Definition ∞ A crypto correction signifies a short-to-medium term price decrease in the digital asset market, typically following an upward trend. This market adjustment involves a price reduction, often between 10% and 20% from a recent high, serving to realign valuations. It is generally viewed as a normal, healthy component of market cycles, distinguishing it from a prolonged downturn or bear market. Such events frequently result from profit realization, minor adverse announcements, or macroeconomic adjustments affecting investor sentiment.
Context ∞ The occurrence of a crypto correction is a recurring subject in financial news and market commentary, especially after sustained periods of rapid asset appreciation. Interpreting these price movements helps market participants distinguish transient volatility from more significant systemic shifts. Analysts and investors closely monitor these corrections, using them as data points for strategic positioning and risk management within the dynamic digital asset landscape.
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