Capitulation in cryptocurrency markets refers to a scenario where investors, driven by fear, sell off their assets during a downturn. This mass sell-off results in a significant price drop, high trading volumes, and widespread pessimism. However, capitulation can signify that the worst is over, marking the bottom of a bearish cycle, clearing speculative investors from the market, and presenting buying opportunities for savvy traders. Key signs of capitulation include spikes in fear levels, high volume sell-offs, massive liquidations in derivatives, sharp drops in altcoin prices, and extreme negativity in both social and traditional media. Following capitulation, markets often stabilize, with increased buying from experienced investors, positive divergence in on-chain data, and a shift in sentiment from fear to cautious optimism. Understanding the psychology behind capitulation is crucial, as emotional responses can drive irrational decision-making. It's important for investors to prepare for potential capitulation events by maintaining liquidity, managing leverage, and focusing on long-term fundamentals.

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