Why do bull markets often experience sharp declines?

This is mainly due to violent market washing.

In a bull market, retail investors have a higher loyalty and stickiness. If they do not experience a sharp decline, it is difficult to wash them out of the market. Sometimes, it even requires a series of sharp declines to force most retail investors to sell off and exit.

Some may ask, why is it necessary to wash out retail investors?

Isn't it good for everyone to profit together in the cryptocurrency circle?

In reality, it is not the case. Without new capital inflows in the cryptocurrency market, if retail investors are not washed out, the main players would need to spend a large amount of funds to drive up the coin price.

Because during the price increase, once retail investors make a profit, they will choose to exit, which significantly increases the resistance faced by the main players, as if the main players are 'carrying the sedan chair' for the retail investors.

However, if retail investors are washed out through methods such as sharp declines, after they cut their losses and exit, the main players can not only realize profits but also facilitate further increases in the coin price later on.

In summary, the frequent sharp declines in a bull market stem from the high stickiness of retail investors.

Therefore, if the operational strategy is inappropriate during a bull market, the losses faced by retail investors may be even more severe.