Crypto Bull Run Guide: Understanding Market Crashes

Crypto Bull Run Guide: Understanding Market Crashes

we are right now on a crypto bull run but there are Market crashes as I’m sure you’ve noticed sort of all the time it’s kind of annoying but it’s what happens why is it happening aren’t prices supposed to go up during a bull market what’s up with my altcoin bags why is everything so savage or destroyed why am I so wrecked and why does crypto in particular sometimes experience such huge gut-wrenching puke worthy Corrections look it’s never easy watching your portfolio lose value but the first thing to be aware of is that market crashes during Bowl markets are normal and they’re usually quite dramatic and disgusting let’s say it’s also true that crashes can be especially violent in crypto stocks move slow Bitcoin moves bit faster when you talk about volatile asset classes look at altcoins man look when price action isn’t exactly going the way you’d like you start questioning things well let’s look at why these Market crashes happen okay looking especially at the situation during bull runs and starting with we have to talk about Market psychology look you hear a lot about the diamond hands man holding through the thick and thick with conviction but in reality sentiment can change real fast super quickly as Traders suddenly start questioning their Holdings I was a genius last month now I’m an idiot from there Panic ensues and creates a self-fulfilling prophecy crypto dumps super rapidly because people panic the herd panics enough holders believe crypto can dump rapidly so they start dumping their crypto and then other people dump their crypto too and you got a problem on your hands right this leads to crowd contagion as everyone flees for the exits at the exact same time and then of course of course crypto is prone to reflexivity this is usually a positive process involving self reinforcing Loops Rising prices attract buyers sending prices of course even higher still but it stops at some point you can also find a bit of a negative impact here because falling prices trigger selling sending prices even lower triggering more selling triggering more panic and so on so forth until you find a bom you run out of sellers way you run out of buyers going up and this is related to excessive fear and excessive greed in the market very few people now think Bitcoin will ever go to zero what about altcoins they go to zero all the time altcoins of course are less proven even though has been around for a while making holders very sensitive to fear uncertainty and doubt especially if you’ve been around the market for a while you know these things will go to zero at least a lot of them will not everyone but enough to make a difference also traditional fundamental analysis is used to evaluate stocks just really isn’t relevant for the vast majority of cryptos so the market is never exactly sure how much any given altcoin really should be valued I know efficient market hypothesis right but I mean come on we got dog [ __ ] coins out here going to billions is crazy and look this can all actually be great because it leads to insane fomo pumps taking the price of Skyhigh we’ll have upside volatility but not downside volatility right before we continue there’s a lot more to dive into here I just want to remind you that every single week my team and I produce the best damn newsletter in the cryptocurrency business it’s called wealth Mastery our readers love it I’m sure you will as well you got to check it out it’s packed with Alpha on bitcoin altcoins meme coins charts and much much more you’ll love it you you can join our 135,000 plus weekly readers for free using the link Down Below in the description or in the pin comment over our next now back to the topic and let’s talk about profit taking and healthy Corrections okay a major factor leading to price cooldowns profit taking ma’am people sell they want to cash out right big moves up people sell and put money in their pockets which is normal and that’s fairly self-explanatory right price runs up there’s always going to be a cohort of Traders and early investors they got in early right bought low high they want to realize those gains and that’s a good thing it’s positive thing it’s healthy thing for the markets you can expect this after any big move up if it’s basically the whole point of trading anyway to make more money right you buy low you sell High that’s the only way you make money in this market okay so if the price was low before but it’s high now you can figure out what’s probably gonna happen next right and in the case of a solid asset like BTC okay this kind of bull market dip as profits are taken is fine bitcoin’s going to be fine it’s going to recover okay these are all healthy Corrections of the long-term uptrend because markets cannot simply go up in a straight line forever that is massively unhealthy makes me really paranoid and markets move too fast just doesn’t happen like that in fact dips create sustainable bull runs as prices rise dip then consolidate at new levels shake out the the fomo people transfer from the patient impatient to the patient all that kind of stuff consolidation periods aren’t fun okay they’re not but after you got hooked on those towering green candles they’re necessary okay they’re necessary for further gains as they establish new support levels which can act