In the crypto world, every liquidation is a **'cognitive collapse'**.
It's not that you weren't watching the market or that you weren't trying hard, but you fell into the five traps set by the dog fund.
Today's article only discusses the five signs before liquidation; understanding them may help you preserve the next 50% of your capital.
01 | Strange volume amplification: 'The dealer is ambushing'
When the price remains stagnant but trading volume suddenly surges - this is not retail investors working together, but large funds testing the waters.
Real case: In March 2024, Bitcoin stayed around 65,000 for three days, trading volume surged, and within 48 hours plunged to 58,800, resulting in 200,000 liquidations.
Countermeasure: When there is a divergence in volume and price, hold light and observe. Give up what you don't understand, and don't participate in what you can't comprehend.
02 | K-line continues to be sideways: It's not accumulation, it's murder.
If the price is sideways for more than 48 hours, with price spikes up and down, but no direction chosen, it’s often the prelude to a death shake.
Why? Sideways movement is meant to wash out stop losses and lure in the greedy; once the direction emerges, it will be lethal.
Practical tip: If the Bollinger Bands continue to narrow and the MACD energy bars shrink drastically, that's a time bomb.
03 | Crypto market good news flood: Bulls shout, liquidation is imminent
When the community is flooded with 'good news': influential figures shout for a rise, the platform officially announces, and on-chain data explodes, you need to be careful.
Historical data: Within 48 hours after good news is announced, the average decline is higher than the rise.
Dog fund logic: Good news is not meant for you to make money, it's to make you rush in and get liquidated.
04 | Unrealized profits doubled, but still not taking profits.
Have you experienced: 'The account profits doubled, thinking of holding for a few more days', and then the account went to zero?
Core issue: The more profit you make, the greedier human nature becomes. You haven't been liquidated because you haven't held for too long.
Risk control advice: If profits exceed 40%, take profit in batches to protect profits, rather than fantasizing about tripling.
05 | Fully leveraged just because 'it felt right'
When you start to 'believe in yourself', 'believe that this time it will definitely surge' - you are already not far from liquidation.
Real-life tragedy: Before the LUNA crash, a user used 500,000 to fully leverage a 20x long position, and three hours later, the account was wiped out.
Lifeline reminder: Never exceed 3x leverage, and always keep 30% of your capital off the market.
How to escape the next liquidation?
Don't believe in 'miraculous reversals'; please believe in probabilistic logic.
Predicting the moment of loss of control: Once more than two of the following conditions are met, it’s time to cut positions or liquidate and observe:
Failed breakout + increased volume decline
A concentrated explosion of 'good news' in the crypto market
Bullish sentiment is overheating, with a rise exceeding 30%/week.
MACD death cross + declining volume
Develop anti-human nature discipline:
Stop loss line: If there's a 5% unrealized loss, you must reduce or cut positions.
Profit line: Halve your position after doubling, do not let profits retreat.
Position increase logic: Add 10% after a 20% drop, not fully add on a crash.
Conclusion:
Liquidation is not an issue of the market but a lack of understanding + too weak human nature.
There are no 'must-win' opportunities in the crypto world, only 'survival' strategies.
If you are still on the edge of liquidation, please read this article three times.
Because understanding it once may help you hold onto the opportunity of a bull market.
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