Capitulate meaning refers to a period of strong selling activity, where investors give up their positions and sell their holdings as quickly as possible. This is commonly known as panic selling. Sell orders are very high at this point of time, which drives the asset price lower and lower until a bottom is eventually reached.
Capitulation can be described as the moment when investors lose hope, accepting losses and giving up their previous gains. When the panic selling period is over, marking the end of the capitulation, it may be followed by either a consolidating period or by an upward trend that would potentially indicate the beginning of a bull market.
A reason for capitulation happening is due to people’s FUD and panic, which leads to tremendous selling pressure. However, the more violent and abrupt the price drop is, the higher the possibility that it will be followed by a strong bounce.
Historically, the word capitulation was used by militaries, referring to the act of surrendering a territory or troop when negotiating terms with an enemy army. When used in a financial sense, the term refers to the moment when investors succumb to prevailing market forces. So instead of HODLing in expectation of a market recovery or bounce, investors choose to dispose of their holdings at the currently available market price.
Cryptocurrencies are known to experience greater forces of capitulation due to the volatility in their nature.
In conclusion, capitulate meaning refers to a period of strong selling activity, which is often accompanied by FUD and other feelings of panic.
