Cyclical Bottom Formation

Definition ∞ Cyclical bottom formation describes the observable patterns and processes in market data that signal an asset or market is reaching its lowest point within a broader cycle. This involves a series of price actions, trading volume shifts, and sentiment indicators that collectively suggest a market reversal is imminent. These formations often include periods of heavy selling followed by stabilization and gradual accumulation. Recognizing these patterns helps anticipate market recoveries.
Context ∞ Crypto news frequently analyzes cyclical bottom formations, especially after prolonged downturns, to assess the likelihood of a market recovery. Technical analysts and on-chain data experts often highlight specific metrics or chart patterns that suggest such a formation is underway. This concept provides a framework for understanding market structure and potential shifts in digital asset valuations.