In the world of cryptocurrencies, a large segment of traders falls every day into a well-known psychological trap: "Buying from the bottom in the hope of quick riches." Traders watch alternative coins that have collapsed from extremely high levels to mere scraps of cents, and their emotion tells them that the price can’t possibly fall any further—that it’s the chance of a lifetime to accumulate huge amounts and wait until it rises.
But the technical truth behind the scenes is that you’re often not buying an investment bottom; instead, you run into a programmed and economic mechanism designed to drain the liquidity of retail traders.
1. The inflation mechanism and programmatic unlocking (Mint & Unlocks)
Bitcoin achieved investment success because it has absolute, hard-coded scarcity in its code (only 21 million coins). In contrast, most small and quiet alternative coins have their smart contracts with a feature called programmatic minting (scanning/minting) or they are subject to large, periodic unlock schedules for developers and early investors.
When crowds of buyers push their real money via digital dollars (USDT) to buy in hopes of pushing the price upward, new and continuous quantities of coins are injected into the Spot market as wall-style sell orders to absorb that liquidity. No matter how large the buy is, the continuously increasing supply breaks the market’s orders and drives the price down or leaves it stagnant—boringly.
2. Crowd psychology.. Why doesn’t the price rise despite all the buyers?
We often see severe imbalances in live trading data—like finding that the percentage of buyers (Longs) exceeds 85% based on the number of accounts—yet the price refuses to rise and even bleeds slowly!
Technical Explanation: The 85% figure most often represents small retail traders who enter with small amounts. The remaining small percentage of sellers (Shorts) is driven by the market maker (Market Maker) or smart algorithms with massive liquidity. The market maker can absorb all buy orders through limit orders, keeping the price sideways for two reasons:
Draining funding fees (Funding Fees): Forcing buyers to pay recurring fees to sellers as long as their positions are open and the price doesn’t move.
Waiting for liquidation (Liquidation Hunting): Price stagnation or a slight dip is enough to exhaust traders psychologically or liquidate their open accounts with high leverage when any sudden market fluctuation occurs.
3. "The Percentage Trap" in Futures Contracts
Some people believe that if a coin becomes extremely cheap (below a cent), there’s nothing to fear from the general market or Bitcoin falling. This is the biggest calculation trap!
Algorithms and platforms don’t treat prices as "cents" but as "percentages." Mathematically, price movement downward by extremely tiny fractions of a cent may represent a 20% or 30% drop—enough to clear and liquidate (Liquidation) any leveraged buy trade, even if the coin looks at its historical lows.
How do you protect your wallet and trade intelligently?
Study token economics (Tokenomics): Before buying, always check the circulating supply and the total supply of the coin, and avoid projects with infinite inflation.
Investing in standard assets: If your goal is to buy and hold long-term, safety lies in assets with strict scarcity and truly decentralized governance, where the rules are encrypted and protected from sudden manipulation.
Separation of Spot and Futures: Futures contracts (Futures) are designed for fast, momentary speculation. As for buying from the lows and holding long-term, the exclusive and safe place is the Spot market to avoid liquidation and funding fees.
⚠️ Disclaimer: This article is for educational and awareness purposes only, to share how the market works technically, and does not constitute any kind of investment or financial advice. Trading involves high risk, and you should always do your own research (DYOR)
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