HH How To Circumvent A Crypto Market Correction

Cryptocurrency markets are characterized by comparably higher volatility than stock markets. As such, a very robust bullish market may suddenly swing to rapid decline. A bearish market may also suddenly get an upswing in prices.

Due to the comparatively higher volatility, crypto market corrections may catch many traders completely unawares. An investor may suddenly find himself in a position where a previous cash cow loses money rapidly in hours, prompting a divestment. Consequently, the price may swing back up from its correction after a short while, a lost revenue opportunity. One needs to be equipped with means of how to survive a crypto market correction.

What’s a Crypto Market Correction?

A market correction can be defined as a rapid crypto price decrease in cryptos, normally ranging between 5-10% from a recently set peak. However, the decline could exceed 10%, with 20% being more or less the upper limit. The decrease is caused primarily by an overextended price surge on its overall long-term price momentum.

A correction is normally expected to be temporary, not affecting the general price momentum of the crypto asset. It’s usually immediately followed by a price recovery that potentially goes beyond the set peak. 

There are, however, instances where price corrections signal a swing to bear markets. This occurs if the price decline drops by at least 20% or more, making a potential recovery during the trade period less likely.

How to Circumvent a Correction

Thanks to the high crypto price volatility, corrections are all too common. The best strategy an investor could do is plan on how to overcome the potential price declines. Below are several ingenious ways;

Always Staying Up-to-Date with Market Information

No market analysts can predict the market’s future with utmost certainty, but they fall pretty close. They have the tools and knowledge to understand crypto price movements much better than the average trader. Keeping tabs with several of them could equip one with a pre-warning of potential corrections.

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