Definition ∞ Tightening float describes a market condition where the number of publicly available shares or tokens for trading decreases, leading to reduced liquidity. This reduction in the circulating supply can result from various factors, such as institutional accumulation, long-term holding by investors, or token burning mechanisms. A tightening float often precedes periods of increased price volatility due to supply-demand imbalances. It can amplify price movements with relatively small trading volumes.
Context ∞ In cryptocurrency markets, a tightening float can significantly influence price dynamics, especially for assets with limited supply or strong community holding. Discussions often center on the impact of token lock-ups, staking initiatives, or exchange reserves on the available trading supply. Monitoring changes in an asset’s float helps market participants anticipate potential supply shocks and their subsequent effects on price action.
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