Supply shock setup refers to market conditions that indicate a significant reduction in the available supply of a digital asset is imminent. This setup can arise from events such as halving cycles, large-scale asset lock-ups in decentralized finance protocols, or substantial withdrawals from exchanges to cold storage. It often precedes periods of upward price pressure due to constrained supply meeting sustained demand. It suggests future scarcity.
Context
The market is currently observing a supply shock setup for several digital assets, with decreasing exchange balances and increasing staking activity. This situation suggests that a significant price movement could occur if demand remains constant or increases. Analysts are closely monitoring on-chain metrics to confirm this impending supply squeeze.
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