Price Cascade

Definition ∞ A price cascade describes a rapid, sequential decline in asset prices, often triggered by a significant market event or a large sell-off. This phenomenon can accelerate as initial price drops lead to further selling pressure, liquidations, and margin calls. It reflects a chain reaction of diminishing value across a market. Price cascades are characterized by swift and substantial market movements.
Context ∞ In cryptocurrency markets, price cascades are a notable risk due to the inherent volatility and interconnectedness of digital assets. News often reports on sudden market downturns where a cascade effect can liquidate leveraged positions, exacerbating price movements. Discussions frequently address the mechanisms that can trigger such events, including large whale movements, protocol exploits, or macroeconomic shifts. Understanding price cascades is critical for investors and regulators aiming to mitigate systemic risks within the digital asset space.