Definition ∞ Investor exhaustion describes a market condition characterized by a significant decline in buying interest and a pervasive lack of conviction among market participants. This state often follows prolonged price declines or periods of stagnation, leading to reduced trading volume and minimal new capital entry. It suggests that most willing sellers have already exited the market, leaving fewer active participants. This condition typically precedes a potential market bottom or a period of consolidation.
Context ∞ In cryptocurrency markets, investor exhaustion is frequently cited in news analyses as a precursor to potential price reversals or a stabilization phase. When market sentiment reaches extreme lows and trading activity subsides, it can indicate that the selling pressure has largely dissipated. Observing indicators consistent with investor exhaustion provides context for understanding market cycle dynamics and potential turning points for digital asset valuations.
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