📊 What is a correction in the cryptocurrency market?
A correction is a natural short-term price decline of an asset after a period of rapid growth. In the crypto market, drops of 10-20% are considered a correction, however, due to high volatility, declines can reach 30%, while still remaining part of a healthy market movement.
✅ Key features of a correction in crypto:
Occurs against the backdrop of an overheated market.
Is part of the market cycle.
Often provides an opportunity to 'buy cheaper'.
🚨 Why do corrections happen?
Reason Brief description
Profit-taking Investors sell after a rise.
Psychological Effect Panic or unwarranted optimism can sharply shift prices.
News Regulations, bans, hacking attacks.
Technical Analysis Working through resistance/support levels.
Whale Manipulations Sharp price movements by large players.
Liquidity Outflow Funds can move from crypto to stablecoins or fiat.
📉 Difference between a correction and a bear market
Criterion Correction Bear market
Drop -10% to -30% -30% and more
Duration Days or weeks Months and years
Sentiment Expecting recovery Market depression
Causes Technical pullback Global negative factors
🛡️ How should an investor behave during a correction
✅ What to do:
Analyze news and reasons for the drop.
Buying in parts (DCA) — lowering the average purchase price.
Reallocate part of the capital into stablecoins if a strong pullback is visible.
Monitor areas of interest (support levels, liquidation zones).
Reevaluate the portfolio, get rid of weak projects.
❌ What to avoid:
Panic sell-offs.
Trading with leverage during a downturn (can lead to liquidation).
Entering 'pump' altcoins without analysis.
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🛎️ What to watch for when assessing a correction?
Tool What it shows
RSI Shows overbought/oversold market conditions. RSI below 30 indicates a potential bounce.
MACD Trend intersections show trend reversals.
Order Book Exchanges show where large orders are placed.
Volumes Sharp drop on high volumes = profit-taking or panic.
News Always keep an eye on market events: network updates, ETFs, laws.
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🚀 What assets to buy during a correction?
Bitcoin (BTC) — the most stable asset that often recovers first.
Ethereum (ETH) — the leader of altcoins with an active ecosystem.
Binance Coin (BNB), Solana (SOL), Toncoin (TON) — major altcoins with fundamentals.
Infrastructure tokens — Cosmos (ATOM), Polkadot (DOT), Chainlink (LINK).
NFTs and GameFi — high-risk, but sometimes yield X after strong pullbacks.
💡 Professional advice:
A correction is an opportunity for patient investors to earn, but a trap for those trying to 'guess the bottom'. The right strategy is to plan ahead: decide at what levels you will buy or sell before the movement begins.
