Definition ∞ Extreme Loss Selling describes a market scenario where asset holders liquidate their positions at significant losses, often driven by panic or urgent liquidity needs. This behavior typically occurs during severe market downturns and contributes to rapid price depreciation. It signifies a profound lack of confidence in the asset’s near-term prospects. This type of selling can mark a market bottom.
Context ∞ Periods of extreme loss selling are closely monitored by on-chain analysts to identify potential market bottoms and capitulation events. The aggregate realized loss metric often spikes during these times. Understanding this behavior helps in discerning the emotional state of the market and anticipating subsequent recovery phases.
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