In the world of cryptocurrencies, investors face multiple challenges beyond just price volatility. One of the most prominent of these challenges is altcoin seasons and how they are exploited by major players in the market.
What is altcoin season?
Altcoin season is a period where the growth of altcoins is concentrated significantly, at the expense of major currencies like Bitcoin. During this period, many small investors are tempted by quick profits in these new currencies.
Market manipulation:
Major financial firms and large investment funds often exploit these periods to manipulate the market:
1. Artificially raising prices: They buy large quantities of altcoins to drive prices up quickly, creating a frenzy among small investors.
2. Driving out Bitcoin holders: When the focus shifts to altcoins, some small investors sell their Bitcoin for quick profits, selling to large investors at low prices and acquiring large quantities.
3. Dumping the market: After major companies acquire the required quantities, they begin to gradually sell altcoins, causing prices to crash and most small investors to lose their money, while large companies make huge profits.
How to protect against this manipulation:
Focusing on long-term investment in major currencies like Bitcoin and Ethereum.
Not getting carried away by rapid surges and new currencies without study.
Using technical and fundamental analysis to understand market movements before making any decisions.
Diversifying investments and not putting all funds into one currency.
Summary:
The digital market is full of opportunities, but it is also full of risks, especially with major players controlling liquidity. Awareness of how the market moves during altcoin seasons can protect small investors from falling into the trap of quick losses and provide them with the opportunity for sustainable financial growth.
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