“Bro! My crypto assets have dropped by 20%, this must be a wash sale, right? I'm planning to put all the remaining money in!”
I rubbed my eyes and opened the K-line chart he sent, the coin surged to 1.8 the day before and then suddenly dropped, continuing to fall by 7% that day. The trend looked like the main force was “packing up and running away,” so I quickly replied, “Don't average down! Averaging down is just giving away money.” Three days later, that coin dropped directly to 1.3, and Xiao Yang sent another message: “Glad I listened to you, I almost put this month's rent into it!”
This reminds me of the big pit I fell into in 2021: I was focused on AVAX, which dropped from 140 to 120, and I slammed the table and told my friend, “The main force is washing the market too ruthlessly, let's buy more at the low!” As a result, a week later it plummeted to 90, and I lost 60,000 in my account — during that time I even hesitated for three minutes before ordering takeout with an egg, finally realizing that both wash sales and unloading look like a drop, but there's a world of difference in terms of “losing money or not.”
After two years of struggles, I finally summarized 3 'life-saving tips'. Now, every time the market crashes, I rely on these three tips to avoid pitfalls. Today, I'm sharing my heartfelt insights with you:
The first tip is to watch the 'volume signal.' A decrease in volume during a drop is likely a 'false drop.' Last year, ADA dropped from 1.3 to 1.1, and the trading volume was cut in half. At that time, I told my followers in the community, 'The main force is scaring off retail investors; wait for the rebound.' Sure enough, three days later, the volume doubled and shot back up to 1.5. But ATOM was different; when it dropped from 18 to 15, the trading volume doubled, yet the rebound was getting weaker. I quickly advised everyone to liquidate, and later it dropped to 12, and those who doubted me came back to say, 'Thank goodness I listened to the advice.'
The second tip is to focus on the 'support bottom line.' A washout won't break key levels. For example, when ETH dropped to 1800 last year, the 60-day moving average seemed fixed. Even if it briefly broke below, it bounced back within half an hour; this is a typical washout. But last year, a new cryptocurrency (don't ask for the name, I'm afraid you'll fall into a pit) dropped below the horizontal platform at 1.1 and plummeted directly to 0.7 like a kite with a broken string. Someone asked me, 'Can I buy some to lower my cost?' I replied, 'Buying now is just sending heads to the main force.'
The third tip is to calculate the 'rebounce speed.' A washout rebound is like a slingshot. Previously, SOL dropped 13% in the morning and then rebounded in a V shape in the afternoon, like a spring being pressed; but DOGE dropped once, and the rebound was sluggish, taking three days to rise by 2%, touched the moving average and then dropped again. I said in the live broadcast, 'Sell quickly, don’t wait to be trapped.' Later, it really dropped to 0.05, and several followers said, 'Thank goodness I didn’t get greedy.'
Last year, Old Wang downstairs took a big fall: the new cryptocurrency he bought dropped 16%. He patted his chest and said, 'This is a strong washout, I'm all in!' As a result, trading volume surged, support levels broke, and he ended up losing 120,000. Later, he came to me with the K-line, and I pointed out, 'The volume is off, the rebound is weak, it's clear that funds are retreating.' He slapped his thigh and said, 'I was so panicked at the time, why didn’t I look closely!'
In fact, when the market crashes, the more panicked you are, the easier it is to fall into pitfalls. Remember these three tips: whether the volume shrinks, whether the support has broken, and how fast the rebound is. If you're really uncertain, just follow me. I analyze the market every day in the community and will break down the K-line into 'plain language.' Next time the market crashes, we won't panic, and we can minimize losses.
