Supply Deficit

Definition ∞ A supply deficit occurs when the demand for a particular asset exceeds its available supply. In digital asset markets, this imbalance can lead to significant price appreciation as buyers compete for limited quantities. Understanding supply dynamics is fundamental to analyzing asset valuation and scarcity.
Context ∞ Supply deficits are frequently discussed in relation to specific cryptocurrencies, particularly those with fixed or diminishing supplies, like Bitcoin. News reports often analyze halving events or other supply-reducing mechanisms as potential drivers of future price increases due to an anticipated deficit. This context is vital for assessing the scarcity-driven value propositions within the digital asset space.