2026-01-02 12:22:12

The most common mistake in a bear market is rushing to buy the dip. There is a saying circulating among the people: the deeper the decline, the more it’s time to buy the dip. In simple terms, this is gambling, purely driven by emotion.

So the question is—how to determine if the bear market is truly ending? From the perspective of market supply and demand, it requires demand to expand and supply to gradually deplete. Based on price and volume performance, there are generally four typical stages.

**Initial Support**: Market demand begins to pick up, and some smart funds start quietly accumulating after the price enters the value zone. This behavior will gradually influence other institutions to follow suit.

**Panic Selling**: Retail investors sell off in large quantities out of fear, mostly influenced by pessimistic emotions and negative news, trying to cut losses quickly. It’s hard to hear, but the lasting bull market often comes after experiencing this stage. Without panic selling as a foundation, rebounds usually don’t go far.

**Auto Rebound**: The normal market response after panic selling. A word of caution—never buy the dip here. Because this rebound is often just short covering, with limited gains.

**Second Test**: In theory, the main players want to verify whether there are still large-scale liquidations in the market, or whether supply can still support the continuation of the bear market. If during the second bottoming out, trading volume significantly shrinks and candlestick ranges narrow sharply, it indicates that the bear market is truly nearing its end.

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CodeZeroBasis

· 3h ago

That's right, I was one of the people who suffered the biggest losses because I was rushing to bottom fish... The move of a second bottom and shrinking trading volume is brilliant; I finally understand the real signal. The biggest risk in bottom fishing is catching the wave of short covering, losing money very quickly. Wait, does that mean we shouldn't act now? The signal still doesn't seem clear enough. Without retail investors' panic selling, where does a sustained bull market come from? I love this logic. I want to ask, how can we accurately determine if the trading volume is really shrinking? Not just by visual inspection, right? This article hit me; I am the kind of emotional trader who wants to buy more the harder the price falls. I never thought about the exhaustion of supply before; so that's the angle!

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TommyTeacher

· 3h ago

I really don't dare to agree with the idea that "the deeper the fall, the more it should be bought," this is truly the graveyard for retail investors... How many stories have I heard about people being trapped at the bottom? --- The second test area was well explained; shrinking trading volume is indeed a signal, but I think it should also be combined with on-chain data. Relying solely on candlestick charts can be easily deceived. --- Panic selling is actually the real buying opportunity, but the prerequisite is that you must have the discipline not to be driven by emotions. If you can't do this, it's better not to bother. --- Been burned by automatic rebounds... thought I was bottom-fishing, but it turned out to be just short covering, and then it crashed. --- Honestly, no indicator is useful; the most important thing is to wait until the spot market pressure disappears. It feels much more comfortable than just looking at charts.

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DaoResearcher

· 3h ago

From the data performance, these four-stage models are essentially applications of the Elliott Wave theory in a bear market—it's worth noting that most people get caught in the "automatic rebound" moment, which is technically correct, but the dynamics on the supply side haven't truly improved. According to on-chain data, the shrinking trading volume during the double bottom is indeed a signal, but there is an incentive incompatibility issue here: the main players are also betting, so who truly represents the market consensus? Token Weighted Voting exposes this—retail investors' desire to buy the dip and institutional goals to verify the market bottom are fundamentally not in the same game equilibrium. It is recommended to first review the governance proposals of several projects from last year; many dip-buyers got trapped during the "automatic rebound" phase and are still complaining in the DAO.

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WealthCoffee

· 3h ago

Really, last time I got caught in the automatic rebound wave. Only now do I realize it was a short covering rally. A shrinking volume on the second bottom is the real signal. I’ve taken note of this time. Wait, so the question is how to confirm that I’m right about the second bottom and not just another wave coming? The deeper the fall, the better the bottoming. How many people have been ruined by this saying? Depletion of supply is the key, but how can we tell? Can trading volume reflect that? It always feels like I’m stepping on the highest point each time, like a contrarian indicator. The real opportunity is when retail investors panic and sell, but I’m just a retail investor myself. This theory sounds right, but in practice, who can precisely catch the second test? Without experiencing a panic-driven bottom and rebound, it’s hard to go far. I agree with that.

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