Definition
Distribution is a trading concept that describes a period when ownership of an asset shifts from stronger or larger holders to a wider group of market participants. It usually happens after a price increase, when those early or larger holders begin to sell into ongoing demand. Instead of selling all at once, they tend to offload positions gradually so the price does not drop too quickly. In crypto markets, distribution can be observed in trading activity, price behavior, and changes in who holds the asset.
As a concept, distribution is closely tied to overall market conditions and market sentiment. When sentiment starts to weaken after a strong uptrend, distribution can mark a transition from optimism to caution. If selling pressure continues and demand fades, this phase can precede more prolonged downward conditions, such as those seen in a bear market. Distribution does not guarantee a trend reversal, but it often signals that the balance between buyers and sellers is changing.
Context and Usage
In trading discussions, distribution is often mentioned when price movements appear to stall near highs while trading activity remains active. Participants may describe this as a time when larger or more informed holders are exiting positions while the broader market is still influenced by earlier positive market sentiment. The concept is used to interpret who might be on the buying side and who might be on the selling side at different stages of a trend.
Within the broader market cycle, distribution is viewed as one of several recurring phases that assets can move through over time. It contrasts with earlier accumulation phases, when ownership becomes more concentrated rather than spread out. In extended downtrends or a bear market, past distribution phases are sometimes referenced to explain how ownership changed hands before prices declined more significantly.