Loss Dominance describes a market condition where the majority of recent trading activity involves assets being sold at a price lower than their acquisition cost. This metric indicates that a significant portion of market participants are realizing losses, suggesting widespread capitulation or a strong negative sentiment. It is often observed during severe market downturns. This condition reflects a prevalent trend of negative returns across the asset base.
Context
In crypto news, Loss Dominance is frequently cited by analysts to gauge the extent of market capitulation and to identify potential market bottoms. A high degree of Loss Dominance can signal that weak hands have exited the market, potentially setting the stage for a future recovery. Conversely, sustained Loss Dominance highlights persistent selling pressure and a lack of conviction among holders.
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