This reminder should be considered very timely. I hope everyone has managed to avoid a disaster.
Now, let's talk specifically about how to make judgments. In simple terms, there are three steps to follow.
- Look at the funds
Funds are the most fundamental logic. No matter how the market changes, funds represent real buying and selling. The amount of funds determines the height of the market.
Specifically, funds can be divided into on-market funds and off-market funds. In 2021, there was a continuous influx of off-market funds, creating a super bull market. However, now there are no off-market funds (buying altcoins), so there won't be a bull market for altcoins.
As for on-market funds, they also have a significant impact. The market initiated in October 2024 and lasted for a long time, with many surges. This was because before the market started, it had been declining, and most on-market participants were holding USDT.
This year is different; the market hasn't declined much, and many people are holding coins, so the on-market buying power is far less than last year.
- Look at the sentiment
After a few coins surge, it triggers market sentiment. The market's sentiment leads people to uncontrollably buy, which is why most people tend to buy at the top. This is not a rational decision but rather influenced by market sentiment.
After a few days of sustained market sentiment, everyone has been buying, and the purchasing power will be exhausted. This is especially easy to happen when the potential purchasing power is not large.
- Look for indicative phenomena
After considering the first two points, you will have a general understanding of the height of a market wave and the market situation. The indicative phenomena are specific decision-making time points.
This time, the indicative phenomena are Binance Life and Customer Service Xiao He. Binance Life saw a FOMO situation with full positions, pushing the market to 400 million USD. Later, Customer Service Xiao He only managed to push it to 100 million at most. Although later the top influencer made several calls, it still couldn't rise. This is already a very clear signal that market funds have run out.
Therefore, this adjustment has basically become a foregone conclusion. It just happened to encounter a major tax issue, resulting in a resonance of a significant drop.
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