Definition ∞ A Market Cap Drop signifies a decrease in the total market capitalization of a specific cryptocurrency or the entire digital asset market. This indicates a reduction in the aggregate value of all circulating tokens. Such a decline can be attributed to selling pressure, negative news, or broader economic downturns.
Context ∞ Market cap drops are frequently analyzed by investors and analysts to gauge market sentiment and identify potential entry or exit points. Understanding the factors contributing to these declines, such as regulatory uncertainty or major security breaches, is crucial for assessing market health and predicting future price movements.
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