Definition ∞ Short Term Holder Pain describes a market condition where recently acquired digital assets are held at a loss. This typically occurs during market downturns when investors who purchased cryptocurrencies within the last few months see their holdings decrease in value. It can lead to increased selling pressure as these holders may liquidate their positions to avoid further losses, contributing to market volatility. Analyzing this metric helps gauge the capitulation potential within the market.
Context ∞ Short Term Holder Pain is a key on-chain metric often discussed in cryptocurrency news, particularly during bear markets, as it indicates periods of significant market stress. Analysts monitor the percentage of short-term holder supply in a loss to assess potential capitulation events or market bottoms. Understanding this indicator provides insights into the psychological state of recent market participants and their influence on price action.
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