Definition ∞ Deep loss volume refers to a significant amount of cryptocurrency being sold at prices considerably below its acquisition cost. This market metric indicates a substantial capitulation event where holders liquidate assets at a significant financial deficit, often driven by extreme market downturns or widespread panic. It suggests a strong sentiment of despair among investors and can sometimes precede a market bottom. Analyzing deep loss volume helps assess market psychology and potential turning points.
Context ∞ The occurrence of deep loss volume is a closely watched indicator for market analysts seeking to understand the intensity of bearish trends in digital asset markets. While painful for those selling, it can signal a cleansing period that precedes a recovery phase, as weaker hands exit the market. Observing this metric provides insights into investor behavior during periods of severe price compression.
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