Correction in cryptocurrencies refers to a decline in cryptocurrency prices after a period of significant increases. Correction is a natural and healthy phenomenon in financial markets, including the cryptocurrency market, and usually occurs when prices reach very high levels very quickly.
Reasons for correction:
1. Profit-taking: Investors sell assets after making significant gains.
2. Negative rumors or news: Regulatory or economic news that affects market confidence.
3. Technical levels: Prices may rebound when reaching strong resistance levels.
4. Overbought: When prices are excessively high compared to their true value.
How to deal with corrections:
Don’t panic: Corrections are a natural part of the market, and don’t always mean a collapse.
Investment review: Check the viability of an investment based on long-term performance.
Exploit corrections: For long-term investors, corrections are an opportunity to buy at lower prices.
Identifying support and resistance levels: This helps predict points at which prices may stabilize.
