A recent message from the Federal Reserve has stirred a moderate ripple in the cryptocurrency market — staff are allowed to hold a small amount of cryptocurrency. This seemingly inconspicuous information has been quickly interpreted by some market participants as significant good news, as if they have grasped a lifeline in the continuously sluggish market, and for a moment, market sentiment seems to show some signs of warming.
However, a little calm analysis reveals the oddities within. Looking back at the previous market trends, cryptocurrency prices have been struggling in a quagmire of sharp declines, and investor confidence has been severely impacted. Just as market sentiment was nearing freezing point, the emergence of such news easily evokes associations of 'policy shift' and 'market about to reverse'. But the reality is that the market has not welcomed a strong rebound as people hoped; instead, it has shown a lukewarm, oscillating state.
This abnormal performance resembles a carefully orchestrated 'trap for bulls' by the market makers. After a continuous decline in the market, investors are generally eager to find opportunities for a rebound. At this time, releasing such ambiguous news can exploit people's desire for 'good news', attracting a large number of retail investors to follow suit. Meanwhile, the market makers can take this opportunity to quietly offload their chips and complete their selling operations. Once the market makers have sold out, the market, lacking support, may likely fall into a deeper decline again, and those blindly chasing high prices will become the unfortunate buyers.
Therefore, in the face of such market signals, we must not blindly take them seriously; maintaining a calm mind is crucial. For those investors who have taken long positions at low levels, the most prudent course of action now is to promptly raise the stop-loss to protect their capital. In this way, even if the market unexpectedly declines later, it can maximize the safety of the principal and avoid becoming a victim of the market makers' selling due to momentary greed.
