The Practice in the Bitcoin Market: How to Hold on to Your Inner Anchor Amidst Volatility

When the candlestick chart fluctuates wildly by thousands of dollars every minute, when the red alerts on trading apps keep flashing, and when social media is filled with the clamor of "the bull is coming" and "the bear is out", Bitcoin holders are undergoing an unprecedented psychological trial. The severe volatility of the crypto market acts like a mirror, reflecting the greed and fear deep within every investor. This is not just a simple numerical game, but an ultimate test of humanity and cognition.

1. Penetrating the Market Fog: Understanding the Underlying Value of Bitcoin

Bitcoin was born from the ruins of the 2008 financial crisis. Satoshi Nakamoto created not just a payment system with blockchain technology, but a revolutionary challenge to the traditional financial system. Its constant total supply of 21 million contrasts sharply with the unchecked money printing by central banks around the world. As the Federal Reserve's balance sheet exceeds $8 trillion, and global debt surpasses three times the total global economy, Bitcoin's anti-inflation property is gaining unprecedented real significance.

2. The Nature of Market Volatility: Cycles and Collective Psychology

Historically, Bitcoin has experienced 386 instances of daily declines exceeding 10%, but each deep squat has led to new highs. From $266 to $50 in 2013, from $20,000 to $3,000 in 2017, and from $69,000 cut in half in 2021. Behind these numbers lie the same market laws: the death spiral triggered by miners shutting down, the cascading effect caused by leveraged liquidations, and the emotional panic brought on by regulatory storms. However, after each market clearing, true value reemerges.

The herd effect in the crypto market is even stronger than in traditional markets. When the greed index exceeds 90, exchanges start to see a flood of newcomers who have never dealt with private key management; when the fear index drops below 10, social media suddenly sees a surge of "Bitcoin is dead" obituaries. This collective irrationality precisely creates opportunities for awake investors, as Buffett said: I am greedy when others are fearful, and fearful when others are greedy.

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