1. Profit-taking: After any strong rise, investors tend to sell their holdings to realize profits, resulting in price corrections.
2. General market pressures: There may be negative news or economic fluctuations affecting investor sentiment, such as Federal interest rate decisions or issues with major platforms.
3. Natural correction: Typically, financial markets go through a correction phase after periods of rise, and this can be part of the normal market cycle.
4. Negative news or rumors: There may be news about government regulations or security breaches that affected investor confidence.
5. Liquidation of contracts in futures markets: If there are a large number of open leveraged positions, a price drop may lead to the liquidation of many positions, deepening the decline.
What can you do?
Monitor news and updates: To understand the main reason behind this drop.
Don't panic: A sharp decline could be a buying opportunity if you have a long-term strategy.
Support and resistance analysis: To identify where the market might stabilize before any potential rebound.
