
Demand Decreasing (DD)
If the demand decreases, and the supply remains the same, there will be a surplus, and the price will go down.
When the demand for an asset decreases while the supply remains constant, a surplus occurs. This surplus happens because fewer market participants want to build a position in the asset than there are units available. As a result, the price of the asset tends to fall. This price decrease is a natural response to the lower demand, as sellers reduce prices to attract buyers and clear the excess positions.
Key Points:
• Decreased Demand: Fewer market participants want to build position in the asset.
• Constant Supply: The number of available units does not change.
• Surplus: The supply exceeds the demand, leading to an excess of the asset.
• Price Decrease: Due to the surplus, sellers lower the price to attract buyers and reduce the excess positions.