Definition ∞ Cascading selling describes a rapid, sequential series of sell orders in a financial market, often triggered by an initial price decline. This phenomenon typically leads to further price depreciation as more participants react to the downward momentum, liquidating their holdings. Such events can accelerate market downturns, particularly in highly leveraged or illiquid digital asset markets.
Context ∞ The discussion around cascading selling in crypto markets frequently relates to periods of significant price volatility and market instability. A critical aspect involves the role of automated liquidation protocols in decentralized finance, which can amplify selling pressure when collateral values drop below certain thresholds. Observing these events provides context for understanding sudden, sharp market corrections and the systemic risks within certain digital asset ecosystems.
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