Correction is a natural process that brings the established value of a coin closer to its more realistic price. 

Correction — a change in the token's rate in the direction opposite to the trend.

It occurs as a result of a sharp increase or decrease in the rate, after which the coin begins to adjust and takes an average position, where it stabilizes before returning to the trend. A rate adjustment of more than 20% can lead to a bear market.

Causes of the Phenomenon

The main causes of correction are:

• Overbought conditions. This occurs with a sharp increase in token prices (the correction tends to move downward).
• Oversold conditions. This occurs with a sharp decrease in token prices (the correction tends to move upward).
• Lack of demand for a specific token. To increase demand, the coin adjusts to a more optimal rate for traders. Due to market oversaturation, which has been noted recently, this reason occurs less frequently than the previous ones.

The root cause of price changes can be any external factors unrelated directly to cryptocurrency: political events, natural disasters, epidemics, etc.

Pros and Cons of Correction

Correction is a natural process that brings the established value of a coin closer to its more realistic price. Its main advantages include:

• Reducing market overvaluation;
• Providing an opportunity to buy coins under more favorable conditions.