Definition ∞ A supply shock signal indicates an abrupt and significant reduction in the available circulating supply of a digital asset, often leading to upward price pressure. This reduction can result from events like halving cycles, large-scale token burns, or substantial accumulation by long-term holders moving assets off exchanges. When demand remains constant or increases amidst dwindling supply, the asset’s price typically experiences rapid appreciation. This signal suggests an impending period of scarcity.
Context ∞ Supply shock signals are eagerly watched by cryptocurrency investors and analysts as potential catalysts for significant price rallies. News often highlights events such as Bitcoin halvings or large institutional purchases as examples of factors creating such shocks. The discussion revolves around the magnitude and timing of these supply reductions and their expected impact on market value.
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