Last night’s market correction left many retail investors who have just entered the cryptocurrency market feeling anxious and scared. However, for experienced investors who have gone through multiple bull and bear cycles, such price volatility is nothing new. Let’s take a look at what market analysts and veteran players have to say about yesterday’s turbulence.
Spartan Group co-founder and managing partner Kelvin Koh summarized six points regarding last night’s plunge:
1. Such adjustments are not uncommon in the cryptocurrency market. With the market’s rise, there will be several more adjustments like this throughout the year.
2. The market will quickly rebound. Idle capital will be put to use. Fundamentals have not changed. (At the time of writing, there has already been a rebound.)
3. This sell-off will clear the accumulated leverage and positions from the past few weeks, laying the foundation for the market’s next rebound.
4. Your investment portfolio should be able to withstand this major drop. If you panic and exit, you should reflect on your inadequate risk management. Even in a bull market, the market will continuously eliminate the weak in this manner.
5. If you have been on the sidelines up until now, this is a good opportunity to enter. BTC will not drop to $42,000.
6. If there are tokens you want to buy but your position is not large enough, or if you missed the buying opportunity, this is a good chance to adjust your position size.
QCP Capital posted on its Telegram channel that last night saw a significant drop in long leverages, with nominal liquidation amounts on Binance alone exceeding $1 billion. However, buying pressure quickly intervened during the drop, and the $60,000 price level proved to be a good support level.
Furthermore, during the drop, it reflected traders’ strong interest in purchasing BTC and ETH call options from September to December. At the same time, as the narrative of an ETH spot ETF starts to play out, ETH’s performance may outperform BTC.
Mechanism Capital partner Andrew Kang wrote on X platform that adjustments to all-time highs (ATH) have a reflexive factor. People sell because they see that ATH is always rejected, and when this actually happens, more people follow to sell. Short-term intense liquidity (traders with over $1 billion in short-term trades) will outweigh passive liquidity (ETF purchases of over $500 million). But ultimately, passive liquidity will still prevail.
Nevertheless, it is still attractive to retain some cash to bid during a drop of over 40% in altcoins. After a few more liquidations, the market will be up only.
CEHV partner Adam Cochran shared his past trading strategies in light of last night’s volatility, providing them as references for investors using leverage strategies.
“Looking back when I was more enthusiastic about using leverage on Binance and FTX, I would convert 25% of my funds into cash on days with a price increase exceeding 10%, in order to increase my leverage when we experienced over 4% green candles (assuming I didn’t think it had peaked yet). My rule of thumb is that I only allow myself to increase leverage on consecutive green days, and then I must cash out more than 50% of the net profit, keeping 50% in cash and 50% in spot.”
Well-known Mandarin-speaking cryptocurrency influencer Woody also posted last night, reminding investors not to overreact to sudden drops during a bull market:
“In a bull market, there will be many sudden drops. Spend less time watching the market. Holding on is more important than trying to time the market. Reduce the noise and enjoy life outside, as it’s better than watching the market at home. Most people cannot make short-term profits, but they can earn from the bull market’s dividends. Opportunities to see the truth are rare.”
