Definition ∞ Capital exhaustion describes a market condition where the available capital for investment or asset acquisition within a specific sector or asset class becomes depleted. This state typically results in a slowdown or cessation of buying activity, leading to price stagnation or decline. It signifies a reduction in liquidity and investor capacity.
Context ∞ In cryptocurrency markets, capital exhaustion can follow prolonged periods of high speculation or significant market downturns, as investors run out of funds or risk appetite. This condition often precedes periods of consolidation or further price corrections. Analysts frequently discuss capital exhaustion in relation to macroeconomic factors and broader market liquidity conditions.
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