Correction in the cryptocurrency market, what threatens such a situation
Not long ago, Bitcoin stormed to new highs above the 100 thousand US dollar mark, and today it has dropped below 95 thousand.
Many of those who bought Bitcoin on the cryptocurrency market at the maximum price are starting to panic, because the price has dropped from the maximum by more than 10%.
Moreover, a similar situation is observed for most of the altcoins, which showed record growth.
But, if you look at the history of price movements for cryptocurrencies, you will immediately notice that nothing terrible happened, just another correction is taking place in the cryptocurrency market.
A correction in the cryptocurrency market is a temporary decrease in the price of an asset after a long rise, caused by traders taking profits or market revaluation. Typically, a correction (price rollback) ranges from 10% to 30% of the previous rise and is considered normal for price stabilization.
If we talk about the biggest corrections in the cryptocurrency market using the example of Bitcoin, we can note the following events:
March 2020: Decline: Bitcoin correction from $9,000 to $4,000, losing more than 50% of its value.
Reasons: Global panic caused by the COVID-19 pandemic, which led to a massive sell-off of assets as investors sought to move into cash.
May–July 2021: Decline: Bitcoin price retreated from around $64,000 to $30,000, a decline of about 53%.
Reasons: Increased regulation of cryptocurrencies in China, including a ban on mining and restrictions on trading activities. Statement by Elon Musk to stop accepting Bitcoin as payment for Tesla cars.
November 2021 – January 2022 : Decline: Bitcoin fell from an all-time high of about $69,000 to $35,000, losing about 49%.
Reasons: Expectations of tightening monetary policy by the US Federal Reserve, worsening geopolitical tensions and uncertainty in world markets.
May-June 2022: Decline: The price of Bitcoin decreased from around $40,000 to $20,000, which is 50%.
Reasons: The collapse of the algorithmic stablecoin TerraUSD (UST) and the associated LUNA token, which undermined confidence in the cryptocurrency market. A general decline in financial markets due to fears of recession and inflationary pressures.
As you can see, corrections in the cryptocurrency market occur quite regularly and can last from several months to a year, but despite this, in the long term, an upward trend still persists.
Therefore, if you made a purchase at the very peak of the price, you should not immediately panic and sell the purchased coins, especially if the price has already dropped by 10-20%. In this situation, it is better to set yourself up for a long wait and still wait for the price to go up again.
If waiting a long time is not your option, and you want to make money on short-term transactions, then use a professional trading platform and cryptocurrency brokers .
In this case, you will be able to make money even on the correction of cryptocurrencies by opening transactions, both for purchase and for sale, using leverage or without it.