Many long-term investors are struggling in this bull market 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 Boom of High-Leverage Trading
In previous years, most capital flowed into cash trading - buying and holding assets. However, now, the number of participants in futures trading and high leverage has surged. With this tool, a small amount of capital can multiply profits several times - but it also increases the risk of loss.
2. FOMO Psychology in an Uptrend
When the overall market is booming, especially with the call for 'altcoin season' - the explosive growth season of altcoins - many traders do not want to miss the opportunity. They open long positions with high leverage, hoping to catch the rally to quickly double their accounts.
3. Consequences: Sudden Collapse
That is the significant leverage that makes the market fragile. When prices undergo a slight adjustment, long positions get liquidated en masse, leading to a chain reaction - prices drop further, causing severe crashes that people feel are 'sudden' and 'devastating.'
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 rise; corrections are normal.
Long-term thinking: Invest smartly based on value and sustainable economic trends rather than chasing short-term waves.
A bull market offers many opportunities but also hides dangerous traps. Understanding the motives behind strong fluctuations will help you survive - and thrive - in this brutal game.
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