Capitulation definition

Capitulation is a phase of heavy, panic-driven selling at the end of a sustained market decline. It is the point where holders give up on losing positions and exit at almost any price.

Capitulation usually shows up as a sharp drop on unusually high volume, wide price swings, and deeply negative sentiment. It happens when traders abandon positions because they expect more downside or can no longer carry the loss, and it can occur in shares, forex, commodities, crypto, and index markets.

Capitulation can signal that selling pressure is close to exhausted, but it does not confirm a market bottom. Price can keep falling if the fundamentals stay weak or liquidity worsens, so traders look for confirmation in volume, a clear price rejection, a held support level, or a turn in a momentum indicator before treating it as a low.