Risk Sentiment

Definition ∞ Risk sentiment refers to the overall attitude of market participants towards taking on financial risk within the digital asset space. This sentiment can range from risk-on, where investors are willing to pursue higher-risk, higher-reward assets, to risk-off, where they prefer safer, more stable holdings. It is influenced by macroeconomic conditions, regulatory news, and market performance.
Context ∞ Crypto news often analyzes risk sentiment to explain market movements, especially during periods of economic uncertainty or significant regulatory announcements. A shift in sentiment can lead to rapid capital reallocation, impacting the prices of various digital assets. Understanding prevailing risk sentiment is crucial for interpreting market reactions and forecasting future trends.