The cryptocurrency market has collapsed, what should we do? How long will the current market turmoil last?
Recently, prices of financial assets such as U.S. stocks, crude oil futures, cryptocurrencies, and precious metals have all sharply declined, leaving investors in a low mood, and the market is facing various uncertainties.
Qualitative issues cause deep anxiety. Faced with such an unsettling market phenomenon, investors can't help but ask: How long will this chaos last?
In this article, we will analyze in detail the deep reasons behind the market crash, provide coping strategies, and look forward to future opportunities.
Background of the Global Market Crash
At the beginning of April, global financial markets suddenly suffered a severe blow, especially on April 7, when a series of unexpected events occurred. At midnight Beijing time, Bitcoin fell below the $30,000 mark, forcing many miners to shut down, which initially revealed the instability of the cryptocurrency market. In the following hours, strong inflation signals from Federal Reserve officials caused U.S. stock futures to plummet, leading to significant drops in the stock prices of several well-known tech companies, awakening investors from their dreams.
In this process, Saudi Arabia announced an increase in crude oil production by 2 million barrels per day, causing international oil prices to plummet by 7%, further exacerbating concerns about future oversupply. Meanwhile, gold prices also fell below the psychological barrier of $2,000, leading the traditionally safe-haven gold assets to face a crisis of trust. While people are still reeling from the collapse of confidence in cryptocurrencies, some mainstream investment institutions, such as A! Quantitative Fund, suffered huge losses due to 'long-short dual kills' operations. This series of intertwined events has formed a dark picture of sustained turmoil in the global market.
Ordinary people in the eye of the storm
The market crash has not stopped here, and the lives of ordinary investors have also been affected. We use real cases to intuitively show the panic and helplessness that ordinary people experience in this market storm.
For example, Xiao Lin, a white-collar worker in Beijing, bought gold ETFs to preserve and increase value, but now faces the predicament of depreciation. In a conversation with her mother, her mother even suggested whether she should sell her wedding gold bars. Considering the hard work and effort of the past years, she now finds herself unsure of how to cope with this sudden economic winter.
Another farmer from Texas, Old John, faces a similarly grim situation. Although diesel prices have been reduced, commodity futures continue to decline, making it difficult to sell agricultural products, leaving him anxious and lamenting when those who once claimed 'investing in agricultural products can hedge against inflation' lost their judgment.
Meanwhile, cryptocurrency investor Ahmed in Dubai has also become disheartened; his once luxurious party life has suddenly turned into the embarrassment of negative cash flow in his wallet, leaving him to wait in silence. Such examples are countless, with tens of thousands of investors globally feeling deep pain in this round of market crash.
Why even gold cannot escape the crash?
In the face of the current market's drastic fluctuations, it is necessary to explore why even traditional safe-haven asset gold has not been spared. Among these, we can summarize three main reasons to help us better understand the economic situation we are facing.
Firstly, the strong return of the dollar is undoubtedly a straw that broke the camel’s back for gold prices. In recent years, central banks worldwide have been selling U.S. bonds and buying gold to hedge against inflation, but as the Federal Reserve re-strengthens dollar policies, the pressure on gold prices is evident. A simple example is that, over the past few years, gold prices have fluctuated between $1,500 and $2,000, and any expectations of a strong dollar will impact gold price trends like raindrops on floating leaves.
Secondly, with technological advances, AI big data and algorithmic trading are playing an increasingly important role in commodity trading. When market volatility intensifies, AI systems can instantly adjust, such as reducing holdings in gold and other risk assets, leading to a breakdown of the market's trust base.
Finally, the diversification of safe-haven assets has driven the decline of gold. Recently, Switzerland introduced the digital franc, which has been favored by the wealthy, while stocks of space mining companies have also sparked huge interest. The new era's asset allocation concepts are influencing investors' perceptions of traditional gold.
