Definition ∞ Capitulation failure describes a market situation where an expected final wave of selling, driven by extreme fear and widespread investor surrender, does not materialize. Typically, capitulation signals a market bottom as all remaining sellers exit, preparing the way for a recovery. A failure of this event means that price declines continue without a clear, decisive purging of weak holders. This condition suggests that market weakness is more persistent or that selling pressure remains distributed.
Context ∞ Analysts monitor capitulation events as potential signals for market bottoms, especially in volatile asset classes such as cryptocurrencies. A capitulation failure complicates market bottoming processes, indicating that the market may remain vulnerable to further price drops. Understanding this concept helps interpret price action where a definitive turning point is absent, necessitating caution in forecasting recovery.
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