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  1. Home
  2. /Glossary
  3. /Supply Shock
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Supply Shock

A sudden reduction in the available supply of an asset, which can drive prices up sharply if demand stays the same or increases.

Definition

A sudden reduction in the available supply of an asset, which can drive prices up sharply if demand stays the same or increases. Bitcoin halvings create predictable supply shocks by cutting miner rewards in half. Exchange outflows, where coins move to self-custody, can also signal an incoming supply shock.

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Related Terms

Halving

When Bitcoin's block reward gets cut in half, happening roughly every four years.

Circulating Supply

The number of tokens currently available and tradeable in the market.

Tokenomics

The economic design of a token including supply, distribution, utility, and incentives.

Accumulation Phase

A period when smart money quietly buys up an asset before a major price move.

Annualized Return

The average yearly return on an investment, calculated to account for compounding.

Arbitrage

Profiting from price differences of the same asset across different markets.

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