Definition ∞ A supply absorption phase describes a period in market cycles where buying pressure systematically acquires available selling supply without causing a significant price increase. This indicates strong underlying demand that is gradually accumulating assets from sellers. It often occurs after a price decline or during a consolidation period. This phase can precede a sustained upward price movement.
Context ∞ Market analysts frequently reference a supply absorption phase in cryptocurrency news to explain periods of stable prices despite ongoing buying. Debates often concern the strength of this absorption and its potential to signal a market bottom or upcoming rally. Observing this phase helps gauge underlying market strength.
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