Definition ∞ Supply Shock Fuel refers to market conditions or events that significantly reduce the available supply of a digital asset, thereby creating upward pressure on its price. These conditions can include programmed halvings, large-scale burning events, or a substantial increase in long-term holding by investors. When demand remains constant or rises against a rapidly diminishing supply, it creates the potential for a “supply shock.” This term describes the underlying factors contributing to such a market dynamic.
Context ∞ Supply Shock Fuel is a term frequently used in cryptocurrency market analysis, particularly in anticipation of events like Bitcoin halvings or major protocol upgrades that reduce new token issuance. Analysts often discuss how decreasing new supply, combined with steady or growing demand, could lead to significant price increases. Understanding these supply-side catalysts is essential for forecasting market movements and asset valuation.
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