Definition ∞ A market shakeout describes a period of intense price volatility and significant decline that forces weaker or over-leveraged participants out of the market. This process often involves rapid liquidations and a general loss of confidence among a segment of investors. It typically leads to a consolidation of assets among stronger holders and can precede a more stable market environment. Such events purge speculative excesses.
Context ∞ News reports often refer to a market shakeout in cryptocurrency as a cleansing event that removes speculative froth and establishes a healthier market foundation. While painful for many, these periods are sometimes viewed as necessary for long-term market sustainability. Understanding the dynamics of a market shakeout provides context for analyzing price corrections and the resilience of digital asset ecosystems.
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