Supply saturation refers to a market condition where the available quantity of an asset meets or exceeds current demand. In cryptocurrency markets, this indicates a point where there are ample sellers or newly minted tokens entering circulation, making it difficult for prices to appreciate without a significant increase in buying pressure. It suggests that the market has absorbed its capacity for new supply at prevailing price levels. This condition can lead to price stagnation or downward pressure if demand does not expand proportionally.
Context
Identifying periods of supply saturation is important for analyzing the long-term price potential of digital assets, especially for those with predictable issuance schedules. Market participants monitor metrics related to new token distribution and exchange inflows to assess this condition. The balance between supply dynamics and sustained demand is a critical factor influencing an asset’s valuation over time.
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