The 4 crypto market conditions characterized by falling prices When the price of cryptocurrencies is falling, you can be sure that the market is experiencing one of these conditions: 1. correction 2. dip 3. dump 4. bear market Let me explain what each of these is so that the next time prices drop, you know exactly what it is and what to expect next. - Market Correction A market correction is when the price of a coin rises sharply, usually creating a new ATH (all-time high), and followed by a relatively smaller decrease as some older investors begin taking profit (or DCA out). Corrections are usually in the range of 5% 15% drop, and the price of the coin would begin to go back up shortly after the quick drop. They are primarily (but not solely) caused by traders and short-term investors riding the upward trend, and taking profit along the way. - Market dip A dip is a correction with no hope of an immediate comeback and is caused by a sizeable number of short to medium-term investors taking profits. When these investors take profit, they invest the money into other coins or wait to see how the market settles and try to buy back in at the bottom. This is called buying the dip. And it can take an unpredictable amount of time for the price to go back up. But eventually, it will. - Dump A dump is simply a dip that never recovers. The projects either die completely after the price drop or at best if it survives, never reaches their all-time high again. Examples are SQUID, ZZZ, most dead shitcoins and projects that you know, etc. These are usually caused by exit scams perpetrated by project teams, rug pulls, hacks, etc. However, some projects can recover from a dump, like FARM, DOGE, SHIB, etc. But these are rare cases, and most times, they never reach their ATH ever again. - Bear market In a bear market, the price of cryptocurrencies will slowly and gradually go down for an extended period of time, which could even last for years. Though in between this gradual price decrease, there would be times prices will rise, only to fall back again and continue the downward trend. A lot of projects will die during this period and when it's all over, a major bull run will follow when the price of cryptocurrencies will begin to rise very fast.
Log in to join in Reading is open to everyone. Replying needs an account.
1 comment
Thank you so much for such a great explanation @Cryptosorted.