What is Capitulation?
Let's find out Capitulation meaning, definition in crypto, what is Capitulation, and all other detailed facts.
Capitulation is the process of investors selling their assets or cryptocurrencies as a result of a significant drop in price. These users simply lose hope that it will ever go back up again. The decision is made purely by the same investors since they give up any previous gains.
By definition, capitulation means to give up or surrender.
To be fair, 2020 and 2021 had lots of ups and downs in the crypto world, specifically if we were to talk about Bitcoin investment. The Bitcoin token skyrocketed in April of 2021, but it took a couple of weeks for the price to fall again. As a result of Bitcoin's poor performance, numerous investors decided to sell their holdings despite their loss.
This sellout of Bitcoin resulted in an even more significant drop in the price for one BTC. Besides, if this were to happen on a global level, further crashes in the price of the asset are inevitable.
Trading in cryptocurrencies, as well as standard stock market trading, may be extremely risky. It is apparent by now that prices can go down as quickly as they go up, and traders can’t be sure how their investment will perform.
Because the cryptocurrency market is decentralized, some people tend to believe that it is way riskier. To be more specific, because this market is not governed by a central authority, it is far more subject to manipulation or large impacts, and so, fluctuations in the values of crypto tokens may be enormous.
Yet, the majority of cryptocurrencies have inherent worth that cannot be disregarded lightly. Nonetheless, there have been a number of crypto winters and bear markets since 2009, the year Bitcoin was launched.
Because of the significant volatility in the cryptocurrency sector, crypto traders are more prone to make a capitulation decision. Sadly, crypto tokens can lose value fast, leading investors to lose optimism that they will ever be able to sell at a profit.
All in all, once the decision is made, despite how much the value of an asset has dropped, this is when the capitulation occurs.