Deep declines are both risk release and risk transfer

Many people only see the losses caused by declines but overlook that a decline itself is also a process of risk release. When prices rise steadily over a long period, systemic risk is accumulating; when a deep correction occurs, these risks are gradually transferred to those who can withstand volatility.

A drop approaching historical extremes often means high leverage is being liquidated, overly optimistic expectations are being corrected, and project valuations are returning to reality. These processes are painful in the short term but make the market structure healthier. Just like forests need periodic small fires to prevent larger ones in the future.

What truly matters at this point is survival, not predicting the bottom. Maintaining cash flow, controlling positions, and avoiding emotional leverage are more realistic than trying to catch the “perfect bottom.” Because no one can precisely buy at the lowest point, but everyone can avoid falling before dawn.

There are two common paths for future trends: one is a quick rebound after emotional recovery; the other is a long-term consolidation and bottoming process. Regardless of which, only those who survive will have the right to participate in the next round.