Definition ∞ Capitulation in financial markets refers to a period of intense, widespread selling by investors who abandon their positions due to severe market downturns or extreme negative sentiment. This often occurs at the trough of a bear market, driven by panic and a loss of confidence. It typically marks a final, dramatic surrender before a potential market reversal.
Context ∞ In cryptocurrency markets, capitulation events are frequently reported during significant price corrections, characterized by sharp declines and high trading volumes as participants exit positions. News analysis often identifies these periods as potential turning points, where the weakest hands are forced out, setting the stage for subsequent recovery. Recognizing capitulation is crucial for interpreting market bottoms.
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