What does correction mean in the world of cryptocurrencies?
### **The meaning of correction in digital currencies**
**Correction** is a term used in financial markets, including the cryptocurrency market, to refer to a temporary decline or decrease in the price of an asset (such as a cryptocurrency) after a period of continuous rise.
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### **Correction Features:**
1. **Natural and healthy:**
- Correction is considered a natural part of market movement, as it helps calm prices after sharp rises.
2. **Retreat rate:**
- The decline is usually between 10% and 30% from the previous high, but it is still too small to be classified as a major downtrend.
3. **Short-term:**
- It lasts for a short period compared to the long-term decline known as the bear market.
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### **Why does the correction happen?**
1. **Making profits:**
- When investors sell their assets to make a profit after a significant rise in price.
2. **The price is rising very quickly:**
- A sudden and sharp rise may lead to unsustainable price inflation, leading to a correction.
3. **Temporary negative news or events:**
- Such as rumors or regulatory decisions that affect the market.
4. **Achieving supply and demand balance:**
- A price correction occurs when the market returns to normal levels after an unbalanced increase in demand or supply.
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### **How are corrections handled?**
1. **Support and Resistance Analysis:**
- Monitor support lines to see where the correction might stop.
2. **Don't panic:**
- Corrections are not always an indication of a market crash, and may be an opportunity to buy at low prices.
3. **Technical Analysis:**
- Use indicators such as RSI and Bollinger Bands to see if the currency is in an overbought or oversold zone.
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### **Conclusion:**
A correction is a natural, temporary decline in cryptocurrency prices following a significant rise. It can be an opportunity for investors to buy coins at lower prices or an indication of a market calming down before an uptrend continues.
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