Definition ∞ A supply squeeze occurs when the available supply of an asset is severely limited relative to the demand for it. This imbalance can drive up prices rapidly as buyers compete for the scarce available units. In digital asset markets, this can be influenced by factors such as token lock-ups, reduced mining output, or concentrated ownership.
Context ∞ Supply squeezes are frequently observed phenomena in cryptocurrency markets, particularly with assets having fixed or deflationary issuance schedules. News reports often analyze the dynamics of specific tokenomics, such as Bitcoin’s halving events, and their potential to constrict supply. Discussions also revolve around the impact of large holders (whales) accumulating and holding assets, further limiting circulating supply and potentially influencing price action.
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