Definition ∞ Deep profit taking refers to investors selling assets that have seen substantial price gains. This action occurs when holders divest a significant portion of their assets after a considerable upward price movement, aiming to realize large gains. It often leads to notable downward pressure on the asset’s price, as a large volume of assets enters the market. Such activity can indicate a perceived peak in value or a strategic rebalancing of portfolios.
Context ∞ The occurrence of deep profit taking is a recurring theme in cryptocurrency news, especially after extended rallies. Analysts closely monitor on-chain metrics to detect patterns of large-scale selling by long-term holders. This activity can precede market corrections, making it a key indicator for understanding short-to-medium term market direction.
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