A distribution phase signal indicates that large holders are selling off assets, typically after a significant price increase. This signal often appears as increasing selling volume, decreasing price momentum, and a shift of assets from strong hands to newer, less experienced buyers. It suggests that the market may be approaching a local top or experiencing a reversal from an upward trend. Recognizing these signals helps participants avoid potential losses as prices begin to decline.
Context
Crypto news frequently reports on distribution phase signals when analyzing potential market reversals or profit-taking events. On-chain metrics, such as Coin Days Destroyed or Long-Term Holder spending, are often examined to identify these patterns. The ongoing discussion involves discerning true distribution from temporary market corrections, which requires careful analysis of multiple indicators.
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