Definition ∞ Supply Exhaustion describes a market condition where the available quantity of a digital asset for sale becomes critically low, indicating that most willing sellers have already divested their holdings. This state often occurs after prolonged periods of price decline or consolidation, leading to a significant reduction in selling pressure. It suggests that the market has absorbed the majority of available supply. This condition frequently precedes a price rebound due to limited sell-side liquidity.
Context ∞ Crypto news frequently identifies Supply Exhaustion as a strong bullish signal, often preceding significant price increases. Analysts look for metrics such as declining exchange reserves and a high proportion of illiquid supply to confirm this state. Understanding supply exhaustion is crucial for anticipating market bottoms and the commencement of new upward trends.
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