What is crypto market capitulation and its significance

cointelegraph.com:

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.

Suppose a cryptocurrency drops 30% overnight. An investor is left with two options: they can continue to hold or sell to realize the losses.

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. 

But while it's very difficult to predict and identify capitulation, there are a few recurring market signals that can help traders prepare for such an event.

A crypto market capitulation will typically include most of these condition:

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.

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. 

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. 

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. 

Many experienced traders and investors see a crypto market capitulation as a foreteller of a price bottom. As a