Capital flight risk describes the potential for large amounts of assets to rapidly move out of a particular country, market, or asset class. This movement is typically driven by investor concerns over economic instability, political uncertainty, or unfavorable regulatory changes. In digital assets, this risk pertains to rapid withdrawals from specific platforms or conversions away from certain cryptocurrencies.
Context
Capital flight risk is a significant consideration in global financial markets and increasingly in the digital asset space. News regarding regulatory crackdowns, geopolitical events, or platform vulnerabilities can trigger swift movements of crypto holdings. Understanding this concept helps interpret market volatility and the impact of external factors on digital asset valuations and liquidity.
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