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What is Correction?

Although there is no clear definition of a correction, it is typically used to refer to a sharp decline of at least 10% in an asset’s price from a recent peak. Because it typically restores the price from an unusual increase to its long-term established trend, it is known as a correction.

Corrections typically lead to recoveries, but they can occasionally cause longer-lasting declines known as bear markets, during which prices can fall by 20% or more.


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