Definition ∞ Asset deleveraging refers to the process where entities reduce their financial leverage by selling assets or decreasing debt. In the digital asset space, this typically involves the liquidation of cryptocurrency holdings or the repayment of collateralized loans. This action aims to reduce exposure to market volatility or meet margin calls, thereby stabilizing financial positions. It is a response to market downturns or heightened risk perception among participants.
Context ∞ The digital asset market frequently experiences asset deleveraging events, particularly during periods of significant price corrections or regulatory uncertainty. Such occurrences can amplify downward price pressure as large holders sell off assets, affecting market liquidity and investor sentiment. Observing deleveraging trends provides insight into market health and the risk appetite of institutional and individual participants.
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