Supply absorption refers to the market phenomenon where buying demand effectively takes up available selling pressure for a digital asset. This occurs when purchasers are willing to acquire assets at current or even rising prices, thereby reducing the circulating supply available for sale. It indicates underlying strength in demand, often preventing further price declines or signaling a potential upward movement. This process can lead to price stabilization or appreciation.
Context
Supply absorption is a key analytical concept discussed in crypto news, particularly in reports on market accumulation phases and price trend reversals. On-chain metrics are often employed to track the movement of digital assets from exchanges into cold storage, indicating strong holder conviction. News articles frequently interpret signs of robust supply absorption as bullish indicators for an asset’s future price performance. Understanding this dynamic helps interpret market sentiment and potential price bottoms.
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