Definition ∞ Demand cooling signifies a reduction in the intensity or volume of buying pressure for an asset or service. This phenomenon indicates that the rate at which new buyers are entering the market or existing buyers are increasing their positions is decelerating. It suggests a potential shift from a strong seller’s market towards a more balanced or buyer-leaning environment. Observing demand cooling can be an early indicator of price stabilization or potential price retracement.
Context ∞ In the context of digital assets, demand cooling is frequently discussed in relation to speculative bubbles and market cycles. Analysts monitor on-chain metrics, trading volumes, and derivatives data to gauge the strength of current demand. Debates often revolve around whether observed cooling represents a healthy market correction or a precursor to a more significant downturn, impacting future price trajectories and investor sentiment.
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