Supply Shock Warning

Definition ∞ A supply shock warning indicates an impending reduction in the available supply of a cryptocurrency, which could lead to significant price increases. This signal arises when on-chain metrics or market events suggest a substantial portion of an asset’s circulating supply is becoming illiquid or moving off exchanges into long-term holding wallets. Such a reduction in readily tradable supply, especially if demand remains constant or grows, can create intense upward price pressure. It points to a potential imbalance between supply and demand.
Context ∞ News reports frequently highlight supply shock warnings for cryptocurrencies, particularly after events like halving cycles or large institutional accumulation. These warnings provide context for understanding rapid price rallies and potential market squeezes. Investors closely monitor these signals to anticipate periods of heightened price appreciation.