Definition ∞ Market Cooling refers to a period where the rapid price appreciation of an asset or market decelerates, often stabilizing or experiencing minor corrections. This phase typically follows periods of significant growth, signaling a normalization of investor sentiment and trading activity. It suggests a transition from a speculative frenzy to a more measured market environment.
Context ∞ The concept of Market Cooling is frequently discussed when asset prices plateau after substantial rallies or when trading volumes contract. Analysts interpret this phase as a potential precursor to consolidation or a more significant price adjustment. Observing the indicators of Market Cooling provides context for understanding market transitions and potential shifts in investor behavior.
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