The most important reason for such dramatic swings in human psychology, the psychology of the crowd. Imagine that not one investor, who works on a strictly defined strategy, and miliiony traders whose actions are subject to group psychology.
Each of these traders monitors the fluctuations in the market hoping to buy bitcoins cheaply and sell them more expensive. And so begins a significant increase in its value.
Some start buying cryptocurrencies, others just watching, tormented by their inner fears. Eventually there comes a time when all who wanted to buy BTC, did, and others are skeptical of the lance growth rates. This leads to a sharp decrease in the number of buyers.
On the contrary, the number of people willing to sell their bitcoin begins to grow, especially among those who bought it long ago at a price much lower than what it shows today. They want to secure their profits, to convert it to Fiat currency and start spending.
The number of traders willing to sell bitcoins is greater than the number of investors willing to buy it. At one point, the growth rate stops. It is the boundary condition where any careless action can lead to collapse.
If suddenly the price starts to fall, holders of tokens will begin to sell them to stay in profit. And each of them will try to do it ahead of the others, offering a bit less than the market price. All this leads to an avalanche-like decrease rate, which in professional language is called adjustment.
This is normal and the assurance of many analysts normal for the cryptocurrency market. If you follow the schedule bitcoon, you will notice, as periods of growth alternated with periods of rapid decline in its price. However, correction of only part of the overall trend of growth, so at the end, the value of BTC begins to grow again.
To fear correction is not necessary, it gives the opportunity to buy you are interested in cryptocurrency at the best price with the focus on the long term.