Scammers often exploit the curiosity and interest of their victims. Once someone expresses a desire to invest in cryptocurrency, these fraudsters position themselves as intermediaries, offering assistance with supposedly advanced trading strategies. However, they display fake trading dashboards on fraudulent exchanges, ultimately siphoning off the victims' funds. When the victim attempts to withdraw their cryptocurrency, the scammer vanishes with the stolen money.
Unfortunately, this is just one of many crypto scams that undermine the industry. It's crucial to educate yourself about common scams to identify their warning signs and protect yourself. Set aside a day to read up on these scams and implement robust security measures to avoid becoming a victi.
Why Many People Lose Money in Crypto
Despite the historical pattern of the crypto bull run cycle repeating every four years, many investors still end up losing money. Let’s explore the reasons behind this trend.
1. Understanding the Crypto Bull Run Cycle
Typically, a bull run lasts about four years, with the first three years representing a bear market and the final year being the bull run. The timing of previous cycles illustrates this pattern:
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
As of now, the all-time high (ATH) hasn't been surpassed, indicating we are still in a bear market.
2. The Psychology of Market Cycles
The bull run cycle brings a wide range of emotions, reflecting different phases:
Red Phase: Complacency, Anxiety, Denial, Panic, and Capitulation occur after hitting a new ATH when prices begin to decline rapidly. Investors often fail to recognize the start of a downturn.
Yellow Phase: During the accumulation period, emotions include Anger, Depression, Disbelief, and Hope, as the market trades sideways before potentially recovering.
Green Phase: After breaking the previous ATH, investors experience Optimism, Belief, Thrill, and Euphoria, often leading them to re-enter the market.
3. The Interaction of These Factors
Combining the understanding of the bull run cycle and the psychology of the market explains why investors lose money in crypto, even with awareness of these cycles.
Red Phase: After reaching a new ATH, investors often become complacent, thinking any decline is just a temporary pullback. As prices continue to fall, anxiety and denial set in until panic drives them to sell, often at a significant loss.
Yellow Phase: In this phase, prices trade sideways, leading to anger and depression over losses. Even when the market starts to recover, disbelief can prevent timely re-entry until renewed hope emerges.
Green Phase: When prices exceed the previous ATH, investors begin to regain confidence. As excitement grows with rising prices, many fail to sell at the optimal time, ultimately leading to losses when the cycle starts anew.
In summary, this emotional roller coaster, combined with the cyclical nature of the market, explains why many individuals struggle financially in the crypto space.
