The season for altcoins is drawing near, and many keen investors are starting to redeploy funds, gradually shifting from Bitcoin and mainstream coins to potential altcoins. However, during this transition period, a harvesting operation targeting long contracts may be quietly brewing.
Why 'cut long positions first' before the altcoin season?
The cryptocurrency market has never lacked high volatility and high leverage, but a wave of liquidations targeting 'overly optimistic' long positions before the explosion of altcoins is actually the script most commonly used by market makers.
1. High leverage, weak liquidity.
During the consolidation or slight rise of Bitcoin, market sentiment begins to turn optimistic, and funds start to flow into altcoins, leading to a rapid accumulation of long contracts. But at this time, the market depth is insufficient, and a slight disturbance can trigger a chain liquidation.
2. Overheated sentiment for long positions is the best time for harvesting.
Investors opening long contracts generally expect 'altcoins to take off', but before the real market starts, the market makers will choose to first dump to clean up, allowing restless funds to exit, and then pull up the real main rising segment. This not only saves costs but also avoids attracting market attention too early.
3. History always repeats itself: There must be a drop before Altcoin Season.
Whether in 2017, 2021, or earlier cycles, before the explosive growth of altcoins, there is always a wave of severe pullback aimed at cleaning up overheated leverage. These declines often come suddenly and violently, catching novices off guard.
How to recognize that the knife is about to fall?
Contract open interest hits a new high, but spot prices have not kept up.
When you see a surge in long contracts while the prices of spot altcoins do not rise in sync, it’s a dangerous signal.
Extreme bullish funding rate.
The rising positive funding rate indicates that the sentiment for long positions is too strong, which is the position that market makers like to harvest in the opposite direction.
Market makers begin to release slight bearish signals, and the market reacts excessively.
A bit of policy wind or a slight technical pullback can often trigger the collapse of leveraged positions. At such times, retail investors don’t even have a chance to run.
Response strategy: Don’t be the last batch of bulls.
If you are already positioning in altcoins now:
Maintain light positions and reduce leverage.
Set stop-losses, don’t gamble on direction, don’t get attached to battles.
Focus on the main trend of Bitcoin; before mainstream coins stabilize, altcoins are just bait.
The altcoin bull market presents opportunities but is also a maze of stacked traps. True players do not rush in at market highs but avoid the knife's edge and wait to ride the waves when the wind rises.