Definition ∞ 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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