The belief must be translated into action to succeed; this phrase is perfectly applicable to the cryptocurrency market. Recently, I’ve seen many discussions about price fluctuations, and the feeling of falling from heaven to hell is truly unforgettable, which is also the charm of this market.

But have you ever thought about what exactly causes a major crash in virtual currencies? I’ve summarized several main factors that are worth a deeper understanding.

First is the news aspect. A single tweet or statement can trigger huge volatility in the crypto space. Good news pushes prices up, while bad news directly dumps the market. That’s why everyone keeps a close eye on various news, because information can indeed directly influence market sentiment.

Next is policy factors. Government regulation trends are often turning points for the market. Remember last year’s power outage in Sichuan? All mining farms shut down overnight, and the market dropped accordingly. Restrictions from central banks on financial institutions can also lead to sideways movement or declines. In the reasons for major crashes, policy shocks are often the most direct.

Then we look at market manipulators. The crypto space, like the stock market, has major capital players. They buy low and dump high—pushing prices up to sell off at the top. Cost is key—when the market drops, no one dares to buy, so they can heavily dump; when the market rises, just buying key positions can push prices higher. This manipulation constantly influences short-term trends.

The specific coin also matters a lot. The team’s strength, technological progress, whether issues are exposed—these all impact the price. Once a project is revealed to have problems, the price drops immediately; conversely, listing on major exchanges can cause it to rise. The project’s fundamentals determine its long-term direction.

There’s also the overall market environment. Bull markets see frantic rises, bear markets see wild declines. Most coins are affected by the macro environment, which is an important background for major crashes.

Finally, is the supply and demand relationship. This might be the most fundamental factor. Oversupply causes prices to fall; demand exceeding supply causes prices to rise. All other factors ultimately reflect in supply and demand.

Thinking carefully, whether it’s a sharp rise or a sharp fall, it’s not caused by a single factor. News, policies, manipulator actions, the project itself, market environment, supply and demand—these factors influence and interact with each other, ultimately forming the price fluctuations we see. Understanding these causes of major crashes in cryptocurrencies can help you view the market more rationally.