The fundamental economic condition where limited supply of a resource exists relative to demand. In trading and investing, scarcity drives value — assets with a fixed or diminishing supply, such as Bitcoin with its 21 million coin cap or rare commodities like gold, tend to command higher prices as demand increases.
Example
“Bitcoin's built-in scarcity through its 21 million supply cap is a key reason investors view it as digital gold, especially after each halving event reduces the rate of new supply.”