Three Core Values of the #加密市场回调 Cryptocurrency Market Correction

1. Squeeze Out Speculation for Health

A correction is a key mechanism for the market's self-correction, effectively squeezing out the valuation bubbles formed by short-term speculation. When asset prices surge far from their fundamentals, corrections eliminate over-leveraged speculators through price declines, gradually aligning valuations with actual application value. For example, the 50% deep correction of Bitcoin in May 2021 cleared nearly $10 billion in futures contracts, creating a healthier valuation foundation for subsequent institutional investment.

2. Create Strategic Opportunities

Price declines create a "value pit," providing high-quality entry points for long-term investors. Historical data shows that the average return rate within 12 months after Bitcoin's corrections of over 30% reaches 215%. During the market adjustment in August 2023, institutions like BlackRock took advantage of low prices to accelerate the preparation of spot ETF investments, ultimately driving the compliance process in early 2024.

3. Optimize Market Structure

The correction process reshapes the structure of market participants: it forces weak-risk-bearing retail investors to exit, increasing the proportion of institutions and long-term holders. On-chain data indicates that whenever the proportion of "diamond hands" holding Bitcoin for over a year exceeds 65%, the market often enters a more stable appreciation cycle. This metabolism ensures the sustainable development of the ecosystem.