As retail investors who have experienced market trials, we all understand one truth: the success of trading depends not only on strategy and data but also on understanding market psychology and behavior. Among all trading logic, the most fundamental and critical rule is the supply-demand relationship. Surprisingly, many novices often overlook this core principle and ultimately become losers in the market.
Underlying logic of market operations
In any trading market—whether stocks, commodities, or cryptocurrencies, the essence of price fluctuations is the battle of buying and selling forces. When buying pressure exceeds selling pressure, prices naturally rise; when selling pressure surpasses demand, prices inevitably fall. Just like limited edition sneakers: with 100 pairs available facing a rush of 1000 buyers, prices will only rise.
1: Demand-driven market opportunities
When the following characteristics appear, they often indicate a rising trend:
Volume continues to increase while prices stagnate (accumulation phase)
A key resistance level shows consecutive large bullish candles breaking through (demand explosion)
Market sentiment shifts from panic to greed (FOMO sentiment brewing)
At this time, smart money quietly builds positions, waiting for the demand wave to push prices higher.
2: Risk signal of oversupply
When the market shows these signs, the risk of decline increases:
Prices fall despite good news (main players take the opportunity to sell).
Volume shrinks during rebounds (lack of real buying pressure)
Exchange reserves continue to increase (accumulation of selling pressure)
Many investors often misjudge the situation at this moment and ultimately suffer losses.
3: Practical application rules
Buy when demand is budding: intervene when volume breaks through key levels, rather than chasing after prices at high levels.
Sell before supply explosion: decisively take profits when good news is exhausted and there is a divergence between price and volume.
Beware of liquidity traps: large deposits to exchanges are often a precursor to market crashes.
（Chart suggestion: Insert BTC/USDT weekly chart marking typical supply-demand conversion nodes）
Advanced thinking
Market sentiment amplifies supply-demand imbalances—
End of the bull market: already overvalued assets are further distorted by FOMO sentiment.
Bear market bottom: quality assets are often mispriced due to liquidity crises.
True experts understand: discovering imbalance is just the beginning; waiting for confirmation is the art.
Remember: candlestick patterns can deceive, technical indicators lag behind, but supply and demand relationships never lie. Master this language, and you can understand the market's most genuine pulse.