Four, the Five-Level Defense Strategy for Investors
When facing the heavy pressure of the market, ordinary investors should remain rational rather than blindly follow trends. Here are five levels of defense strategies for investors to refer to, which can alleviate impacts or seize opportunities when the market improves:
Lv.1 Emergency Protection
During market turmoil, the first step is to assess your account leverage; low leverage can protect investors from liquidation. For cryptocurrency investors, it is recommended to adjust positions as soon as possible to ensure that they do not face significant losses.
Lv.2 Cash Management
During this period of high risk, financial security comes first. Diversify your savings across multiple banks to avoid the risk of a single bank. At the same time, understand whether your country may impose a 'super savings tax' and take corresponding measures to protect your interests.
Lv.3 Hedging Strategy
For investors who do not have the funds to buy gold, another strategy to consider is to short crude oil futures while going long on new energy stocks to achieve profit balance amid market fluctuations.
Lv.4 Emotional Self-Rescue
In continuous market declines, emotions can easily be suppressed, so maintaining a good mindset is crucial. Check financial apps only once a day, and spend the remaining time switching your mood with light and humorous videos or books.
Lv.5 Future Layout
Market fluctuations also mean the arrival of opportunities, especially when many quality assets are currently in a downturn. Pay attention to relevant information, invest at the right time, and gradually invest in phases; you may achieve good returns in the future.
Five, the dawn and opportunities of the future.
Although the market is always full of challenges, opportunities are also hidden around the corner. After this turmoil, we may see several counter-trend tracks:
First is 'doomsday insurance', such as a company that recently launched 'global crash insurance' quickly selling out, showing that investors want to provide insurance for future uncertainties.
Strong demand for barriers.
Secondly, the rise of the emotional economy, although the psychological counseling market has collapsed, emotional companionship robots have risen against the trend, reflecting the progress of the times and people's desire for psychological support.
Finally, the potential of space assets is gradually revealing itself, such as Bezos' open 'lunar warehouse' project, which brings unlimited possibilities for investors, even allowing payment in Bitcoin. This represents an expansion of innovative investment logic and categories, a new frontier that is hard for traditional investors to imagine.
In the face of such a turbulent market situation, investors must remain vigilant, timely adjust their response strategies, and calmly seek opportunities.
"After the collapse of Lehman Brothers in 2008, some went bankrupt while others seized the opportunity to buy the whole street. What future will you choose?" I hope this article can provide ideas and references for investors, helping you find your footing in this survival game.
How should we respond to the current cryptocurrency market?
Growth and evolution in the ups and downs of the market
In the recent market situation, Bitcoin plummeted over 20%, Ethereum also dropped nearly 30%, and many altcoins even saw a decline of around 70%. Whether you are an old investor who has been in the market for a long time or a newcomer, such significant fluctuations can catch anyone off guard. It can be said with certainty that this market reshuffle is not a unique experience for some but a shared pain experienced by the entire cryptocurrency world.
Everyone is bleeding, not just you.
When prices are plummeting, many people inevitably feel anxiety and helplessness. I myself have suffered considerable losses; despite having experienced bull cycles in the past, each significant downturn still tightens my heart. The market's decline brings not only a numerical shrinkage but also a heavy blow to faith and emotions. We have become accustomed to the market's rapid operation, with fervor during rises and panic during falls being commonplace, but this time's severe volatility has made everyone feel the weight and helplessness of losses. Regardless of how you adjust your positions, the pain felt in this wave is shared.
First, please stop and take care of yourself
Market volatility can catch people off guard, and many rush to act out of panic, trying to quickly recover losses. At this time, the most crucial thing is not how to quickly regain losses but to first learn to stop, adjust your emotions. Please turn off those constantly refreshing candlestick charts, temporarily leave social media, and do not let the outside noise and negative news further disturb your state of mind. Give yourself a period of quiet recovery, enjoy a hot meal, get enough sleep, or take a leisurely walk, allowing your body and mind to rest and reset. Only when you have regained calm can you have clear judgment and face the market again.
