Definition ∞ Short-term holder capitulation refers to a market event where investors who have held a digital asset for a relatively brief period panic and sell their holdings at a significant loss. This mass selling pressure typically occurs during sharp market downturns, as newer investors exit the market to avoid further depreciation. It often marks a period of extreme fear and can precede a market bottom. This behavior indicates a lack of conviction among recent buyers.
Context ∞ In crypto news, short-term holder capitulation is often discussed as a key indicator of a potential market bottom for digital assets. On-chain analytics track the movement of coins from short-term holders to long-term holders, particularly when these coins are sold at a loss. Such events are frequently reported as signs that the weakest hands have been flushed out, potentially clearing the way for a market recovery as stronger hands accumulate assets.
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