Recently, I’ve been thinking about a question: why do cryptocurrencies experience such violent swings? Falling from heaven to hell—sometimes it only takes a few hours. This kind of extreme up-and-down experience really is addictive, and that’s exactly what makes this market so compelling.

I’ve been observing for a while, and I found that the reasons behind major drops in cryptocurrencies are actually quite complex—they’re not caused by a single factor. Let’s start with the most direct one: the news. A tweet, an announcement, or even a throwaway comment from a well-known figure can trigger a chain reaction. These pieces of information may be favorable or unfavorable, and the market is often very sensitive to how it reacts to them—resulting in price volatility.

The impact from the policy level is even more difficult to ignore. Do you remember a few years ago when domestic regulators changed their stance on mining and trading? From Inner Mongolia to Qinghai to Sichuan, a series of policy adjustments directly hit the market. The central bank also clearly stated that financial institutions are not allowed to provide services related to cryptocurrencies. These kinds of policy signals often lead to obvious sideways trading or declines in the market.

Then there are the factors involving market makers. The crypto market is essentially no different from the stock market in essence. When large funds move in and out, they realize maximum profits by controlling the price. When they’re accumulating at low levels, they suppress the price; when they distribute at high levels, they push the price up. The key is cost control—when the broader market is falling, they can deeply hammer the price with the smallest amount of chips; when the broader market is rising, buying at key levels can drive the overall upward move. This kind of operating approach is why the causes of major cryptocurrency drops often include human factors.

There’s also the problem with the coin itself. The project’s development progress, the team’s strength, the technical level, and the founder’s background—all of these can affect market confidence. If a project is exposed for plagiarism, the price drops immediately; if it goes live on a major exchange, the price may rise instead. This is the market’s direct reaction to fundamentals.

The broader environment also matters. When a bull market arrives, almost all coins tend to rise; when a bear market arrives, prices generally fall. Market sentiment and the environment influence the direction of most assets, and that’s a force that’s hard to resist.

At the root, it still comes down to supply and demand. When supply is greater than demand, prices fall; when demand is greater than supply, prices rise. In fact, whether it’s the news, policy, or the market makers’ operations—these factors ultimately show up as changes in supply and demand. So, whether it’s a big rally or a crash, behind it there is always the combined effect of multiple factors. The reasons behind major cryptocurrency drops may look complicated, but in reality, it’s the result of these forces interacting with one another.