Definition ∞ A flash correction is a sudden, rapid, and significant price drop in a financial asset or market. In cryptocurrency markets, these events are often characterized by a quick and substantial decrease in asset value, typically followed by a partial recovery. They can be triggered by large sell orders, liquidations of leveraged positions, or sudden shifts in market sentiment. Such corrections highlight the inherent volatility and liquidity dynamics present in digital asset trading environments.
Context ∞ Flash corrections are a recurring phenomenon in the highly volatile digital asset markets, often causing concern among investors. A key discussion point centers on the role of automated trading bots and large institutional orders in precipitating these rapid price movements. Observing market structure improvements and enhanced liquidity provision will be important for mitigating the severity and frequency of future flash corrections.
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