A long position shakeout describes a rapid market decline that forces traders holding long positions to sell their assets. This event typically occurs when prices drop sharply, triggering stop-loss orders or liquidations for those betting on price increases. The forced selling further accelerates the price downturn, removing weaker hands from the market. It often precedes a market recovery, as selling pressure diminishes after many long positions are closed.
Context
Long position shakeouts are commonly discussed in cryptocurrency market analysis, especially after periods of sustained price increases or high leverage. News reports often cover these events as a sign of market correction or a reset in speculative activity. Understanding these shakeouts helps traders gauge market health and identify potential turning points in price trends.
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