Short Seller Dominance

Definition ∞ Short seller dominance describes a market condition where participants betting on price declines exert significant influence over asset valuations. This occurs when short selling activity, such as borrowing and selling assets with the expectation of buying them back cheaper, outweighs buying pressure. It can lead to downward price spirals and increased market volatility. This situation reflects a prevailing bearish sentiment.
Context ∞ Crypto news often discusses short seller dominance during prolonged bear markets or periods of significant FUD (Fear, Uncertainty, Doubt). High funding rates for short positions or a substantial increase in short interest can signal this dominance. Understanding short seller dominance helps observers comprehend the forces driving price depreciation in digital asset markets.