Market Cleansing Phase

Definition ∞ A market cleansing phase refers to a period of significant price decline and reduced market activity in digital assets, often characterized by the exit of speculative participants. This phase typically follows periods of excessive exuberance, correcting overvalued assets and eliminating unsustainable projects. It functions as a recalibration, establishing a more sustainable market foundation.
Context ∞ Crypto news often describes a market cleansing phase as a necessary, albeit painful, process for the long-term health of the digital asset ecosystem. This period is watched for signs of genuine project utility and the strengthening of underlying infrastructure, rather than pure speculation. The debate centers on whether such phases foster maturity and resilience within the broader cryptocurrency market.