After observing crypto market for years now I've found couple of reasons that causes bear and bulls to fail while rallying. So, I'll highlight those and going to explain how you could take advantage of such situations.
1- Role of Sentiments in Crypto
One main reason I see bulls and bears losing a grip from rallying is "sentiments" in crypto changing quicker than expected.
Market moves inversely based on the emotions of people like if majority of people in crypto are bearish it'll surprise them with a bullish formation and so on.
It's more necessary to understand this psychological aspect. How to know?
Fear and Greed index
Fear and Greed, It is an index that tells about sentiments of people in crypto if they're afraid of buying in market or greedy to sell and neutral due to uncertain situation.
Just today, market had rallied good and bitcoin rose like 3% in some hours.
The fear and greed index turned slightly greed now from extreme fear just a day ago.
People tend to go this euphoric by a just 3% move and than market rally eventually fails cuz it wants to go against people to bleed em longer than they can have green portfolio.
2. Liquidations Hunt
There are two kind of rallies driven by bear and bulls, one is spot market driven which is much healthy and strong but than comes futures driven market pump.
Now the fun begin when everyone jump into futures longing with 100x leverage and thinking we're going to new all time high.
The Oi means open interest increases rapidly that indicates "bulls are trapped in" we've got the liquidity now liquidate the bulls.
The finest example you could see is in screenshot where you see one way bears got liquidated than bulls.
This keeps the rally a small pump and than retrace the whole move and don't let it go until something big narrative start to play out.
3. Rumors Driven Move
In crypto each news have some impact on market and whenever a rumor hits it in most cases it creates some waves.
Like either goes up or down than that rally eventually cools off when that rumors circulating were denied or proved correct.
Many such cases like binance have been caught by many of rumors this year and it had left crypto in some sort of fire.. but it didn't left any much impact when those rumors were proved as fake rumors.
So, this is another reason why bulls and bears fails to rally in crypto.
Wrapping Up...
In the end, I hope you found this interesting and would love to know your thoughts on it in the comment.
This Q3 is about to end and Uptober I mean October is already knocking the door with a positive move.
So, kinda getting hyped and hopefully good relief rally waits ahead for us.
