The cryptocurrency market is always full of variables. When you see the screen full of declines and hear the voice of "recovery", are you also eager to "buy on dips"? But don't be impatient, calm down first!
What is a sell-off?
When the market crashes, that’s when the sell-off comes. At this point, you’ll see a short-lived rebound in prices, as if the token is going to go up again. But don’t forget, this rebound may only be short-lived. After the panic sell-off, buyers come in to pick up bargains, and the price goes up temporarily. But this doesn’t mean the market has really recovered, it’s likely that short-term traders are playing tricks.
Why are traders easily fooled?
First, there is a fear of missing out. When traders see a price rebound, they are afraid to miss the opportunity and rush to buy in, often resulting in buying at a high point. Second, they are misled by the illusion of recovery. A rebound after a significant drop can make people mistakenly believe that the market is improving, but the result may only be temporary, and then the price may drop again. Third, there is emotional trading. A drop in stock prices can cause anxiety, and seeing a rebound can lead to impulsive buying, resulting in losses again.
How to distinguish between a sell-off and market recovery?
A sell-off is a temporary rebound after a drop, usually caused by speculation and panic buying. It may drop again afterward, or the market may consolidate. A true market recovery, however, is a steady rise supported by strong demand and favorable news, leading to sustained price increases. Recovery is the result of a shift in fundamentals and market sentiment, lasting several weeks or months.
So what should we do?
Don't rush to buy! Just because the market is green doesn't mean it's the right time to buy. Wait until the market is confirmed to have truly recovered before taking action. Look at the overall trend, news, and fundamentals. You need to develop a strategy and not let emotions influence your decisions. Set your buy and sell points and stop-loss points to protect yourself. Buying on dips should also be done cautiously; don't buy during a rebound; wait until the market stabilizes.
Don't fall into the trap!
When investing in cryptocurrencies, stay calm and don't let the market's short-term fluctuations lead you by the nose. Remember, real opportunities are always reserved for those who have patience and a strategy.
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