Bitcoin (BTC), where volatility and speculative behavior can lead to significant losses for many participants. Here are some key points to consider:
1) Volatility:
The cryptocurrency market, including Bitcoin, is known for its high volatility. This means that prices can rise and fall sharply in short periods of time, creating both opportunities for quick profits and risks for significant losses.
2) Profitability model:
In traditional stock and equity markets, returns are often tied to company fundamentals, economic growth, dividends, etc. In contrast, cryptocurrencies, especially in their early years, are driven more by speculation, confidence in blockchain technology, news, regulatory changes, and general market sentiment. This makes price movements less predictable and more prone to hype.
3) Liquidations:
When the price of an asset falls below a certain level, traders' positions may be liquidated, which results in a forced sale of assets at the current market price, amplifying the price decline and creating a chain reaction of liquidations.
4) Difference in investment strategy:
In the stock market, investors can focus on long-term investing, portfolio diversification, and fundamental analysis. In the crypto sphere, where time frames are often compressed, many participants behave more speculatively, which increases the risk of losses.
Education and experience: Many newcomers to the cryptocurrency market may not have enough experience or knowledge on how to manage risks effectively, which leads to large losses. Unlike the stock market, where investors may have access to a more extensive educational base and analysis.
