Definition ∞ Short-term loss realization occurs when digital asset holders sell their assets at a price lower than their acquisition cost within a relatively brief holding period. This action results in a capital loss for the seller and often reflects immediate market reactions or forced liquidations. It is a metric used to gauge short-term market sentiment and capitulation events.
Context ∞ News reports often cite short-term loss realization data as an on-chain metric reflecting periods of market distress or fear among newer investors. High levels of such activity can indicate a market bottom as weaker hands exit their positions. This phenomenon provides insight into the psychological and financial pressures influencing short-term market participants.
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