as launch pads for the next leg up and they shake out a bit of that wild euphoric greed in the market so for long-term holders patience is key you’ll be fine but let’s touch briefly on funding rates and leverage look without going into all the technicalities okay you can look at funding rates on Perpetual Futures contracts and see when the market is really becoming overheated and too frothy when positive funding rates start getting too high for too long you can get an overleveraged market and that may be the precursor to a big fat crash is when prices dip Traders start losing money and they’re liquidated bringing in forced selling taking prices still lower liquidating more people creating more forced selling and on and on and on until you erase sometimes billions of dollars of Leverage from the market those are fund crashes can go real fast look this can all be seen as a necessary correction as funding rates reset Market cools down doesn’t feel like I’m participating in a necessary correction in the market I just lost my ass doesn’t feel good but that’s the reality of it now let’s talk about sector specific bubbles so low cap altcoins have the capacity for Rapid upside which can contribute of course to sector specific bubbles like for example mcoins although it just seems to keep on going meme coins doesn’t it nfts in 2021 not really altcoins I kind of like altcoins and pictures whatever maybe AI coins or metaverse projects or gaming or whatever a whole range of tokens within a certain niche or category can be look set to moon and they just go crazy and Traders leap in but these accelerated mini bubbles that happen so frequently in crypto are neverly followed by many mega crashes as the sector in question becomes massively overbought early buyers cash out run out of buyers all usual stuff okay the bubble bursts also the cycle that we’re in right now has featured some particularly crash prone narratives specifically Financial nihilism and meeme coins Good Financial analism refers to the idea that new Traders are basically giving up on real value distrusting traditional Investments and therefore going all in on super high-risk alternative assets or just straight up vaporware [ __ ] it’s a gambling mentality massive speculation that feeds of course the rise of meme coins as they trade purely on hype and expectation and you can see how that kind of Market might actually get very very crazy and of course it’s very attractive but it gets crazy really quickly huge volatility up 50x in a day and down 99% tomorrow major crashes happen all the time that said when it comes to bitcoin ethereum some of the other uh more fundamentally sound coins right there are plenty of entirely healthy narratives out there such as in Bitcoins store value or peer-to-peer transactions while in altcoins we have decentralized physical infrastructure networks great stuff real world assets great stuff gaming cool stable coins amazing these all have clear utility and basically there’s a lot happening in crypto that has real value but there’s also a lot of [ __ ] people love to speculate on however let’s just take a moment to focus on some specific altcoin issues firstly there are Venture funds that invest in new tokens at the earliest stages look they take early risks by backing companies that may never produce anything right and then later they face pressure of course to realize gains for their funds thus creating sell pressure when they’re up massively especially on these coins notably q1 2022 and the last Market was starting we saw the most ever VC funding they were largely late to the game told around1 billion in that quarter so if VCS are out there eating up the juiciest gains after getting Early Access why would retail really want to buy these tokens that are up 10,000x for the VCS or something like that basically just being exit liquidity for the VCS and the large funds and then there’s the issue of token unlocks which of course may increase Supply in ways that existing demand simply cannot immediately absorb for example earlier this year arbitrum token saw its market cap sore while the token price itself just kept tanking glad I sold that one this happened because a large Supply unlock flooding into the markets like a 40% increase in Supply was absolutely insane now when it comes to altcoins obviously you have to check the tokenomics how will the supply increase how much is held by investment funds when will early investors be able to sell their tokens and cash out from asset profits and how much are they up now according to any lockup period they’ve signed to you got to be aware of all this stuff okay anyway so we’ve discussed psychology we discussed the factors within the cryptocurrency market all that kind of stuff but don’t forget about the external factors because crypto does not exist in of itself it’s part of the world right crypto goes up and it corresponds a lot with stuff like money supply expanding which makes sense this big stuff fed central banks all that stuff when cash is available crypto absorbs it but the opposite is also TR Contracting money supply means crypto takes a hit as well that means reacts to the the FED meetings the CPI inflation data when we get to assess the fed’s Outlook and possible future actions and all this kind of stuff and then there are Global factors there’s Wars there’s political crises there’s the price of oil