Every round of bear market trading strategies is similar, with news combined with technical analysis to drive prices down, letting retail investors hand over their chips.
The bear market washout generally has 5 stages: (Currently, we should be in the 3rd stage)
First Stage: Top Distribution and Structural Collapse
At the end of a bull market, major funds quietly distribute during times of ample liquidity. A certain symbolic event (such as regulatory crackdowns, major project collapses, or exchange issues) becomes the last straw that breaks the camel's back, causing the market to plummet from a high volume, forming a 'guillotine'. At this time, most people still think it's just a pullback and choose to buy the dip.
Second Stage: First Rebound and Despair Slope
After the first wave of plummeting, the market will experience a sharp rebound, regaining popularity. However, this is often a 'bull trap', as the rebound fails to break previous highs and subsequently enters a slow, continuous decline. This stage is the most demoralizing, as each rebound marks the beginning of a new low.
Third Stage: Liquidity Exhaustion and Deleveraging
As prices fall below miners' cost and the liquidation line of DeFi protocols, a series of liquidations begin. A large number of highly leveraged long positions are forcibly closed, causing a momentary spike in prices (especially in Bitcoin). At this time, the market enters a 'death spiral': price falls → liquidation → further decline. Projects, mining farms, and market makers begin to experience breaks in their capital chains.
Fourth Stage: Panic Selling (Surrender Stage)
Symbolic events: Industry giants collapse (such as FTX, Three Arrows Capital), panic from USDT decoupling, and a wave of miners shutting down. At this time, the media announces everywhere that 'cryptocurrency is dead', with trading volumes swelling amidst extreme pessimism. This is the true bottom range, but often accompanied by the final 'trap' deep squat.
Fifth Stage: Bottom Formation and Washout
The bottom will not be achieved overnight. It usually experiences 3-6 months or even longer of sideways fluctuation, testing previous lows multiple times without breaking them. The major players use a 'sideways market + false breakout + retest' method to let early dip buyers lose patience and hand over their chips, completing the bottom formation.
So a truly significant black swan event has not yet occurred, corresponding to the fourth stage, which is when the true low-priced chips are about to form.
