The massive bloodbath in the crypto market saw major assets such as Bitcoin [BTC] and Ethereum [ETH] succumbing to severe selling pressure. As a matter of fact, the king coin suffered a drastic fall of 18% in a span of just 10 hours on Saturday morning. However, the asset posted a recovery of 10% in the last 24 hours and is currently trading at $49,404 still 27% short of its previous peak.
In contrast to that, lesser-known altcoins like Terra [LUNA], Gaming platform Gala [GALA], distributed ledger protocol Quant [QNT], etc have outperformed the top currencies in a significant manner during the meltdown in the broader market. This raises the question- if the investors have mastered the art of maneuvering the massive panic sell-offs as cryptocurrencies are notorious for their volatility. A similar observation was echoed by on-chain analysis platform, Santiment in their tweet
Here’s how Crypto Investors avoiding the panic sell-offs
That being said, seasoned Analyst and founder of Cinneamhain Ventures [CENV] Adam Cochran held a detailed discussion on the possible scenarios following the big price correction. According to the analyst, investors are ‘less market-driven and more about human behavior’. In a series of tweets, Cochran went on to mention that after the sell-off, preservation instinct kicks in as investors are left with less capital and fewer choices.
This leads to overselling pressure that catches ‘overleveraged bulls’ off guard, spurring liquidations, and pulling them down more. Next, the expert spoke about the recency bias where the people’s frame of reference for crypto is shaped by a recent experience. The author cited the example of Ethereum which sits above $4k from a mere $700 a year ago. ‘But people are bear market doom posting,’ he says.
In addition to that, Cochran also mentions the survivor bias– which comprises those investors who go on a selling spree leading to more drawdown in the market. Summing up, the analyst stated,
“The key takeaways: 1) The market can move lower off of this and still be bullish. 2) The market likely will at least try another low so don’t use stupid leverage. “