Reasons For The Crypto Correction

crypto correction
  • Cryptocurrencies are the most volatile asset class in the world, making price corrections a fairly common occurrence.
  • A price correction may be defined as a sharp fall in an asset’s price by about 10%.
  • Corrections usually occur after a bullish surge in prices.
  • Bitcoin’s latest correction sees the price fall by over 10% to trade at $47,911.00, while Ethereum’s price correction sees it trade at $1,534.40.

Price correction in cryptocurrencies is a fairly common occurrence as a result of its high levels of volatility. If you’re a new trader, you should be prepared to have probably the wildest roller coaster ride of your life.

A price correction may be seen as a steep fall in the price of an asset of about 10%, and lately, the entire cryptocurrency industry has seen a price correction. Bitcoin’s value slumped by over 10% to trade at 47,911.00, while Ethereum dropped by 16.51% in the last seven days trading at $1,534.

What is A Price Correction?

Before we delve into the myriad reasons for a price correction, it is ideal to understand the concept. A price correction occurs when an asset’s price falls by more than 10% but less than 20% from its most recent high.

Etymologically, this phenomenon has christened a correction because the drop “corrects” and prices return to their long-term trends. An example is the epic Bitcoin bull run of 2017, which saw Bitcoin leap from a mere $900 to a whopping $20,000 before experiencing a price correction.

It is not always easy to ascertain whether a correction will always lead to a further drop in prices. Still, statistically, price corrections signal a recovery in prices and set the stage for another price rally.

On the Flipside

  • Despite the crypto price correction, Cardano gains 29.68% to trade at $1.27
  • This comes after the CEO of Tesla, Elon Musk, was linked with the crypto asset.
  • Binance coin continues its impressive run by gaining 20.55% in the last seven days.

Reasons For Price Corrections

The reasons for the price correction of crypto-currencies are not far-fetched. The purpose is to interrupt an uptrend in asset prices. It usually occurs after a price rally triggered chiefly by investors’ panic selling to rake in profits.

Price corrections are simply a natural cycle in the history of big asset classes. The imminent threat of tight regulations on Initial Coin Offerings (ICO) is also touted to cause a price correction.

Without a price correction, the market may balloon out of control, and it is through a price correction that things are kept in check.

The latest price correction sees Bitcoin and other atcoins slump by over 10% within the last seven days. Worthy of note is Bitcoin, which lost over 10% of its value to trade at 47,911.50, while Ethereum trades at $1,534.40, having lost over 16%. Other coins such as Litecoin, Chainlink, and TRON lost 16.26%, 12.83%, and 11.29%, respectively.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

Author

Deno Trajcevski is a cryptocurrency and blockchain content creator who specializes in the field of GameFi and covers a wide range of topics on the subject. From Play-to-Earn (P2E) mechanics to the latest news, announcements, and exploits within this crypto sphere, Deno reviews and analyzes the movement and developments in gaming daily. If a project implements GameFi in its lineup, he is there to review the project.