Recently, the market sentiment for cryptocurrencies has begun to surge, with prices jumping from $65,000 at the end of March to $78,000 in just 20 days. In light of this market trend, one can start by understanding the price dynamics through the overall global economic environment and market, as well as observing both long-time holders and recent newcomers on how to begin operating.
The core driving reasons for the recent Bitcoin surge
1. Geopolitical issues and safe-haven sentiment: The wide-ranging implications of the US-Iran conflict have prompted global capital to reassess the risks of the current financial system. Bitcoin, as a decentralized cryptocurrency, has reaffirmed its status as 'digital gold,' making its safe-haven attributes a significant consideration for many assets seeking protection.
2. The net inflow of traditional funds into institutions: The gradual development and maturation of Bitcoin spot ETFs on Wall Street has provided traditional financial institutions with compliant and secure purchasing channels. This continuous buying has also changed the market structure, which was previously driven by retail investors. It has not only become the main reason for price increases but has also provided support during this market decline, which is different from the typical 70-80% drop.
3. Expectations of global policies: At this stage, the market is generally optimistic about the upcoming monetary policy of the Federal Reserve (Fed) and the release of market liquidity. When the market expects that the cost of capital can continue to decrease, hot money will naturally continue to flow into risk assets, including cryptocurrencies.
Beginners must be extremely cautious in such a market.
Based on our past experience, during such significant short-term market rises and rebounds, beginners are very likely to experience FOMO (Fear of Missing Out), blindly chasing the market's short-term highs, or falling into traps of scams.
Water Brother offers a few specific suggestions.
1. Choose exchanges with larger market scales.
Looking at historical data, once the market enters a bear cycle, many projects and exchanges facing operational issues or financial difficulties usually collapse at this time. During a bull market, due to high trading sentiment and better profitability, these issues are not easily revealed. You might be lucky enough to avoid disaster then, but placing assets in smaller exchanges at this time is a very dangerous move; beginners must be extremely cautious.
2. Understand before participating in the market.
As the market emerges from extreme panic, it has even returned to greed levels in the past two days. At this time, various scams or Ponzi schemes claiming 'guaranteed profits / stable earnings' will begin to appear. Before investing your funds, you must first understand the source of the profits or seek assessments from professionals. Just this week, Water Brother has prevented four scams. If you ask me before throwing your money in, it’s still not too late; once locked in, even I can't help.
3. Gradually build positions starting with spare money.
No matter how much capital you anticipate investing in the market next, never be afraid of missing opportunities. During intense market sentiment, volatility is usually amplified, and corrections are the norm. This is why Water Brother recommends that beginners start with dollar-cost averaging and purchasing spot assets first. It reduces the psychological pressure of entering the market initially, and spare money can have better resilience, avoiding irrational investment methods.
A rising market is a good thing, but always ensure that you have the necessary protective strategies in place.
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