Definition ∞ Price capitulation describes a market phase characterized by widespread, panicked selling of a digital asset, typically occurring at the end of a prolonged downward trend. During this period, even long-term holders relinquish their positions, often selling at significant losses, driven by extreme fear and a loss of confidence. This intense selling pressure often results in a sharp, final price drop before a potential market bottom is established. It signifies a purging of weak hands from the market.
Context ∞ The concept of price capitulation is frequently discussed in crypto news during severe bear markets or after major market crashes. Analysts often look for signs of capitulation as a precursor to a market rebound, suggesting that the majority of sellers have exited. Identifying true capitulation versus temporary dips is a constant challenge for market observers and provides critical context for understanding potential market reversals.
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