Understanding the steps in how altcoin prices drop is important for investors. These declines usually happen in four phases. Let’s simplify each one:
Phase 1: The Start of the Drop
After prices rise for a long time, the market becomes unstable. Big players (whales) start controlling prices for their benefit.
Key points:
Prices seem steady but show sudden bursts of activity for 3-5 days.
Trading volume goes up, but prices don’t increase much.
Influencers and “experts” hype the market, telling people to buy.
Regular investors get excited and start buying heavily.
While this happens, whales quietly sell off their holdings to lower their risks. This phase often lasts a few days and signals the beginning of a bigger decline.
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Phase 2: False Hope
As prices drop across the altcoin market, some analysts and influencers try to stay optimistic.
What happens:
Analysts call it a “buying opportunity” and urge people to buy at lower prices.
Phrases like “Buy the dip!” or “Now’s the time to invest!” are common.
Whales sell more of their holdings during brief price recoveries.
Experienced investors sell during rebounds to avoid losses.
This phase lasts 10-14 days, giving false hope to many investors.
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Phase 3: Panic Mode
By now, the price drop is clear, and fear takes over.
Key events:
Analysts stop making bold predictions, though some remain optimistic with less confidence.
Selling pressure increases, and prices keep falling.
Regular investors feel stuck, realizing they bought at high prices.
Some hold on, hoping for a recovery, while others sell at a loss.
Prices open lower every day, creating more fear.
This phase usually lasts two weeks or more and often leads to a market crash.
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Phase 4: Aftermath
This stage is quiet and filled with frustration.
What happens:
Optimism disappears, replaced by complaints and silence.
Altcoins trade at low prices, repeatedly testing bottom levels.
Weak projects lose activity, while stronger ones start stabilizing.
When altcoins stop following market trends, it may signal a shift.
This phase can last weeks or months, eventually paving the way for a new market cycle.
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Conclusion
Understanding these stages helps you avoid emotional decisions. Instead of chasing predictions or acting out of fear, focus on studying the market and waiting for better opportun
ities. Patience and preparation are key for long-term success in crypto investing.