Market Cooldown

Definition ∞ A market cooldown refers to a period of reduced trading activity and price stabilization after a phase of rapid price increases or intense speculation. During a cooldown, market momentum diminishes, and asset valuations may consolidate or experience minor corrections. This phase often precedes a period of sustained price discovery or further directional movement. It signifies a reduction in market heat.
Context ∞ News often reports on market cooldowns in the cryptocurrency space, analyzing factors such as decreased trading volumes, investor fatigue, or shifts in macroeconomic conditions. These periods allow for a re-evaluation of asset valuations and investor sentiment. A cooldown can be a healthy market adjustment, setting the stage for more sustainable growth or further price adjustments.