Definition ∞ A supply side squeeze occurs in a market when the available quantity of an asset becomes significantly constrained relative to existing or increasing demand. In cryptocurrency, this means a reduction in the circulating supply of a token, often due to extensive staking, burning mechanisms, or tokens being locked in decentralized finance protocols. This scarcity can exert upward pressure on the asset’s price, given consistent buyer interest. It is a powerful market dynamic.
Context ∞ Supply side squeezes are frequently observed in digital asset markets, especially for tokens with deflationary mechanisms or substantial staking ratios. News reports often highlight how protocol upgrades, such as EIP-1559 on Ethereum, contribute to reducing circulating supply. Market participants closely monitor these dynamics for potential price implications, as a sustained squeeze can significantly alter asset valuations.
Blockchain Knowledge
Cryptocurrency Foundation
Cryptospace Newsfeed
