Definition ∞ 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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