Definition ∞ Investor Conviction Decline refers to a decrease in the belief or confidence among market participants regarding the future price appreciation or fundamental value of an asset. This reduction in conviction often leads to increased selling pressure, reduced buying activity, and a general shift towards risk aversion. It can be triggered by negative news, regulatory uncertainty, or sustained price depreciation. This decline indicates a weakening of long-term holding sentiment.
Context ∞ News reports frequently discuss investor conviction decline during bear markets or periods of significant FUD (fear, uncertainty, and doubt) in the crypto space. On-chain metrics, such as a rise in short-term holder supply in loss, can signal this sentiment shift. Understanding this decline is important for identifying potential market bottoms or continued downward pressure. It helps explain why assets may struggle to recover even after substantial price drops.
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