Why Do So Many Investors Lose Money in Crypto? 😥☠️ Discover the Real Reasons! 🤔
It’s well-known that cryptocurrency moves in cycles, with massive bull runs every four years. Yet, even with this pattern, countless investors still face substantial losses. Wondering why? Let’s dive in.
1. The Structure of a Crypto Bull Run Cycle
Crypto operates on a distinct four-year cycle: three years spent in a bear market, followed by an explosive bull run. Historically, these cycles have been surprisingly consistent:
2014-2018
Bear Market: 177 Weeks
Bull Market: 34 Weeks
Total: 211 Weeks (4 years, 2 weeks)
2018-2022
Bear Market: 157 Weeks
Bull Market: 47 Weeks
Total: 204 Weeks (3 years, 11 months)
2022-2026
We’re currently in the bear market phase, awaiting the next big breakout, with no confirmed new all-time high (ATH) yet.
2. The Psychology Behind Market Cycles
These cycles can be brutal, but the real rollercoaster is the psychological impact on investors, leading many to losses despite market knowledge.
Red Phase: Complacency, Anxiety, Denial, Panic, Capitulation
After a new ATH, prices start declining. Initially, it seems like a minor dip, so you stay in. But as prices fall further, anxiety builds. When your investment plummets by 90%, panic sets in, and you sell at a loss—entering the capitulation phase.
Yellow Phase: Anger, Depression, Disbelief, Hope
The market stabilizes, but you’re still reeling from the drop. Skeptical of any upward movement, you hesitate to re-enter. Gradually, hope returns as prices recover slightly, but it’s cautious.
Green Phase: Optimism, Belief, Thrill, Euphoria
Once the price breaks past the last ATH, optimism explodes into excitement. You re-enter, thrilled as prices soar. However, euphoria often clouds judgment, setting you up for a harsh wake-up call when the cycle inevitably shifts again.
3. The Perfect Storm: Cycle + Emotion
This predictable cycle, combined with the unpredictable nature of investor psychology, creates the “perfect storm.” Even when people know the bull-bear pattern, emotions often override logical decisions.
🟥 Red Phase
Initial complacency turns to anxiety, but you hold on, hoping for recovery. When the price finally collapses, panic pushes you to sell, resulting in substantial losses.
🟨 Yellow Phase
Prices trade sideways, causing frustration and regret. Minor rallies seem suspicious, yet hope slowly creeps in. You’re hesitant, often missing the momentum entirely.
🟩 Green Phase
With a new ATH, optimism and thrill return, prompting a rush to buy. Excitement peaks, but without a clear exit plan, the cycle’s downturn catches many off guard.
Ultimately, many lose money in crypto because they’re swept up in these cycles, struggling to recognize when it’s time to exit. Staying level-headed, planning ahead, and controlling emotional swings are the real tools to succeed in this volatile market.
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