Crypto Terms: Letter C

What is Correction?

Correction MEANING:
Correction - an event in the financial market when an asset’s value suddenly decreases by at least 10% to adjust for over-valuation
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Let's find out Correction meaning, definition in crypto, what is Correction, and all other detailed facts.

Correction can be described as a market activity when the price of an asset suddenly decreases by at least 10% after a recent peak. The price typically returns from over-valuation to the long-term established trend, thus “correcting” itself.

Correction events are typically followed by recoveries. However, corrections can sometimes lead to longer declination periods such as bear markets when the prices drop by at least 20%. Bear markets are statistically infrequent.

According to the financial services company Charles Schwab, between November 1974 and February 2020, the S&P 500 stock market index oversaw 24 corrections, of which five were followed by bear markets.

Compared to the traditional markets, the cryptocurrency market experiences more frequent price corrections by 5-10%. This is caused by the overall volatile nature of cryptocurrencies. However, crypto market recoveries tend to quickly follow. Since the creation of the cryptocurrency market in 2009, the overall market sentiment has been predominantly bullish.

Although Bitcoin (BTC) has overseen intense market corrections, with the value dropping by as much as 50% in a day, its overall value has grown significantly, from $0.003 per Bitcoin in 2010 to $69,000 at its all-time peak in November 2021.