A structural supply squeeze refers to a market condition where the available supply of an asset is significantly constrained due to fundamental, long-term factors. This leads to upward price pressure. It often stems from decreasing production rates, increasing long-term holding, or significant asset lock-ups in protocols.
Context
In cryptocurrency markets, a structural supply squeeze can result from events like Bitcoin halvings, large amounts of tokens being staked in proof-of-stake networks, or significant allocations locked in decentralized finance (DeFi) protocols. This reduced liquid supply, combined with consistent demand, can drive substantial price appreciation over extended periods. Analysts closely monitor these fundamental supply changes.
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