Definition ∞ Market risk elevated indicates an increased probability of adverse price movements or significant losses within digital asset markets. This condition can arise from macroeconomic instability, regulatory uncertainty, or a decline in overall investor confidence. It signals a period where asset prices are more susceptible to sharp fluctuations.
Context ∞ Crypto news often reports on periods where market risk is elevated, advising caution for investors. Factors contributing to this state might include impending interest rate changes, geopolitical tensions, or major protocol vulnerabilities. Analysts assess various indicators, such as volatility indices and derivatives market sentiment, to determine the level of prevailing risk. Understanding elevated market risk helps participants adjust their strategies to protect capital.
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