What is market correction? How we started to misused the word!
Price correction doesn’t mean that price will go down. But we see in crypto world people commonly mention correction when price going down. Which is a wrong practice!
We know there are multiple exchanges, brokers and financial institutions. Trade happens everywhere. Now one coin may get 5% up in one exchange and 5% down in another exchange for a short period of time.
It’s due to liquidity difference between two platform.
Lemme give more real life example. Imagine you want to buy chocolate. You went to a market where people selling purest dark chocolate for 1$ a gram. On another market people selling chocolate for 0.8$. Now a news reporter went to the first market and found chocolate is trading at 1$. So he wrote a Facebook post that today chocolate price went 1$ a gram which is ATH. Another reporter commented there that he saw it’s trading 0.8$ a gram. Now the first reporter will correct the price and tell chocolate price is 0.9$ (after averaging).
I know the example is not realistic, but as long as you understand the concept, it’s fine.
If you check when STRK, the potential scam coin, launched on Binance, it went to near 7.9$, at the same time it was trading on Dex for 2.4$ and within a second it went to 5$ and then 4$ and then 3$ and then 2.4$. Then kept going down.
Now when usually price correction happens? Ans. it keeps happening between platforms in every seconds, days and weeks. But we see much impact during week.
Let’s give another example, let’s say my company bought 500 BTC from a miner at a average price of 65k. The deal took 7 days to happen. When the deal got realised the market price is already 70k. Once we announced the deal, the correction start to happen and the price fall dramatically within a day.
So market correction is not necessary means a coin losing its value. But due to common aggressive behaviour of market, the price gets higher than the actual valuation, it’s hard to find a example, where the price increased after the correction.
$BTC
