The five laws of trading in the cryptocurrency market are as follows:
First, if the rate of increase is rapid while the rate of decrease is slow, it indicates accumulation. When the price of a cryptocurrency rises quickly but the subsequent drop is relatively slow, it suggests that the operators are accumulating a large amount of tokens in preparation for the next round of price increases.
Second, if the rate of decrease is rapid while the rate of increase is slow, it indicates distribution. If the price of a cryptocurrency falls quickly but the subsequent recovery is very slow, it means the operators are gradually selling off their holdings, signaling that the market is about to enter a downtrend.
Third, when at the peak area, do not rush to sell if there is a high trading volume, but if there is no volume at the peak, you should exit quickly. When a large trading volume occurs at the peak, the price may still have upward momentum; but if the trading volume at the peak shrinks, it means that the upward momentum has already diminished, and you should exit quickly to avoid risks.
Fourth, in the bottom area, if there is only an increase in volume, it is not advisable to buy, but if there is a sustained increase in volume, consider entering the market. An increase in volume at the bottom may just be a temporary pause during a downtrend and requires further observation; only when a sustained increase in volume occurs does it indicate that funds are continuously flowing in, making it a consideration for buying.
Fifth, trading cryptocurrencies is essentially about speculating on market sentiment, and market consensus is reflected in trading volume. The fluctuations in market sentiment directly influence the price movements of cryptocurrencies, while the size of the trading volume accurately reflects the degree of market consensus and the actual behavior patterns of investors.
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