{"id":529204,"date":"2022-12-19T13:20:00","date_gmt":"2022-12-19T10:20:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/what-is-crypto-market-capitulation-and-its-significance\/"},"modified":"2022-12-19T13:20:00","modified_gmt":"2022-12-19T10:20:00","slug":"what-is-crypto-market-capitulation-and-its-significance","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/what-is-crypto-market-capitulation-and-its-significance\/","title":{"rendered":"# What is crypto market capitulation and its significance"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a27a0cbd56e8\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a27a0cbd56e8\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/what-is-crypto-market-capitulation-and-its-significance\/#%E2%80%9D_What_is_crypto_market_capitulation_and_its_significance_%E2%80%9C\" >&#8221; What is crypto market capitulation and its significance &#8220;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/what-is-crypto-market-capitulation-and-its-significance\/#What_is_crypto_market_capitulation\" >What is crypto market capitulation?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/what-is-crypto-market-capitulation-and-its-significance\/#What_is_the_significance_of_a_crypto_market_capitulation\" >What is the significance of a crypto market capitulation?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_What_is_crypto_market_capitulation_and_its_significance_%E2%80%9C\"><\/span>&#8221; What is crypto market capitulation and its significance &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<div class=\"post-content\" data-v-30a6cf80>Capitulation literally means concede. In the financial sphere, this term reflects a period of aggressive selling when the last of the bulls concede defeat to become bears themselves.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_crypto_market_capitulation\"><\/span>What is crypto market capitulation?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Suppose a cryptocurrency drops 30% overnight. An investor is left with two options: they can continue to hold or sell to realize the losses.<\/p>\n<p>There would be sharp decline in price if most investors decide to realize their losses. In addition, this selling pressure could produce a price bottom as the bears eventually run out of coins to sell.\u00a0<\/p>\n<p>But while it&#8217;s very difficult to predict and identify capitulation, there are a few recurring market signals that can help traders prepare for such an event. <\/p>\n<p>A crypto market capitulation will typically include most of these condition:<\/p>\n<ul>\n<li>Rapid price crash<\/li>\n<li>Large trading volumes<\/li>\n<li>Oversold conditions<\/li>\n<li>High volatility<\/li>\n<li>A big drop in the number of large holders<\/li>\n<li>Negative market fundamentals<\/li>\n<\/ul>\n<p>For example, the sudden collapse of the FTX Token (FTT), the native asset of the defunct crypto exchange FTX, in November 2022 accompanied most signs of capitulation, as shown in the chart below.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-12\/9b8a0430-5368-4948-aac7-418808682618.png\"><figcaption style=\"text-align: center;\"><em>FTT\/USD daily price chart. Source: TradingView<\/em><\/figcaption><\/figure>\n<p>Cryptocurrencies, especially those with extremely low market caps and liquidity, will always see greater volatility during capitulation. But crypto market capitulations are not always bad for investors. On the contrary, they bring the period of maximum profit opportunity as the asset price bottoms out.\u00a0<\/p>\n<p>But crypto market capitulations are not always bad for investors. On the contrary, they bring the period of maximum profit opportunity as the asset price bottoms out.\u00a0<\/p>\n<p>For instance, Bitcoin (BTC) and Ether (ETH) have witnessed several market capitulation events in the past eight years, accompanied by large sell-volumes and price bottoms, such as the market crash of March 2020.\u00a0<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_the_significance_of_a_crypto_market_capitulation\"><\/span>What is the significance of a crypto market capitulation?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Many experienced traders and investors see a crypto market capitulation as a foreteller of a price bottom. As a result, they prefer to accumulate during a declining market, thus absorbing the sell-side pressure and creating grounds for a potential bullish reversal ahead.\u00a0<\/p>\n<p><strong><em>Related:\u00a0Here\u2019s 3 ways the relative strength index (RSI) can be used as a sell signal<\/em><\/strong><\/p>\n<p>In addition, a crypto market capitulation typically removes short-term sellers and gradually shifts the momentum to entities with a long-term upside outlook since almost everyone who was going to sell has already done so.<\/p>\n<p>This is typically reflected in a consistent rise of Bitcoin supply held by addresses for more than six months, dubbed &#8220;old coins.&#8221;\u00a0<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-12\/8cc3fc26-76be-48b4-a812-ff1f12fabe5f.png\"><figcaption style=\"text-align: center;\"><em>Bitcoin old supply last active &gt; 6m. Source: Glassnode<\/em><\/figcaption><\/figure>\n<p>These coins are less likely to be spent on any given day, finds a Glassnode <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/insights.glassnode.com\/sth-lth-sopr-mvrv\/\">research<\/a>, noting:<\/p>\n<blockquote><p>&#8220;Old Coins typically swell in volume during bearish market trends, reflecting a net transfer of coin wealth from newer investors and speculators, back towards patient longer-term investors (HODLers).&#8221;<\/p><\/blockquote>\n<p>Ultimately, timing a market bottom during a capitulation event is extremely difficult as the process can take months, if not several years as with Bitcoin in 2014-2016. <\/p>\n<p>Traders typically rely on historic data and previous market bottoms to anticipate potential capitulation events using a myriad of metrics and indicators.<\/p>\n<p class=\"post-content__disclaimer\">This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.\n<\/p>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/what-is-crypto-market-capitulation-and-its-significance\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8221; What is crypto market capitulation and its significance &#8220; Capitulation literally means concede. In the financial sphere, this term reflects a period of aggressive selling when the last of the bulls concede defeat to become bears themselves. What is crypto market capitulation? Suppose a cryptocurrency drops 30% overnight. An investor is left with two&#8230;<\/p>\n","protected":false},"author":1,"featured_media":529205,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/cdn-cgi\/image\/format=auto,onerror=redirect,quality=90,width=1200\/https:\/\/s3.cointelegraph.com\/uploads\/2022-12\/48dc0991-3082-41b1-a711-c25bf5ba0edc.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74862,135234,110520,74939,73785],"class_list":["post-529204","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-bitcoin","tag-ftx","tag-how-to-crypto","tag-market-analysis","tag-markets"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/529204","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=529204"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/529204\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/529205"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=529204"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=529204"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=529204"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}