The methods used by major investors for shakeouts are becoming increasingly sophisticated!

Let's review how the large investors conducted the shakeout during this round of significant declines. Why are there frequent sharp declines in bull markets?

This round of the bull market is accompanied by factors such as Bitcoin halving, the U.S. elections, the Federal Reserve's interest rate cuts, and the approval of Bitcoin spot ETFs, leading to a bull market that lasts longer and is stronger than the previous three bull markets.

Correspondingly, the intensity of the sharp decline will also be stronger, and the methods used by large investors to shake out retail investors will be more deceptive. Because the current market consensus is higher, simple downward pressure is not effective for shaking out positions, so a combination strategy must be employed to achieve this. Currently, from this round of decline and shakeout, the large investors are employing a three-step combination strategy to shake out positions.

Step one, Bitcoin falsely breaks through market psychological expectations—specifically breaking through $100,000 to deceive a wave of traders and lift expectations of a rise, then quickly plunges from $104,000 to $90,790, a drop of 13,210 points or 13%. The reason for this sharp decline in Bitcoin was to clear various leverages, and this drop directly caused liquidations of $1.098 billion across the network, including $816 million in long positions. While Bitcoin was plummeting, altcoins did not fall significantly, creating the illusion that Bitcoin's plunge was due to leverage being liquidated, and altcoins would continue to rise.

Then the second step of the shakeout came: on the early morning of the 10th, Bitcoin began to decline continuously, but in reality, it didn't drop much. However, altcoins experienced severe bloodshed, with traditional mainstream altcoins like ETH, XRP, ADA, and SOL, as well as popular new coins like SATS, SSV, and FET, all experiencing short-term crashes, dropping 15% to even 20% within 30 minutes, with the overall decline exceeding 30%, and some even directly halving. This hit was the hardest, causing 570,000 contract traders to lose everything.

Step three, after the sharp decline, a quick rebound occurs, attracting retail investors to buy the dip. However, the market is sluggish until the early morning of the 11th, when a real second dip begins, almost pushing down right next to the new low, forcing a large portion of those who bought the dip to exit, and making many who originally wanted to buy the dip completely adopt a wait-and-see attitude. Then, taking advantage of the fact that retail investors are not paying attention, the market can quickly rally, further enticing FOMO chasing behavior among retail investors.

This is an analysis of the entire process of the recent sharp decline and shakeout. Whether there will be other actions afterward is still uncertain, but from the perspective of the fourth round of the halving bull market, there will definitely be many more such sharp declines and shakeouts. As many seasoned investors have heard a saying: sharp declines are common in bull markets, while sharp rises are common in bear markets. Specifically regarding Bitcoin's halving bull market, the phenomenon of 'sharp declines' can be said to coexist with the bull market.

Why are there frequent sharp declines in bull markets? There are many answers to this question, but the most fundamental one is that the speed of new capital entering the market cannot keep up with the speed of the market's rise. At this point, the bullish momentum is difficult to sustain, and with many profits being realized, the sentiment for taking profits increases, leading to a gradual reversal in the market direction and triggering panic selling, resulting in a sharp decline. Quick corrections usually occur when prices reach a key psychological threshold, such as previous highs or round numbers, just like this time when Bitcoin broke through the psychological barrier of $100,000, which led to the subsequent sharp decline.

Another reason is the liquidation in the leveraged market. In a bull market, investors tend to use high leverage for trading to pursue higher returns. However, sudden market fluctuations can trigger a large number of forced liquidations, exacerbating price declines. This often results in a sharp decline being accompanied by a large amount of liquidation data; this time, nearly $3 billion was liquidated.

In a bull market, market sentiment can easily shift from extreme optimism to panic. Once negative news (such as regulatory policies or black swan events) emerges, retail investors' confidence may collapse rapidly, leading to a stampede-like decline.

These factors will be utilized by major funds to conduct shakeout operations, namely through selling large amounts of Bitcoin to create price declines, thereby triggering market panic and forcing retail investors to sell Bitcoin and other valuable assets. Subsequently, they will reacquire positions at lower levels in preparation for the next round of increases.

For those trading in the spot market, the overall direction hasn't changed; a shakeout is healthier. The next wave will rise higher. Those who should earn cash flow should earn it, those who should increase positions should do so, and those who should dollar-cost average should also do so!