Crypto Capitulation?

Capitulation in finance and crypto specifically is marked by a declining market plus a substantial increase in selling pressure. Some well-respected traders are calling for the final capitulation in these dark days of crypto. 

After giving up hope of recouping losses, the fearful will sell at a loss and leave. The aftermath of a final capitulation refers to a heavy bounce in the market. Those bold enough to not run, will now jump back in hoping for green candles as far as the eye can see. 

Indicators of the Final Capitulation

Several major events have occurred that may indicate the final capitulation including the collapse of a major exchange, unusually high trading volumes, liquidations, and a Bitcoin double bottom. Trading psychology is another sometimes overlooked signal.  

Merriam Webster defines the term capitulation as “the act of surrendering or yielding.” What some traders are noticing is the willingness of many investors to sell at a loss. No more HODL, no more TO THE MOON. They’ve given up. 

Dark Days of Crypto

The sentiment on social media is one of darkness and fear. The overall consensus seems to line up with a final surrender as investors dump their hard-earned bags. In crypto, fear and panic selling has led to historic gains for those that had already exited the market during the last bull run. 

While everyone should do their own research, understanding capitulation and what the experienced traders are discussing is valuable. Many skilled traders trade the market with a strategy that goes far beyond technical analysis. 

Trading Psychology

Trading psychology refers to the mental and emotional state of a trader. With most of the top 100 coins down 20-50% combined with funds locked possibly forever on multiple exchanges, it’s safe to assume many investors are watching red candles through tears. 

The FTX crash and subsequent cascade of exchange failures may have spurred on the cycle. Increased trading volume is in, and prices are down dramatically. So, will the bounce follow? 

Capitulation has been called several times this year alone. It can only be confirmed in hindsight. Developing a trading strategy is not easy. There are consultants available at a price that can help investors weather the market more successfully. Many new investors should consider this option. Jumping in the crypto market blind can lead to accidental success, or more often catastrophic failure. Joining a successful trading group is an option that can fast track a new investor’s knowledge and help them avoid some of the pitfalls of crypto.