Definition ∞ Supply Demand Balance refers to the equilibrium between the quantity of a digital asset available for sale and the quantity that buyers are willing to acquire at a given price. When demand exceeds supply, prices tend to rise; conversely, when supply exceeds demand, prices typically fall. This fundamental economic principle governs price movements in cryptocurrency markets. It constantly shifts based on various on-chain and macroeconomic factors.
Context ∞ Crypto news often analyzes the Supply Demand Balance to explain price volatility and forecast future market trends. Metrics like exchange reserves, illiquid supply, and trading volumes are frequently examined to assess this balance. Understanding these dynamics is essential for interpreting market movements and anticipating potential price shifts.
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