Definition ∞ Market demand exhaustion occurs when the buying pressure for a digital asset significantly diminishes, leading to a potential price reversal. This condition indicates that most interested buyers have already entered the market, and there are insufficient new participants to sustain an upward price trend. It is often characterized by decreasing trading volume during rallies, slowing price momentum, and a failure to break through resistance levels. Demand exhaustion frequently precedes a period of consolidation or a price correction as sellers gain control.
Context ∞ The current discussion regarding market demand exhaustion involves technical analysis, with traders looking for specific chart patterns and volume indicators to identify its presence. A key debate concerns the precise signals that confirm demand exhaustion versus a temporary pause in buying activity. Future developments will likely include more sophisticated predictive models incorporating on-chain data and sentiment analysis to better anticipate these critical market turning points.
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