Definition ∞ A supply distribution peak represents a specific point in time or price level where a significant portion of an asset’s circulating supply is transferred from long-term holders or accumulators to newer, often less experienced, short-term holders. This event typically occurs during periods of strong price appreciation, as early investors realize profits from their positions. It indicates a fundamental shift in ownership dynamics and can often precede a market top. This peak suggests increased selling pressure from early participants.
Context ∞ In cryptocurrency markets, identifying a supply distribution peak through on-chain analysis is a critical metric often discussed in news reports to signal potential market tops for digital assets. When a large volume of coins moves from experienced hands to newer market participants, it can indicate that the market is becoming overextended. This shift often warns of impending price corrections, as new buyers may be less resilient to volatility and prone to selling during downturns.
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