After the plunge, will the crypto market really enter a "cooling-off period"?
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After the plunge, will the crypto market really enter a "cooling-off period"?
A wise move after reaching new highs: stay away from the market and hold cash while waiting.
Navigating Web3 tides with focused insightsTranslation: TechFlow
Introduction
The so-called "Spring劫" is finally over. The market flash crash on February 3 caught many off guard, sending account balances into a free fall—some even experienced veteran traders getting stunned. What exactly happened? And what should we do next?
TechFlow has compiled two reflections from crypto KOLs that might help clarify your thinking.
The first article shares how a trader successfully exited positions right before the market plunge and locked in profits through an aggressive profit-taking strategy. He also suggests the market may enter a volatile consolidation phase ahead, with more opportunities arising from short-term fluctuations.
The second article analyzes the underlying logic of this market move from a macro perspective, pointing out that fading catalysts and bearish sentiment in the altcoin market are key factors. Bitcoin is increasingly behaving like a macro risk asset, while altcoins face challenges of capital shortage and weakening confidence.
Below is the full content.
1. The Smart Move After Reaching New Highs: Step Away, Hold Cash and Watch
Source: @Gold_Cryptoz
Unless some major macro events occur, I believe the market may enter a dull range-bound consolidation phase, as all key events in Q1 have now settled.
My focus going forward includes:
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Trading opportunities at range tops and bottoms
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Market volatility driven by macro news
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Small-scale on-chain investments to satisfy personal interest
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A preference for short positions
Beyond that, I plan to stay away from the market for a while, though I’ll still keep some level of awareness.
As always, there’s room for improvement in investing—it’s hard to perfectly buy at the lowest or sell at the highest (though analyzing trades after the fact is always easy). Overall, however, I’m satisfied with having captured this market move.
My portfolio value is now far above its previous all-time high, and I intend to maintain this position. I won’t overtrade at this stage. In fact, my success stems entirely from an aggressive profit-taking strategy: withdrawing funds from the market and not redeploying them.
As for avoiding losses during the market crash, that was largely due to luck. The night before, I took small long positions in fartcoin, XRP, and SOL. When I woke up the next day, the market had just undergone a price pullback. While my analysis was correct, my timing was slightly off. If I had been awake and seen the pullback, I might have panicked and closed my positions. But instead, I felt extremely excited, immediately opened my laptop, and added to those positions that morning. Ultimately, I exited that evening with around $200,000 in profit.
I am now fully liquidated, with all funds converted into USDT.
2. Some Thoughts on This Market Move
Source: @bh359
In short, I believe this market move was primarily influenced by two factors:
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Fading catalysts have caused cryptocurrencies to revert to behaving as macro risk assets
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Bearish sentiment has become widespread in the altcoin market
Fading Catalysts
Over the past two years, the crypto market has been driven by various catalysts—such as liquidity support from BTFP, Blackrock's ETF application, rate cut expectations, the possibility of ETF approvals, Trump's pro-crypto stance and rising odds of his election victory, the potential for SBR, and so on.
But for the first time in a long while, after the presidential inauguration and disappointing SBR outcomes, the market appears to lack a clear narrative to drive sentiment. While some potential catalysts remain, most lack defined timelines. Under these conditions, Bitcoin (BTC) behaves more like a macro risk asset, while altcoins carry even higher risk.
Bearish Sentiment Toward Altcoins
Throughout this cycle, we've often heard calls for an "alt season," typically based on the classic four-year cycle theory. Yet many traders have realized that, for multiple reasons, a true broad-based alt season is unlikely. Examples include reduced Fed liquidity with no near-term catalysts, a surge in newly issued tokens causing market inflation, and a lack of signs showing capital inflows into altcoins—evident from constant sector rotation within the industry.
Nonetheless, many still hold hope that certain factors might change, allowing 2025 to mirror the boom of 2021.
However, after 2–3 years of waiting, as we approach the typical alt season window in the four-year cycle, altcoins' performance against BTC has sharply deteriorated, along with worsening fundamentals.
For some investors, this bearish sentiment is understandable. If they’ve held underperforming assets over the past 2–3 years, failed to participate in sector rotations, or grown increasingly pessimistic about the industry, their negative outlook may be further amplified.
Beneath this market move, selling pressure in the altcoin market has been magnified by a confluence of factors. Especially when BTC faces broader market risk-driven selloffs, this sentiment spreads rapidly, triggering larger chain reactions.
Still, this is already in the past. At present, I don’t have a particularly clear view on where the market is headed next.
Going forward, I will continue monitoring macro developments (e.g., Trump’s handling of tariff issues, market reactions, Fed statements) and any potential crypto-related catalysts (such as new ETF updates, unexpected SBR progress, or breaking news), gradually forming my own views.
Based on my baseline assumption, there could be strong enough catalysts later this year to push the market upward (even if only for a temporary rebound). However, the exact timing remains uncertain. Moreover, depending on the nature of the eventual catalyst, the market might experience further downside before any recovery.
This is just my personal take. I hope those hit hardest by this market move can recover quickly, and those who seized opportunities can find satisfaction. I currently still hold some long positions opened last night, but within this entire cycle, my stablecoin allocation is now at its highest level.
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