there’s all kinds of stuff but be aware that these can switch in their effects with an example being covid in March 2020 Bitcoin crashed hard on the covid news but then what happened governments turned on the money printers in a way which we’ve Almost Never seen before was wild they locked entire populations at home with just the internet for company and gave them a bunch of cash and said go have fun and in this unprecedented scenario people went out and speculated wildly on crypto coins we had a wild crypto bull market in 21 alongside the GameStop mcoin ston Saga and all the rest of the crazy that happened we can also factor in crypto Market specific external factors if you will for example the US government or the German government have recently been selling Bitcoin that they took off hackers or whatever or we have the mount goau creditors getting paid back their Bitcoin this year after a 10e wait they’re going to get coins and DP dump them on the market these kinds of rare events can cause a lot of fear in the market which to be honest the fear itself is often worse than the actual selling from the these entities everyone’s just quiet about it nobody even know but oh every is freaked out about it man that’s good to be aware of these events but it’s also going to be aware they’re often isolated and short-lived and don’t have a major long-term impact on the market and right along with that we can count things like China Banning crypto for the 50th time India Banning crypto for the 30th time and so on so forth the market loves to freak out when that happens but it generally just doesn’t really matter all that much finally let’s finish by identifying how to stay safe and how to profit now for high conviction coins especially Bitcoin ethereum stuff like that you can zoom out okay you don’t need to overtrade and as long as we’re on a generally bullish Market structure you can hold or accumulate more during dips okay looking for buy signals like the RSI going into very very low oversold readings or the hash ribbons indicator flipping a Buy Signal for example which picks up on the hash R this case picks up on period of minor capitulation that suggests Bitcoin is reaching a price Bottom now for small cap altcoins and all that fun wild degenerate stuff and especially for the most crazy volatile micro caps and the meme coins and you know what we’re talking about here you should focus on taking profits aggressively during big moves up don’t underestimate how deeply and savagely these coins can retrace and of course look out for Traders boasting about their big old fat profits on Twitter and the rox’s and all this kind of stuff because those might be signals too that you should be realizing your gains if you want to find out more about spotting top signals in the market go watch my video on it that’s great look it up also check how much the token price has moved overall not just since you bought it right maybe you got a 2X and you think wow I should hold on for a 5x but if the coin already did a 20x before you even bought it then guess what there’s a lot of earlier buyers that have some pretty big profits they might want to cash out on top of your head and they might quickly move the price back down it happens all the time okay now if you’re very sure the crash is coming then you again you might want to take some short positions of course you take your money out but also take some short positions but that’s always risky in a bull market and it’s more advanced skill you don’t need to do that okay you can just wait and buy a dip also just remember a reminder here for you that we’re talking about Market crashes during a bull run when for solid coins holding as a viable strategy however when the bull market top is in again go watch my bull market top signal video when the bull market top is in the market structure is flip bearish you got to get out you probably need to sell almost everything maybe hold your Bitcoin your ethereum if you really want to just ride those down you’re comfortable sitting in big losses on those for a year or two but yeah getting your stable coins get in cash get out above all of course never Panic always stay safe and thanks for watching I’ll see you in the next one

Why crypto crashes happen and why that’s not always bad.
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00:00 Introduction
00:53 Market Psychology
03:06 Profit Taking and Healthy Corrections
04:37 Funding Rates and Leverage
05:37 Sector-specific Bubbles
07:38 Altcoin Issues
09:02 External Factors
11:04 How to Stay Safe and Profit

#bitcoin #crypto #investing #cryptocurrency #cryptocurrencies #altcoins #cryptobullrun #ethereum

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Disclaimer
Everything expressed here is my opinion and not official investment advice – please do your own research before risking your own money. Lark Davis (The Crypto Lark and affiliated brand Wealth Mastery) is not providing you individually tailored investment advice. Nor is Lark Davis registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. The material provided is for educational purposes only. Lark Davis is not responsible for any gains or losses that result from your cryptocurrency investments. Investing in cryptocurrency involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors should consult their financial adviser before investing in cryptocurrency.