To Capitulate, or Capitulation, is a term used to describe sudden, extreme drops. Capitulation can be used across a variety of disciplines but in the context of cryptocurrency and blockchain, capitulation is used to refer to 2 areas:
– Asset Prices
Blockchains that operate under a Proof-Of-Work consensus model have a process known as mining involved. Miners are node/users that allocate their hardware & energy for the purpose of securing a network and being rewarded for their contributions in digital assets (bitcoin). Whenever the network is overtly saturated with miners, or new advanced hardware is released that makes previous equipment obsolete, it becomes unprofitable to some miners to continue participating. So, miner disconnect their machines, causing the networks hashing rate & difficulty to collapse. Typically this is also tied in with difficulties in the assets pricing. This is called Miner Capitulation.
There are particiapnts in the crypto economy that identify themselves as whales/hodlers. Heavily invested individuals that have some degree of influence on the assets price. Should they lose faith in their positions (either get scared by FUD or want to divest into other things) they will exit their positions by selling off into the open markets, in turn scaring other larger participants forcing them to sell their positions as well. This amplified selling pressure radically devalues the assets and capitulates the price.