From ATH to the next market cycle: A deep understanding of the trading logic at historical highs

In the cryptocurrency market, the term “ATH” frequently appears. What exactly does it represent, and why is it so critical for traders? When a coin hits a new high, what changes occur in the market? This article will analyze the essence of ATH and reveal how professional traders make decisions at high points.

What is ATH? A Deep Understanding of this Market Indicator

ATH is the abbreviation for All-Time High, used to describe the highest trading price an asset has achieved since its inception.

In comparison:

• ATL (All-Time Low): the historical lowest point, usually seen during bear markets

For example, according to the latest market data:

• Bitcoin: The all-time high reached $126.08K, which is its current ATH
• Ethereum: The all-time high reached $4.95K, representing its peak valuation

Why does ATH represent a key moment in the market?

When an asset hits ATH, it signifies:

• All holders are in profit (except the last buyers entering the market)
• Market sentiment reaches an extremely euphoric state
• Selling pressure and buying momentum are in fierce confrontation

Market Behavior When Breaking Through ATH

1. Price Discovery Phase (Price Discovery)

Once the asset price surpasses the old ATH, the market enters a completely new territory. At this point:

• The previous high no longer acts as resistance
• Sellers lack historical reference points and don’t know at what price to unload
• Buyers are attracted by the new high, continuously pushing prices higher

This phase often results in unresisted upward movement, leading to sharp short-term surges.

2. FOMO and Profit-Taking Tug-of-War

The market at this stage falls into a typical battle between two forces:

Buyers (FOMO):

• Media extensively reports “new high” news
• Retail investors fear missing out and rush in to chase the high
• Trading volume surges

Sellers (Profit-Taking):

• Early low-cost investors offload holdings amid high liquidity
• Use the euphoria around ATH to mask their selling
• Gradually reduce or completely exit positions

Because of this tug-of-war, significant volatility near ATH is common.

How to Trade During ATH? Two Core Strategies

Strategy 1: Trend Following — Breakout and Retest Trading Method

This approach suits more conservative traders:

1. Confirm the Breakout: patiently wait for the price to effectively break through the old ATH with accompanying volume

2. Wait for Retest: the price often pulls back to test the old ATH level, verifying if it has become a new “support”

3. Confirm Support: if the price holds at this level and rebounds, it is seen as a solid entry signal

This method’s advantage is relatively clear risk, with well-defined stop-loss points.

Strategy 2: Counter-Trend Trading — Top Reversal Strategy

This is a high-risk, high-reward advanced method:

When the following signals appear simultaneously, traders may anticipate a reversal:

• Price hits ATH but volume suddenly diminishes
• Clear reversal candlestick patterns emerge (e.g., upper shadow bearish candles)
• Market sentiment indicators are overly euphoric

Operation: use leverage tools to open short positions, aiming to profit from the reversal.

⚠️ Major Risk Warning: During the price discovery phase, upward movement can be completely limitless. Engaging in contrarian short positions without strict stop-loss enforcement can lead to “short squeezes” and huge losses, even wiping out the principal.

Does ATH Always Lead to a Drop? Common Myths Debunked

Myth: Hitting a new high equals a top, and a big drop will follow

Fact: Not necessarily. While short-term profit-taking can cause a correction, if fundamentals are strong (e.g., Bitcoin halving cycle), breaking ATH often marks the start of a new bull run, not the end.

How to Check ATH

You can track each asset’s ATH through:

• Market data websites like CoinGecko, CoinMarketCap
• Exchange candlestick charts
• Viewing the asset’s drawdown from ATH to assess whether it’s currently at a low point

Conclusion: Rationally Facing Market Frenzy

ATH is not just a number record; it reflects the market’s emotional peak, investor confidence extremes, and an important price discovery phase. Whether following the trend or contrarian, the most important aspects are risk management and emotional control.

Staying calm during the market’s most euphoric moments is key to long-term profitability.

Disclaimer: This article is for educational and informational purposes only and does not constitute investment advice or trading recommendations. Cryptocurrency markets are highly volatile, and past data does not predict future performance. Please conduct your own research and assess your risk tolerance before making any investment decisions.