The Cognitive Traps of Losing Money in Cryptocurrency Trading: A Blood and Tears Lesson from a Million Yuan Principal

Assuming you hold 1 million in funds, stepping into the crypto world with dreams of financial freedom and heavily investing 700,000 in a certain cryptocurrency. Initially, a 1% drop is merely a minor fluctuation of 7,000 yuan on paper, and you firmly believe that the market's pullback is just a temporary adjustment; when a 3% drop takes away nearly 20,000 yuan, the obsession with 'value returning' still keeps you calm in holding your position.

However, the market never follows the script. On the fifth day, a 20% cliff-like plunge instantly devours 140,000, and you start to fantasize about miracles in your anxiety; a brief 5% rebound feels like a life-saving straw, restoring your confidence. But when consecutive drops accumulate to 40%, your account assets have shrunk by more than half, and your previous calmness is completely replaced by panic. Facing a long period of horizontal movement, the online narratives of 'building a bottom and rebounding' and 'main force accumulating positions' lead you deeper into self-deception.

A month later, the coin price drops again by 20%, and your losses have exceeded 60% of your initial principal. When the concept of 'stop-loss' finally arrives, you find yourself in a dilemma between liquidating all and continuing to hold. At this moment, the news of your friend's sudden wealth and the temptation of 'leading strategies' become the last straw that breaks the camel's back — you sell off your remaining assets to switch to new coins, trying to recover losses through speculation, unaware that this is just the beginning of a new cycle of losses.

The root of this tragedy lies in the lethal combination of cognitive biases and human weaknesses: a lack of scientific position management leads to uncontrolled risk exposure; excessive tolerance for short-term fluctuations masks systemic risks; and the instinctive impulse to chase rises and sell on dips ultimately drags investors into the abyss. In the high-risk cryptocurrency market, without professional knowledge, risk control systems, and rational decision-making, the myth of getting rich quickly will ultimately become a wealth crushing machine.