Mean reversion is a concept where the price of an asset tends to return to its average over time. In the context of trading, this means that if a cryptocurrency’s price moves significantly away from its historical average, it is likely to eventually move back toward that average.Traders often use this idea to inform their strategies. For instance, if the price of a coin rises sharply, it may be considered overbought, leading traders to anticipate a pullback. Conversely, if the price drops significantly, it might be seen as undervalued, suggesting a potential upward correction.Mean reversion strategies often involve analyzing price charts, identifying moving averages, and observing volatility. While this approach can be effective, it is essential to be cautious, as markets can experience prolonged trends that deviate from the average, influenced by various factors like news, market sentiment, or regulatory changes. Understanding mean reversion helps traders make informed decisions, but it’s important to combine this strategy with risk management practices.