Belief without action ultimately is just a daydream. This phrase couldn't be more fitting in the crypto world.

Recently, the volatility in the virtual currency market has been truly shocking, dropping from heaven to hell in a short period. The thrill of such swings makes it impossible to stop. But have you ever thought about why prices surge and plummet so wildly? On the surface, it looks chaotic, but there is actually logic behind it.

Let's start with the news aspect. A single tweet can cause bloodshed and chaos; everyone knows the example of Elon Musk. News is indeed a major factor causing cryptocurrencies to sharply rise or fall—good news leads to gains, bad news leads to drops, it's very straightforward.

Then there are policy factors. When a country's regulatory intensity increases, such as the mining policy adjustments in Inner Mongolia, Qinghai, and other regions back then, or the central bank urging financial institutions not to engage in cryptocurrency businesses, the market immediately stalls. The influence of policies can be seen clearly through these cases.

Market manipulation by whales is also a key factor. The crypto market, like the stock market, has whales who profit by controlling the cost of chips. When the market declines, they dump coins to absorb chips; when it rises, they push prices up to sell off. They strike hardest when costs are at their lowest. That’s why sometimes price fluctuations seem irrational—because someone is manipulating behind the scenes.

The type of coin itself is also very important. The team, technology, founders’ backgrounds, even whether it’s been exposed for plagiarism, which exchange it’s listed on—all these directly impact the price. Some project teams have deep tricks: issuing tokens early, writing white papers, hiring celebrities for endorsements, fundraising, listing on exchanges—this entire process is just a way to siphon money. Angel rounds, private placements, public fundraising—layer after layer of profit sharing. The real harvesting happens when it hits the secondary market on exchanges.

Market environment also determines everything. During a bull market, prices surge wildly; during a bear market, they crash. A good macro environment pushes prices up, a poor one drags them down. This is closely related to news and policy factors and is hard to separate completely.

At the core, it’s all about supply and demand. When supply exceeds demand, prices fall; when demand exceeds supply, prices rise. Ultimately, the reason for a sharp decline in cryptocurrencies boils down to these factors stacking up—there’s no single cause, just multiple resonating influences.

Looking back now, those with firm beliefs are not blindly buying in; they truly understand the logic of market operation, and only then do they dare to act. Once you understand these principles, you can decide how to proceed.