Definition ∞ Investor confidence erosion describes a decline in the trust and positive sentiment that investors hold towards a particular asset, market, or the broader digital asset ecosystem. This reduction in confidence can stem from security breaches, regulatory uncertainty, market manipulation, or significant price declines. It often leads to reduced investment activity and increased selling pressure.
Context ∞ News reports frequently highlight investor confidence erosion during periods of market instability or following major industry scandals. Rebuilding this confidence requires transparent communication, regulatory clarity, and demonstrable improvements in security and operational integrity from market participants and platforms.
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