Definition ∞ A supply cluster refers to a concentrated range of prices where a significant amount of a digital asset was last moved on-chain, indicating a large number of coins held at similar cost bases. These clusters represent areas where a considerable portion of the circulating supply was acquired or transacted. They can act as future support or resistance levels, as holders within these clusters may be inclined to sell or hold at their acquisition price. This metric provides insight into investor distribution.
Context ∞ Supply clusters are a key on-chain metric discussed in advanced cryptocurrency market analysis and news reports. When the price approaches a large supply cluster, analysts watch for increased volatility as holders decide whether to sell for profit or loss. These clusters help in identifying potential areas of market congestion or significant price barriers. This aids in predicting price movements.
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