Supply Shock Metrics

Definition ∞ Supply shock metrics are data points used to quantify sudden and significant reductions in the available circulating supply of a digital asset. These metrics track events such as large-scale token burns, substantial amounts of assets moved into long-term storage or staking contracts, or significant outflows from exchanges. A notable decrease in readily available supply, when demand remains constant or increases, can lead to upward price pressure. They provide insight into the scarcity dynamics of a cryptocurrency.
Context ∞ News reports often cite supply shock metrics when explaining rapid price increases or periods of intense market competition for a particular digital asset. Discussions frequently involve the impact of protocol upgrades, such as Ethereum’s EIP-1559, which permanently remove tokens from circulation. Analysts closely monitor these metrics to anticipate potential market rallies driven by diminishing supply.