Glossary - ChicksX

Falling Knife is a term for a rapidly dropping asset, cautioning against buying too early during its decline.

Falling Knife is a financial term used to describe an asset experiencing a swift, significant decline in value. It warns investors to be cautious about buying in too early, as the asset may continue to fall. The term alludes to the idea that catching a falling knife can lead to injury, symbolizing potential financial losses. In crypto and fiat exchanges, recognizing a falling knife is crucial to avoid premature investments. The risk is that the asset's price hasn't bottomed out yet, and attempting to "catch" it can result in further losses.