When the chart goes “Ouch”: Why prices crash, corrections happen and how to keep calm

Big red candles aren’t a glitch; they’re how this market breathes. EXMO experts unpack the main culprits behind sharp drops, show you how to tell a market-wide shock from a local issue, and map the typical drop sequence so you know what you’re looking at. We’ll also flag a few simple, beginner-friendly defenses and teach you to use them. The next pull-back will feel like a planned drill for you without any panic.

Usual suspects behind big drops

Big red candles are normal in crypto. Prices move because money, news, and emotions move. Learn the main triggers, spot what kind of drop you’re in, and use simple tools to protect yourself.

Macro “weather”: rates, liquidity, and risk appetite

When central banks hint at higher interest rates or tight liquidity, investors often de-risk. Risky assets (yes, that’s crypto) get sold first. The reverse is also true: easier money tends to help.

What to do: Zoom out to the weekly chart. If everything risk-on is wobbling (stocks, tech), it’s probably macro, not your favorite token’s fault.

Headlines & regulation (AKA “FUD fuel”)

A single headline—exchange trouble, new rules, tax talk—can spark fear, uncertainty, doubt. Even if the fact later gets clarified, price can move first and ask questions later.

What to do: Read the actual news, not just the retweets. Is it real policy, a proposal, or pure rumor?

Leverage wipeouts (the domino effect)

Lots of traders use leverage. When price dips, some get liquidated, which triggers more selling, which liquidates more… you get the idea. This creates waterfall candles that look scarier than they are.

What to do: If you’re a beginner, skip leverage. If you use it, size small and set strict stops.

Thin liquidity & whale moves

Small or mid-cap coins can swing hard when a big player hits the sell button. In thin order books, a large market sell will push price down fast.

What to do: Check 24h volume and order-book depth before trading smaller coins. Thin books = handle with care.

On-chain supply shocks

Token unlocks/vestings, staking withdrawals, or emissions can hit at the worst time and add sell pressure just as demand softens.

What to do: Peek at the token’s unlock schedule and emissions. If a big unlock is this week, don’t be surprised by turbulence.

Stablecoin stress & liquidity rotations

If a major stablecoin loses its $1 peg or confidence wobbles, money moves around quickly. Even without a depeg, large rotations between stablecoins, BTC and alts can whipsaw prices.

What to do: During shaky periods, keep some funds in well-supported stables and diversify across a couple if needed.

Security incidents: hacks, exploits, bridge issues

When a protocol gets hacked or a cross-chain bridge fails, price usually gaps down first, recovers (maybe), then digests details.

What to do: Separate protocol-specific risk (only that coin) from systemic risk (affects many). Don’t knife-catch a hacked token without understanding the hole.

Sentiment swings & narrative fatigue

Crypto runs on stories. When a hot narrative (AI, L2s, RWAs, DePIN, LST/restaking) overheats, even good projects dip as profits are taken and attention moves on.

What to do: If your thesis is intact (users/fees/partners), sometimes it’s just rotation—not the end.

Understanding and reaction

With the proper knowledge, it becomes easier to figure out what is happening in the market. A single trader is unlikely to influence the situation (unless you are a top whale), so a proper reaction remains the most sensible way out of a sharp drop.

Ask yourself 3 quick questions:
▪️Market-wide or local? If BTC, ETH, and majors fall together, it’s likely macro/liquidity. If only one ecosystem dumps, it’s local.
▪️Thesis broken or just volatility? Did something fundamental change (hack, ban), or is this a scary candle in a healthy trend?
▪️Is liquidity the culprit? Thin books + leverage = exaggerated moves. Deep books + little leverage = calmer.

If you can answer these, you’ll react smarter (and calmer).

Practical ways to protect yourself:
▪️Use price alerts. Don’t babysit charts. Set alerts in the app to ping you at key levels—then live your life.
▪️Place stop-loss / take-profit orders. Pre-define your exits so one bad night doesn’t become a bad month. In Advanced Trade, you can set stops and targets before anything happens.
▪️Scale in, scale out (DCA). Buy/sell in parts rather than all at once. It smooths timing risk, especially in choppy markets.
▪️Keep a stablecoin buffer. A small stash of USDT/USDC makes it easy to buy dips or sit out chaos. If it’s idle, consider EXMO Earn (Flexible for easy access; Fixed for potentially higher rates if your timeline is clear).

Regional note: availability of tiers and conditions varies by location; EEA users don’t have access to Earn tiers (Basic only). Always check in-app.

▪️Mind your fees when rotating. If you rebalance often, costs add up. You can pay for EXMO Premium with EXM to reduce maker/taker fees. Run the “does it pay for itself?” math first.

Regional note: Premium availability can vary by jurisdiction (EEA-residing users do not have access). Always check in-app.

▪️Be careful with margin. Leverage turns dips into disasters. If you’re new, skip it. If you can’t resist, keep it tiny and always use a stop.
▪️Security first. 2FA on, strong passwords, withdrawal whitelist. A hack hurts more than any red candle.

You can’t control the news or the next candle. You can control how much you risk, how you enter/exit, and how well you sleep.

This article is for educational purposes only and should not be considered financial advice. Cryptocurrency investments involve risk, and you should always do your own research or consult a licensed financial advisor before making decisions.