Having been in the crypto space for 12 years, I have seen too many retail investors staying up late analyzing K-line charts, calculating MACD and RSI indicators repeatedly, only to be pressed down by the main force. Today, I must say a harsh truth: those indicators that keep you up at night may just be smokescreens set by the main force. The real 'password' to see through the market is hidden in the 'chip distribution' that 90% of people overlook.
In the crypto market, chip distribution is like the 'funding ledger' of the main force. The peaks of chips on the chart, where red represents the profit at the current price level and blue represents the trapped positions, clearly indicate the cost area of large funds. When BNB rebounded from $220 last year, the red chips below $250 were densely packed, signaling that the main force was locking up positions. Those who understood this at the time are now counting their profits.
Understanding chip distribution makes the main force's actions all transparent.
The low-level chips are completely motionless; the rally has just begun.
When the coin price is rising but the peaks of chips at low levels remain almost unchanged, it indicates that the main force hasn't offloaded at all. Just like when DOT rose from $5 to $12 in 2022, the chips below $7 hardly moved. This kind of 'locked position rally' means holding on guarantees easy profits, while those who exit midway regret it.
If the high-level trapped positions have not been digested, bottom-fishing is like handing over your head.
If the blue trapped positions at high levels pile up like a mountain, don't rush to bottom-fish. When ADA fell from $1.8 two years ago, the blue chips above $1.5 were so dense that light couldn't pass through. Each time it rebounded to this range, it was knocked down. This is actually the main force using the trapped positions to offload; blindly entering will only lead to being trapped.
A single peak concentrated at a low position indicates that the market is about to 'change.'
When chips suddenly pile up into a single peak at a certain price level, it means either the main force has accumulated enough chips and is ready to rally, or they have finished offloading and are about to crash the price. This year, OP formed a single peak at $1.8 and then suddenly surged 20%. This is a typical initiation signal; those who understood it in advance have already profited.
12 years of practical summary: 5 iron rules for trading coins, 10 times more reliable than indicators.
The 'anti-fall ability' during a crash hides the funding password.
When the market crashes, if your coin drops less than others or even rises against the trend, it indicates that large funds are protecting the price. Such coins can be held for a few more days; if it drops with the market but quickly rebounds the next day, it is very likely that the main force is washing positions, and you can take a short position to catch the rebound.
Moving averages are the 'lifeline' of trends; if broken, run without hesitation.
For short-term trading, closely watch the 5-day line; once it effectively breaks down, exit decisively. For medium-term, observe the 20-day line; if it flattens and turns down, take a step back. Don't be superstitious about 'long-term holding'; in cryptocurrencies, trends are king. Once the trend breaks, no matter how good the story is, it's just empty talk.
In sector rotation, only chase the leaders; avoid touching random altcoins.
Every time a sector gains popularity, you must focus on leading coins to buy. Last year, when the DeFi concept warmed up, UNI surged the most with the least pullback, while those small altcoins that followed the trend fell without a bottom. This is the iron law of 'the strong get stronger.'
Stop-loss must be decisive; 5% is the red line.
After buying, if it drops more than 5%, you must cut losses; don't fantasize about 'breaking even.' The volatility in the crypto market is 10 times greater than in the stock market; hesitating for a second could result in being trapped by 30%. Protecting your capital is key to having a chance to recover.
Holding cash is a top-tier skill; if you don't understand it, keep your hands off.
In a fluctuating market, holding cash is 10 times better than chaotic trading. I have seen too many retail investors frequently buy and sell during consolidation, incurring fees and losses, leading to their capital being halved in a year. Those who learned to hold cash have already outperformed 80% of retail investors.
In fact, the main force's tactics are just a few: creating panic during accumulation to force you to cut losses, shaking out positions during consolidation to make you unable to hold on, releasing good news during a rally to make you chase high, and during offloading, painting a beautiful picture to make you take over. Chip distribution is the 'x-ray' that helps you see through these tactics; when the main force is about to act, you can see it in advance.
In the future, I will break down more practical cases of chip distribution, analyzing the entire process from low-level accumulation to high-level offloading. Follow me to avoid taking three years of detours in crypto trading. Next live session, I will also give away 10 copies of the 'Chip Distribution Practical Manual.' Let's chat about the chip pitfalls you've encountered recently in the comments!