Crypto market Capitulation and its Significance

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Happy weekend Tronics in the Forum. Let’s get to learn something this hour.
From this explanation, I believe we have witnessed this in our crypto journey.

Market capitulation a situation investors and traders sell their assets in large quantities, which often results in a sharp decline in prices. It is a period of intense selling activity in which investors liquidate their positions and sell their holdings quickly.

Also “panic selling” sell orders peak at a much higher-than-average level, which quickly drives the asset price lower and lower until a bottom is eventually reached.

It can be the representation of investors losing hope and accepting their losses while giving up their previous gains.

When the panic selling is over, which means the capitulation is over, there may be a period of consolidation (price movements that stay the same) or an upward trend, which could be the start of a bull market.

Price reversals and strong upward trends often happen during capitulation periods. This is because these times are usually marked by FUD and panic, which cause selling pressure to go above normal levels and reach “oversold” conditions.

The more violent and abrupt the price drop is, the higher the chance that it will be followed by a strong bounce
( Lols not applicable to all tho)

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Example of crypto market capitulation:

  • March 2020: The COVID-19 pandemic caused a global economic crisis, which led to a sharp sell-off in the crypto market. Bitcoin, the leading crypto, fell from a high of over $10,000 to a low of $3,800 in just a few weeks. This was a period of widespread panic selling, as investors feared that the crypto market was going to collapse completely.

  • May 2021: The crypto market experienced another period of capitulation in May 2021. This time, the sell-off was triggered by a number of factors, including the collapse of the TerraUSD stablecoin and the Chinese government’s crackdown on crypto mining. Bitcoin fell from a high of over $64,000 to a low of $30,000 in just a few weeks.

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A crypto market capitulation will typically include most of these conditions:

  1. Rapid price crash of a cryptocurrency.
  2. Large trading volumes
  3. High volatility
  4. Oversold conditions
  5. Negative market fundamentals ( FUD)
  6. Significant drop in the number of large holders.
  • What are the factors that drive cryptocurrency market capitulation?

  1. Economic factors such as regulatory changes, monetary policies, and macroeconomic conditions can play a significant role in triggering it.

  2. Technical factors such as network outages, security breaches, hacks or scams and changes in mining difficulty can also contribute to it.

  3. Psychological factors such as fear, greed behavior can also play a significant role in driving market capitulation.

In the short term, market capitulation can result in significant losses for investors and traders as prices decline rapidly. Investors who bought at or near all-time highs can see their portfolios decline by over 80% in a matter of months.

In the long term, market capitulation can present opportunities for those who are able to withstand the decline in prices and hold on to their assets. After a market capitulation event, prices often bottom out and begin a slow recovery, which can potentially indicate the beginning of a bull market.

Let’s get to share our Experiences, if we have had been in this before?

You ever sold your assest cause the dip was over 50% of your investment?

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This also lead to the death of many projects that already had a weak foundation. depending on what you hold determine if you will bounce back or sink.

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Yes, I aggred to this
Not forgetting can also be a point of exist scam for some Crypto project.

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