Definition ∞ A Panic Selling Spike describes a rapid and substantial increase in the volume of digital assets being sold by investors, driven by fear, negative news, or significant price declines. This event typically involves a sudden loss of confidence, leading to a cascade of sell orders as participants attempt to exit their positions quickly. It often results in sharp price drops and heightened market volatility. This behavior is characteristic of market capitulation.
Context ∞ Crypto news reports frequently cover Panic Selling Spikes, often correlating them with major market corrections or periods of extreme FUD (Fear, Uncertainty, Doubt). Such spikes can signal a temporary market bottom as the last remaining weak hands liquidate their holdings. Observing these events helps analysts gauge the intensity of market fear and potential reversal points.
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