Power off and restart, starting from the body and mindset
Sometimes, the simplest adjustments can bring the biggest changes. Pausing the information flow that makes you anxious and focusing on basic daily routines is an important first step in overcoming emotional lows. Try to spend a whole day away from computer and phone screens, giving yourself an 'offline' opportunity. When you put down your phone, close your eyes, and quietly feel the rhythm of your breath, that sense of peace will gradually help you regain your inner strength. As we often say, it is only by first repairing your body and mindset that you can then fix the numbers in your account; this is the right way to emerge from the trough.
Calmly review and rationally face losses
Once emotions begin to stabilize, take out pen and paper to seriously reflect on and review this trading experience. This step is not to let you indulge in self-blame and regret, but to identify the root causes of losses. During this process, you can ask yourself: Did I over-leverage my position? Did I ignore stop-loss settings? Did I blindly follow the trend to chase gains? Or did I trust some unverified information? Write down these thoughts, record each lesson and reflection; this is not only a way of self-growth but can also help you avoid repeating the same mistakes in future markets. Losses are painful, but only by learning from them can you gain an advantage when the next market turning point arrives.
Rebuild from the basics, step by step.
Right now, the most urgent thing is not to rush to find new profit opportunities but to let yourself enter a stable and orderly state of life. Readjust your schedule, ensure sufficient sleep and healthy eating, and maintain moderate exercise; these seemingly ordinary habits will lay a solid foundation for rebuilding your inner self and trading system. When you can restore daily regularity, inner restlessness and panic will gradually subside. Rebuilding oneself is not just about re-entering the market; it starts with the most basic aspects of life, making you stronger and more composed.
Reorganize and focus on what can be controlled
Although you cannot control the market's movements, you can completely control your learning and thinking. Try to deeply review each past trade, carefully study the reasons behind those successes or failures. At the same time, pay attention to on-chain data tools such as Nansen and DeBank for first-hand information and data support. Additionally, you can follow the movements of large holders or 'whale addresses' to understand their investment strategies and operational logic. Through continuous learning and accumulation, you will gradually find that the power of rationality and data is far more decisive for your investment outcomes than temporary emotions. True winners are not just those who can seize opportunities in volatility but those who continuously enhance their cognitive level in calmness.
Remember: Don't rush to win back.
Stimulated by losses, many people become eager to recover, hoping to quickly regain lost funds. However, this often leads to self-destructive paths. Being too eager to recover can easily trap you in a vicious cycle of high leverage and frequent trading, ultimately possibly clearing your account entirely. At this time, what you need most is calmness and patience, rather than an aimless following of trends. Wait for the market to restore rationality and for the signals to become clear, then decisively act to effectively avoid the risks of impulsive trading. Truly smart investors understand that during volatile periods, stabilizing emotions first and waiting for that crucial best timing to act is essential.
Growing through pain, cognition makes you stronger.
After experiencing this market baptism, you will find that pain ultimately transforms into valuable wealth. The market's low points help you see your own flaws and shortcomings, and make you more aware of the importance of steady progress. Perhaps you are moving slowly at this moment, but every decision you make in the future will become calmer and more rational. You will learn how to grasp long-term opportunities and no longer chase after every trade for profit. It is you who will grow stronger and more insightful through such dilemmas, gradually regaining your value and belief.
If you are still persevering, you are already ahead.
When you finish reading these words, it indicates that you still choose to walk alongside the market instead of completely leaving due to a temporary setback. Compared to the 90% who choose to give up, you already possess more courage and perseverance. Losses do not define your identity but are part of the process of how you face them and learn from them. It is these experiences that will ultimately make you a mature, rational, and more capable investor in dealing with market fluctuations.
Slow down, adjust yourself, and the future will hold infinite possibilities.
Markets will rise and fall, and you will also grow with each fluctuation. Remember, a stable mindset and continuously improving cognition are the keys to your long-term success. Keep your eyes on the long term; after you complete your self-adjustment and cognitive upgrade, the next opportunity will quietly present itself. By then, you will stand at the highest point in the market with a more composed and determined posture, welcoming a clearer future.
The above is what the script editor shared with you: the cryptocurrency market has collapsed, what should we do? A detailed introduction to how long the current turmoil will last, I hope you like it!
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