This article is for beginners, those who always incur losses.
You're good now, you always win, you think you control the market, please skip and don't be petty.
To clarify, I need to talk about other financial markets; if you patiently read, it may help you if you still participate in this market.
The crypto market has similarities but also very large differences with the stock market, oil, gold, forex...
Stock market: the base price (floor price) is based on the value of the enterprise determined through supervision and confirmation by state agencies. When listed, the value changes based on the expectations of the enterprise's development.
Gold, oil, forex markets: the base price is set based on the real value of the goods traded in reality.
Crypto market: the price of a coin is confirmed and established when listed on an exchange based on the consensus of crypto players. This is very different; to create a coin, its value is often very low, the cost to promote it is often much higher. They create communities to promote and set its price (creating consensus on price). Even with BTC, the price is actually very low (many people confuse the trading value on exchanges with the real value of the coin).
Let me take BTC as an example: although BTC is a special coin with a limited quantity, its production value is very low. Don't take the cost of mining BTC at this moment as a basis; about 60-70% of BTC is mined at a very low cost. Currently, the remaining amount that can be mined is very small and hard to mine, requiring a large investment. They still mine because the current trading price is still profitable, but you cannot take 5-7% of this BTC quantity to represent the price of BTC.
How people create and operate the Crypto market: Financial experts recognize this as a field with opportunities to make a lot of money, as prices are created by the consensus of crypto players (this is just a small group in society). Crypto has a very low production cost (only a few percent compared to market capitalization). Therefore, price volatility is comfortable; it is based on the psychology and acceptance of the players. Just manipulating the psychology of the players will control the price as desired.
Now I will talk about how it operates: using BTC as an example, exchanges and financial institutions will buy up BTC when the price is very low; they only accumulate about 70% of the available BTC. Then they create exchanges, implement communication strategies to push the price up to the desired level, and sell BTC for profit. After that, due to the large amount of stock being pushed out along with the communication effect, the price of BTC drops significantly. When the price drops to the target buying price, they buy back and continue a cycle of price movement. I'm only writing this simply here for you to understand the essence; in reality, they operate in a much more complex way. Opening various types of trading like Margin or Future is also extremely effective; it amplifies profits, also encourages losses, and amplifies the players' expectations or pessimism, making it easier to manipulate psychology.
If you pay attention to forums about Crypto, if the price fluctuates upwards, even by just a few percent, there are already too many overly excited posts about uptrends and expectations of this coin or that coin x10, x100. Be cautious; only a small portion of those are posts from small players, while the rest are often from exchange staff and financial institutions.
I can guarantee that in this market, the number of people making money is very few; only about 10% are small retail investors (considering those who participated and survived for 4 years, surviving 2 coin seasons). Even if you win in 1-2 months, it does not mean anything; remember, if you win for a few months and stay in the market, you will also lose. 90% of small investors are the liquidity of the exchanges and market makers.
You think exchanges + market makers + small investors win, they earn a lot of money, so where does that money come from?
If you buy at a low price and sell at a high price and make a profit, then someone else must sell at a low price and buy at a high price and incur a loss. That is the principle; not everyone can win. And that is why when the price is high, there are so many posts encouraging buying.
$BTC
