Definition ∞ 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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