Supply Distribution Phase

Definition ∞ A Supply Distribution Phase refers to a period in a financial market where assets are being sold by long-term holders or large institutional investors to new buyers, often retail investors. This phase typically occurs after a significant price rally, indicating that those who accumulated earlier are now realizing profits. It is characterized by increasing selling pressure and often precedes a market correction or downturn. This transfer of ownership from strong hands to weaker hands is a key market cycle component.
Context ∞ The Supply Distribution Phase is a critical concept in technical analysis and on-chain metrics, frequently discussed when assessing the sustainability of a market rally. News reports often analyze data related to exchange inflows and long-term holder spending to identify if a market is entering this phase. Understanding this dynamic helps investors gauge potential market saturation and impending price reversals.