Market Distribution Phase

Definition ∞ The market distribution phase in cryptocurrency trading refers to a period where large holders or institutions gradually sell off their accumulated digital assets into the market. This occurs after a significant price increase, as these entities seek to realize profits. Characterized by high trading volume, increased price volatility, and often sideways or slightly declining price action, this phase can precede a more substantial market correction. It represents a shift in ownership from stronger hands to newer, often less informed, buyers.
Context ∞ Crypto news and technical analysis frequently identify and discuss assets entering a market distribution phase. Reports often analyze on-chain metrics, such as exchange inflows and the movement of older coins, to confirm whether distribution is occurring. Understanding this phase is crucial for investors seeking to anticipate potential market reversals and adjust their portfolio strategies in response to shifting supply dynamics.