A supply absorption event occurs when the market successfully purchases a significant volume of available assets without a substantial decrease in price. This indicates strong demand capable of absorbing selling pressure, often from large holders or profit-takers. Such an event suggests underlying buying strength and can precede an upward price movement as the available supply diminishes. It is a key indicator of market resilience and accumulation.
Context
In cryptocurrency markets, a supply absorption event often signals a shift from bearish to bullish sentiment, as strong demand neutralizes selling pressure. The current situation frequently involves monitoring on-chain data to identify large accumulation patterns by long-term holders. A critical future development involves observing whether sustained supply absorption leads to new all-time highs, indicating robust market conviction beyond short-term speculation.
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