Today, let's not discuss complex indicators; I just want to explore a core truth with you: in this market, the real game is never on the charts, but in your emotions.
1. That 'fake fall' that made me suddenly realize
In April 2021, after Ethereum broke through $2000, it suddenly dropped by 15%. The community was in a panic, with voices saying 'the top has arrived' and 'run quickly' echoing everywhere. I looked at my shrinking profits and hovered my finger over the 'sell' button.
But when I opened the on-chain data, I saw a different scene:
The large holder's address continues to accumulate;
The net outflow from exchanges reached a new monthly high;
The contract funding rate returns to neutral, rather than extremely bullish.
I turned off the trading software and went for a walk. Three days later, Ethereum not only regained lost ground but also set a new high.
At that moment I understood: that 'plummet' was not the end of the trend, but a precise test of emotions.
Two, washout and selling: a battle of emotions
Three characteristics of a washout:
Sharp decline but short-lived: typically completed within 1-3 days, with a drop of 10-20%, and then quickly recovering;
Volume shows a 'U-shape': increasing during the decline, decreasing during consolidation at the bottom, and increasing again during recovery;
Key support levels remain intact: will not effectively break below the long-term trend line or important moving averages.
Three signals of selling:
Weak increase but prolonged duration: slowly pushing up attracts chasing, but each new high seems laborious;
Divergence between volume and price is obvious: prices rise but volume decreases, or sustained high volume at a peak fails to break through;
Support levels are repeatedly tested: every pullback gets closer to critical support, and the rebound strength weakens each time.
My identification method:
When prices experience sharp fluctuations, I ask myself three questions:
Has this major trend been broken? (Look at the weekly and monthly charts)
Has market sentiment shifted from greed to fear? (Look at the fear-greed index, funding rate)
What is smart money doing? (Look at large on-chain transfers, exchange traffic)
Remember: Washouts are to make you get off the bus, selling is to make you get on the bus.
Three, the current market's 'emotional map'
Observing the recent market, I believe we are in a typical 'consolidation washout' phase:
Feature one: Volatility compression
Bitcoin's daily volatility has dropped to annual lows, and this 'calm before the storm' is often a precursor to a trend change.
Interpretation: The main force is testing the market's patience—those who can endure boredom are more likely to survive to the next round.
Feature two: Emotional polarization
There are two voices in the community:
"The bull market is over, run quickly";
"A big trend is coming, rush quickly."
Interpretation: When consensus splits, it is often a signal of trend continuation. Consistent expectations will lead to trend reversal.
Feature three: Capital flows hide secrets
Although prices are sideways, on-chain data shows:
Long-term holders are still accumulating;
Exchange balances continue to decline;
Stablecoin market capitalization begins to recover.
Interpretation: Smart money is using volatility to collect chips.
Four, my 'anti-emotion' coping strategy
Strategy one: Use position management to combat volatility anxiety
I divide my funds into three layers:
Base position (50%): Long-term hold, ignoring short-term fluctuations;
Swing position (30%): Only act when the trend is clear;
Cash position (20%): Never move, serving as a psychological safety net.
That way, even if I judge incorrectly, I can respond calmly.
Strategy two: Establish an 'emotional trigger checklist'
When I experience the following emotions, corresponding actions will be triggered:
Fear (want to cut losses): Check if it has broken key support, if not, increase position by 10%;
Greed (want to chase highs): Check if it has broken key resistance, if not, reduce position by 20%;
Anxiety (frequently checking the market): Turn off the machine and go for a walk, do not trade for 24 hours.
Strategy three: Multi-cycle validation to avoid 'seeing the trees but not the forest'
My decision-making process:
Look at the monthly chart: Is the big trend healthy?
Look at the weekly chart: Is the mid-term direction clear?
Look at the daily chart: Is the short-term position critical?
Only when all three cycles point in the same direction will I participate heavily.
Five, 'emotional immunity' training for beginners
If you are just starting to engage with this market, I suggest:
First week: Record your emotional reactions
After each day's closing, write down:
What fluctuations made your heart race today?
What operation did you want to make at that time?
What operation did you ultimately make?
Goal: Understand your emotional triggers.
Second week: Practice 'delayed reaction'
When you want to act, force yourself to wait:
30 minutes (for day trading);
24 hours (for trend trading);
72 hours (for major decisions).
Goal: Give rationality time to catch up with emotions.
Third week: Establish your 'emotional safety net'
Establish three rules that you will never violate, such as:
Stop trading for three days if you lose more than 5% in a single day;
After three consecutive profitable days, withdraw 20% of the profit;
No more than 10 trades per month.
Goal: Use rules to protect you from emotional harm.
Six, the final heartfelt words
I know it's hard to stay calm watching account fluctuations.
But I want to tell you: In this market, those who survive long are not without emotions, but know how to coexist with them.
The friend who panicked and sold in April 2021 later bought high at Ethereum $3000, ultimately getting deeply stuck in a bear market.
He recently told me: 'I finally understand, I have never lost to the market, but to the self manipulated by the candlesticks.'
Now, I still face market fluctuations every day, but my heart has a bit more calm.
Because I know: the market maker can manipulate prices, but cannot control my rules; can create volatility, but cannot shake my system.
The market is like the ocean, with tides rising and falling.
Surfers do not curse the waves for being too high, but learn to ride their rhythm.
In this market, we all need to become that surfer—not trying to control the ocean, but learning to maintain balance amidst the waves.
If you are also looking for ways to cope with market fluctuations, consider following.
I will continue to share:
How to identify emotional characteristics in different market stages
Psychological applications in position management
And, specific methods to maintain rationality in extreme market conditions
There are no foolproof secrets here, only sincere observations of market human nature.
After all, in this infinite game—controlling emotions is more important than predicting prices.
Follow me @链上标哥 so you won't get lost! Observe clearly and proceed calmly. 🏄♂️
