Yesterday, ACT plummeted, exposing the liquidity issues of altcoins completely. Many people may still be immersed in the illusion of a bull market, thinking that they can just buy any altcoin and it will soar, but after a round of crashes, they realize that the coins in their hands have no buyers, liquidity is terrible, and the price can drop straight back to zero.
During the rise, everyone only cares about the price, with a crowd queueing up in FOMO, and the trading volume seems very healthy. But once the sell-off begins, it becomes apparent that the depth is extremely poor; a large order is thrown in, and the sell orders cannot be absorbed, causing slippage that breaches the price. This liquidity structure determines that the trend of altcoins is always one-sided, rising sharply and falling even more sharply.
This situation exists in many second and third-tier altcoins for a simple reason: liquidity market makers (MM) will not absorb positions during a crash. Normally, the order book looks crowded with orders, but when it comes to a critical moment, either the MM will directly withdraw orders, or the depth will be kicked through, leading to a waterfall decline. Retail investors in this situation have no chance to escape; they can't even cut their losses.
1. Liquidity is more important than price — Don't just look at how much the coin price has risen, but also consider how deep the order book is. A coin with poor liquidity may rise sharply, but once it drops, you won't be able to sell it.
2. Altcoins lack stable liquidity support — Most of the trading volume of altcoins is fake; only when they drop will you know how much real capital is willing to take the positions.
3. Bull market FOMO is still FOMO, risk control must be in place — Don't think that altcoins are a relay race; coins with poor liquidity can quickly become a "one-way ticket."
