The definition of a correction, and why we should stop using the word

[Nightwatchman]

Recently I've been seeing the word "correction" a lot on the forum. It's being used as an explanation for BTC's recent drop in price.

Let me explain to you what a correction is, and why we are wrong to call the current activity in BTC trading a "correction".

A correction often follows a steep rise in price. BTC enjoyed this during December, and it's why many people now think it is "correcting".

But a correction actually signals a return to a price that better reflects an asset's fundamentals, such as cash flow, book value, earnings, etc.

NASDAQ defines a correction as, "A relatively short-term drop in stock market prices, generally viewed as bringing overpriced stocks back to a level closer to companies' actual values."

Given nobody knows how to value BTC, we cannot now say the price has "corrected" to its rightful level. After all, no-one knows what that is, right? Simply, BTC cannot be valued according to any existing, established valuation formula.

A better explanation for what has happened is that profit takers have moved in, re-balancing the supply/demand equation.

I think we are witnessing BTC maturing into a more traditional type of asset class, with a broader base of investors, and with that is a reducing ratio of us "true believers" who have bought into BTC for technical and philosophical reasons, and who are longterm holders and users. Meanwhile, newer investors lack both our patience and genuine curiousity/insight into the transformative ability of BTC.

By the way, nothing that has occurred in the past 3 months has altered my view that BTC is one of the most incredible things to have happened in my lifetime.

I remain a true believer in this wonderful invention and will probably never sell out of it.

[949miner]

Stop over thinking everything, a lot of people are using correction when there is a downside after a huge pump.
 What is the problem with this? It is like those people who say HODL instead of hold.

Recently I've been seeing the word "correction" a lot on the forum. It's being used as an explanation for BTC's recent drop in price.

Anyway, NASDAQ has different terms for everything, and you can not compare cryptocurrencies with the nasdaq, since most of the instruments in there are stocks.

but yes, in terms, corrections, with downsides are almost the same.

[squatz1]

I mean yeah, you could go anywhere and get a different definition for any sort of thing, but if you are to go to a reputable site such as investopedia - https://www.investopedia.com/terms/c/correction.asp - this site is something which shows that a correction is a temporary price shift which is going to come back at a certain point.

So yes it may not come back instantly, though it will come back at some point -- this is why people deem the correction word the best word for this.