When purchasing an asset for $200 and the price drops by 50%, the price is only $100. To recover to the original level of $1l200, the asset needs to increase by 100% from the new price – that is, it must double. This illustrates a harsh reality of mathematics: a percentage price drop cannot be remedied by the same percentage increase, but requires superior growth.
For cryptocurrency, the numbers are even more alarming. A coin that drops from $200 to $40 (a decrease of up to 80%) will need to increase by 400% to return to its original price. As a result, many investors find themselves in a 'loss trap' as the recovery path becomes nearly impossible.
The basic calculations explain why up to 95% of investors in the crypto market are experiencing losses. Most of them bought in during the hype explosion before the market collapsed, and now only a 'parabolic explosion' can save the situation. Even those who bought in recent corrections can only hope for unusual recovery conditions.
Even with a major global event, such as the return of a reputable political figure, investor confidence is only temporarily boosted. The cryptocurrency market has nearly collapsed even under favorable conditions. If the global economic situation worsens – with forecasts of recession and severe liquidity decline – the crypto market may face one of its toughest challenges. The reality shows that, despite a few small signs of recovery, most altcoins have not regained more than 15% of their lost value.
Another concerning trend is the group price movement. Many crypto markets have seen coins drop sharply at the same time, with hundreds of coins falling in the same chart pattern. This suggests a high level of market manipulation, as institutional investors – who are expected to bring transparency and stability – instead play a role in creating market volatility at will. The space that was once considered decentralized now seems to be controlled by a few 'big players' who can manipulate prices.
Coping Strategies for Investors
With the market context becoming extremely precarious, the optimal strategy for investors is to be cautious and flexible. Some useful advice includes:
Take profits early: Even if you only achieve a small profit, consider selling to preserve your capital.
Avoid long-term 'holding': Do not expect a miraculous recovery in the distant future, as the market may continue to be highly volatile.
Thorough fundamental research: Investment should be based on solid fundamentals rather than just following trends or crowd psychology.
Conclusion
The cryptocurrency market is currently witnessing strong volatility and undeniable manipulation. From the unbelievable numbers of percentage increases and decreases to the complex interactions between global economic factors, it is no surprise that up to 95% of investors are facing losses. In this context, adopting a cautious strategy, taking profits early, and investing based on solid foundations becomes extremely necessary.
While the market may still present opportunities for those who buy at the right time, the majority of risks and instability make the recovery journey extremely difficult and unpredictable.
