Many long-term investors find this bull market 'Tough' compared to previous cycles. The reason lies not only in the strong growth rate of the market but also in the structural changes among participants and how they trade.
1. The Explosion of High-Leverage Trading
In previous years, most capital flowed into spot trading – buying and holding assets. However, currently, the number of participants using futures and high leverage has surged. With this tool, a small amount of capital can amplify profits many times over – but at the same time, also amplify the risk of losses.
2. The FOMO Mentality in Uptrends
When the overall market rises sharply, especially with calls for 'altseason' – the explosive growth season of altcoins – many traders do not want to miss out on the opportunity. They open long positions with high leverage, hoping to catch a breakout to quickly multiply their accounts.
3. Consequences: Shocking Corrections
It is this massive leverage that makes the market fragile. When prices experience a slight correction, long positions are liquidated en masse, leading to a chain reaction – prices drop further, creating severe crashes that everyone perceives as 'sudden' and 'brutal'.
4. Lessons for Investors
Risk management: Don’t let high leverage turn potential profits into catastrophic losses.
Understanding market cycles: A bull market does not mean a straight-up rise; corrections are normal.
Long-term thinking: Smart investing based on value and sustainable macro trends rather than chasing short-term waves.
A bull market offers many opportunities but also hides dangerous traps. Understanding the motives behind the violent fluctuations will help you survive – and win – in this harsh game.