Crypto volatility is nothing new. Bitcoin, Ethereum, and other major cryptocurrencies have experienced multiple price swings exceeding 50% in past cycles, yet they continue to attract both institutional and retail investors. In the last 24 hours alone, over $500 million in liquidations were recorded, showing how extreme market swings can wipe out traders who are not prepared.
For newcomers, this volatility can be overwhelming, leading to emotional decisions that often result in losses. However, seasoned investors and industry experts, like Matthias, host of The CoinRock Show, emphasize that navigating volatility is not about avoiding risk, but about managing it wisely.
Understanding Market Cycles
The crypto market operates in cycles, typically shifting between bullish euphoria and bearish despair. These cycles consist of four key phases—Accumulation, Expansion, Distribution, and Decline—each playing a crucial role in shaping market sentiment and price action. Historically, every major bull run has been preceded by periods of sideways trading, corrections, and even outright crashes, causing fear among inexperienced investors.
- Accumulation Phase: This phase follows a bear market when prices stabilize, and smart money (institutional investors and whales) begin accumulating assets at low prices. The market remains relatively quiet, with little retail interest.
- Expansion (Bull) Phase: As demand increases and positive sentiment builds, prices start to rise, leading to mainstream adoption and retail FOMO (fear of missing out). Bitcoin and major altcoins experience massive price surges, reaching new all-time highs.
- Distribution Phase: After a prolonged uptrend, early investors and institutions begin to take profits, leading to increased volatility. Retail traders, driven by greed, continue buying at high prices, unaware that a market top is forming.
- Decline (Bear) Phase: A sharp sell-off follows as smart money exits, triggering panic selling among retail investors. Prices drop significantly, and the cycle resets, leading back to the accumulation phase.
For example, in 2017, Bitcoin soared to $20,000, only to crash below $3,000 in 2018 as the cycle entered its decline phase. In March 2020, Bitcoin plunged to $3,800 during the COVID panic but later rebounded to $69,000 by 2021, marking another full cycle. Now, in 2024, Bitcoin recently hit an all-time high above $73,000, but ongoing corrections have sparked panic, leading many to fear the bull run is over.
Matthias warns that misinterpreting short-term corrections as long-term reversals is a mistake many traders make. He emphasizes that understanding these four phases can help investors avoid emotional decisions and instead position themselves for long-term gains.
Matthias on market cycles:
“Every bull market has brutal corrections. If you’re panicking over a 20% drop, you’re missing the bigger picture.”
By recognizing the natural flow of market cycles, investors can capitalize on opportunities during accumulation phases and avoid FOMO-driven decisions at market tops. Successful crypto investors don’t react emotionally—they strategize based on historical patterns and long-term trends.
Protecting Your Portfolio Against Extreme Swings
One of the most effective strategies for managing volatility is diversification. While Bitcoin and Ethereum remain the most established assets, altcoins tend to experience even higher price fluctuations, making them riskier but potentially more rewarding. Institutional investors follow a balanced approach, strategically accumulating assets to hedge against market uncertainty. MicroStrategy now holds over 214,000 BTC, reinforcing its long-term confidence in Bitcoin as a primary store of value.
Similarly, MetaPlanet has aggressively increased its Bitcoin holdings, following an accumulation strategy similar to that of top investment firms. At the same time, BlackRock, Fidelity, and major banks are expanding their crypto product offerings, further validating digital assets and signaling long-term adoption in traditional finance.
For retail investors, adopting a diversified portfolio strategy that includes both Bitcoin and select altcoins can help reduce risk exposure while maximizing gains when the market enters a bullish phase.
Why Most Traders Get Wiped Out
One of the biggest mistakes traders make is overleveraging their positions in an attempt to amplify gains quickly. However, crypto market volatility makes leverage a highly dangerous strategy, as rapid price swings can wipe out entire positions in seconds. Unlike traditional markets, crypto trades 24/7, meaning that sudden liquidations can happen at any time, especially when liquidity is low.
In the past 24 hours alone, over $500 million in liquidations have occurred due to market swings, with many traders losing their entire margin balances. Data from Coinglass shows that leveraged traders holding long positions were hit hardest, as Bitcoin dropped sharply before rebounding, a pattern that has played out numerous times in past cycles.
Market makers and large trading firms often manipulate price action to trigger stop-losses and force liquidations, allowing them to buy back assets at a discount before sending prices higher again. Matthias on leverage trading:
“If you think you can out-trade the market with leverage, you’re playing a game designed to liquidate you.”
Rather than risking large sums on high leverage, Matthias advises traders to focus on safer and proven strategies such as spot trading, dollar-cost averaging (DCA), and long-term positioning. Historical data shows that investors who accumulate assets during downturns without using leverage tend to see the best returns in the long run.
DCA strategies have consistently outperformed high-risk leveraged trades, proving that patience and steady accumulation often lead to greater profitability than short-term gambling with leverage.
Power Of Patience And Research
The best investors in crypto are not the ones who chase hype but those who stay informed and patient. Many of today’s wealthiest crypto holders made their gains by:
- Accumulating during market downturns rather than selling in fear.
- Holding strong assets through volatility, knowing the market moves in cycles.
- Researching undervalued projects, rather than blindly following trends.
With institutions still accumulating and crypto adoption growing globally, those who stay patient and make strategic decisions are most likely to succeed.
Staying in the Game
Navigating crypto volatility like a pro requires understanding market cycles, diversifying investments, avoiding leverage, and staying patient. The key is not to react emotionally but to develop a long-term strategy that withstands short-term fluctuations. As Matthias reminds investors,
“The real winners in crypto are not the ones who panic sell, but the ones who stay focused when others lose their heads.”
