I bet 90% of people are panicking in the wrong direction! As a veteran of the crypto world for 8 years, having witnessed the Fed's "draining" 3 times, I must say the truth: short-term fluctuations are a test, the turning point opportunity is the real gold mine!
Let's be clear: How severe is Powell's "draining"?
This round of "quantitative tightening" (QT) is essentially the Fed "collecting active money" in the market, harsher than reducing sugar at a milk tea shop. Banks are running out of money, lending is more cautious than choosing a partner, and the wallets of businesses and investors are collectively "shrinking". Our crypto space is inherently a "sensitive skin" of risk assets; with less money and expensive loans, can the prices not resemble a roller coaster? Just a few days ago, the sudden ups and downs were fundamentally due to liquidity tension "causing trouble."
But! Here's the key point (take note)! I reviewed the recent statements from the Federal Reserve, and Powell has already been 'hinting': QT might stop within months! Why? Because bank reserves are nearing the 'adequate bottom line' (around 2.7 trillion), and if they draw down further, the market will 'die of thirst'; the Federal Reserve is not foolish.
This is my most core judgment: now is not the end of the crypto circle, it's 'the turbulence before dawn'! Short-term headwinds are real, but the inflection point of 'stopping the drawdown' is already beckoning. Panicking and cutting losses is just giving chips to the market!
Double impact + opportunity for the crypto circle: panic is instinctive, but knowing how to seize it is skill.
❶ Short-term headwinds: volatility can drive people crazy, but it's not a crash
Don't think that a drop means it will go to zero! The current situation is 'emotional panic caused by lack of money', not that the assets themselves have no value. It's like when supermarkets have sales, people crowd in; some are panicking and grabbing the wrong items, while others calmly find bargains—this is the rhythm of the crypto circle now. With high borrowing costs and tight funding, prices fluctuating is very normal, but if it really collapses? Unless the Federal Reserve goes crazy and dares to pull reserves below the bottom line!
❷ Potential opportunity: once the inflection point arrives, volatility is a 'money-making topic'
I can guarantee: once the Federal Reserve officially announces 'stop QT', liquidity will flow back like floodwaters opening the gates! At that point, risk assets will rebound first, and the crypto circle's elasticity is always the greatest—what's hidden in this wave of volatility is not risk, but the 'money-picking window' for short-term players, as well as the 'signal for adding positions' for long-term players.
(Let me say something sincere: I made a 3x profit in 2020 by catching the QT inflection point with 10% of my position. It's much better than holding on stubbornly!)
Must-read for beginners: 3 practical tips for 'not losing principal' (summary of pitfalls from veterans)
❶ Short-term trial and error = spending money for milk tea, don't bet the family's savings
Want to catch volatility? Sure! But the position must not exceed 10% of total funds—consider it as playing with milk tea money; if you lose, you won't feel heartbroken, and if you win, you can even add an egg. And you must set a 'life-or-death line': lose 5% and run, earn 10% and sell decisively! Newcomers shouldn't be 'greedy'; quick entry and exit is the way to go. I once heavily chased volatility and almost lost my rent—this lesson is more expensive than gold!
❷ Lock in a large position in 'top value coins'; touching altcoins now is just giving them away.
The main funds (at least 60%) must be held in 'hard currency that can withstand blows'—those top coins that have been tested by the market and have high consensus. Don't be tempted by the short-term surge of altcoins! The market is currently 'washing away impatience'; without funding support, altcoins fall even more dramatically than roller coasters, while top coins are like the 'hard bones' in the crypto circle—they can withstand the turbulence, and when liquidity eases, the rebound will be the fastest!
❸ Keep an eye on one signal: the Federal Reserve's official announcement to 'stop QT'
This is my bottom-line judgment: as long as the Federal Reserve hints at 'stopping the drawdown', it's the 'starting gun' for the market! At that point, adding positions in batches is 100 times more reliable than blindly catching the bottom or cutting losses now. I have set a special reminder for the Federal Reserve's communication channels, so I can shout out to everyone on the homepage at the first moment, no need to refresh news and guess every day!
Finally, let me say something heartfelt: don't be a foolish investor; volatility is not the risk, reckless operation is!
The current rhythm of the crypto circle is about 'testing people's patience', but the more you endure, the more stable you must be. Never touch high-leverage gambling; that's not investing, it's risking your life. Don't chase worthless air coins; they rise quickly but fall even faster, and if you get trapped, you won't have a place to cry!
I've seen too many newcomers panic and cut losses in volatility, only to turn around and miss the rebound; I've also seen those who maintain their rhythm and make a fortune through inflection points. The core of making money in the crypto circle has never been 'fast', but rather 'accurate' and 'stable'! Follow me!
