(Original work) Please like, follow, and support
Frequent losses and liquidations occur, yet retail investors continue to flock in; this reflects the complex interplay of human nature, market mechanisms, and the backdrop of the times. Here are several core reasons:
1. The deadly temptation of high returns
The most attractive feature of the cryptocurrency world is: 'the possibility of becoming rich in the short term'.
Case: Bitcoin surged from a few cents to 60,000 USD, and meme coins like Dogecoin and SHIB saw a thousandfold increase; these 'myths' are infinitely amplified through social media, stimulating human greed and a sense of luck.
Psychological mechanism: The human brain is exceptionally sensitive to the reward mechanism of 'quick success'; even knowing the odds are extremely low, people still pay for the fantasy of 'what if I succeed'.
2. Survivorship bias: Only seeing winners, ignoring losers
Social media and news tend to report stories like 'someone turned 1000 yuan into 100 million', while the silent majority of losers go unnoticed.
Self-justification: Losers often attribute their losses to 'bad luck' or 'operational mistakes' rather than acknowledging the high risk of the market itself; this psychological defense mechanism leads them to continue entering the market.
3. Casino effect: The addictive trading experience
24/7 trading, extreme price fluctuations, and the thrill of leveraged contracts resemble the instant gratification of gambling, making it easy for people to become addicted.
Losers will continue to increase their bets in an attempt to 'turn the tables', falling into a vicious cycle of 'the more they lose, the more they gamble'.
4. The 'meat grinder' of leverage and contracts
Exchanges offer leverage of up to 100 times, with small fluctuations leading to liquidations. Statistics show that 95% of contract traders ultimately incur losses, but exchanges profit steadily through fees and liquidation mechanisms.
Project parties, market makers, and large investors harvest retail investors through controlling the market and insider information; ordinary players are like 'lambs to the slaughter'.
5. Group Psychology and FOMO
Community incitement: In the cryptocurrency world, Telegram groups, Twitter influencers, and KOLs create echo chambers, constantly generating anxiety about 'getting on board'.
Herd behavior: When those around are discussing making money in the cryptocurrency world, individuals may blindly follow out of fear of being marginalized.
6. Low barriers and cognitive biases
Easy entry: Just a mobile phone and 100 yuan are needed to trade, attracting a large number of novices lacking financial knowledge.
Dunning-Kruger effect: Newcomers often overestimate their judgment, mistaking luck for skill, believing 'liquidation is someone else's problem; I can win'.
As the old saying on Wall Street goes: 'Make money in a bull market, earn coins in a bear market, but retail investors always lose money.' The key to surviving in the cryptocurrency world may not be predicting the market, but recognizing oneself.
