Market compression describes a period where asset prices trade within a tight, narrowing range. This condition indicates a reduction in volatility, often preceding a significant price movement in either direction as market participants accumulate or distribute assets without clear directional consensus. It is characterized by lower trading volumes and decreasing differences between high and low prices. This phase reflects a temporary equilibrium between buying and selling pressures.
Context
News concerning digital assets frequently references market compression when discussing cryptocurrency price action, particularly for Bitcoin and Ethereum. Analysts often interpret extended periods of compression as a precursor to a volatility expansion. This can significantly impact portfolio valuations or trading strategies. Such periods are closely watched for signals of impending trend shifts or breakout opportunities within the broader digital asset landscape.
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