Definition ∞ A Peak Flag Indicator is a technical or on-chain metric that signals a market is approaching or has reached a significant top. These indicators typically show signs of market exhaustion, extreme speculation, or a shift in the balance of buying and selling pressure. It serves as an early warning system for potential price reversals. Such flags help traders and investors assess risk.
Context ∞ In cryptocurrency market analysis, Peak Flag Indicators are closely watched for signs of impending corrections or bear market transitions. News articles often reference specific on-chain metrics, such as extreme funding rates, high MVRV ratios, or declining transaction counts, as potential peak flags. Recognizing these signals assists in making informed decisions regarding asset allocation.
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