Why do most people fail to make money in the cryptocurrency world?
Have you ever thought about why someone who knows nothing can make money just by dollar-cost averaging and holding Bitcoin?
I have thought about the essence of this issue; the root lies in their behavior, eliminating all human factors of interference, making money unrelated to emotions.
In investing, once personal emotions interfere with subjective judgment, it becomes fatal.
As long as you are influenced by market emotions while investing, your returns will definitely decrease or incur losses, without exception.
The father of quantitative finance, Simons, achieved an annualized return of 64%, far exceeding Buffett's 20%.
However, before this, Simons relied on 13 years of research on macro fundamentals to invest and make money but ultimately did not make any money and gave up, shifting to advanced mathematical models to make money while eliminating any human emotional interference in the market.
Human emotions are the biggest interference in investing.
In the cryptocurrency world, some people make money trading, some hoard coins for the long term, some rely on contracts, some do airdrops, and some are KOLs earning commissions and client losses.
As long as it is profitable, it is not influenced by emotional factors.
People who make money trading have clear plans: why to buy, when to sell, and how much to sell. They do not chase highs, do not bottom fish, and do not FOMO.
Those who make money by hoarding coins simply buy, regardless of highs or lows, regardless of market sentiment, just buy Bitcoin, not caring about the rights and wrongs of the cryptocurrency world, holding for more than two cycles.
Those who make money through contracts take profits when they earn, always trading a fixed amount, having set stop losses and take profits. They take breaks when not earning, find new strategies, are not influenced by emotions, do not hold onto losing positions, and do not use excessive leverage.
Those who make money through airdrops persistently keep trying regardless of whether airdrops happen; if one doesn't work, they try the next, they won't be discouraged or complain.
KOLs making money do not sympathize with others' losses; they do not feel morally guilty for clients' losses. Of course, they themselves do not engage in contracts and will not be dragged down by those making money; they have no emotional interference.
Making money in the cryptocurrency world means eliminating all emotions. If you want to buy a coin and you have a thought that this is going to make you rich, what if I miss out, others have bought a lot, others say it’s good, then you should not buy. The likelihood is that you will get cut.
Many people say dollar-cost averaging is easy; I think such statements are naive, made by those who have never done it.
Dollar-cost averaging is the hardest because it's slow; being slow is the most anti-emotional, not only slow but also having to endure long-term losses. As soon as you generate emotions against the market, you essentially give up. There will always be someone buying more when prices fall and buying less when prices rise, or buying more when prices are high, and not buying when they fall. Or they buy a little and can't hold on, wanting to sell.
I have written many articles about ordinary people dollar-cost averaging BTC, not saying that investing and making money necessarily requires buying BTC or dollar-cost averaging.
Dollar-cost averaging allows the most ordinary and least skilled people to make money, as it helps them eliminate emotional interference.
On the contrary, smart people find it difficult to do dollar-cost averaging; those with average qualifications find it easier to do dollar-cost averaging.
Not only in investing but in anything, once emotions are involved, such as excitement or sadness, or pride, behavior may become excessive, leading to poor outcomes.
Why do those big figures engage in spiritual practices, retreat, seek teachers, traverse deserts, and reside in temples?
It's essentially about diminishing one's emotions through these behaviors; emotions increase entropy in one's actions.
It will not bring any good fortune, but rather increase your burden.
If you haven’t learned to eliminate emotional interference, no matter what techniques you learn or what methods you use to play in the cryptocurrency world, you won't make any money.
Those who are very successful in the cryptocurrency world will tell you that they do not allow emotional interference.
When making money, smile slightly and continue to the next order; when losing money, also smile slightly and continue to the next order.
Nowadays, many people post about 'washing emotions' in their social circles, such as reading, writing, or practicing meditation. Essentially, these are all attempts to actively cleanse emotional interference.
What seems useless is actually very useful; those who are anxious and troubled in life do not engage in emotional cleansing activities; rather, those who have a smoother life often do these things. Of course, it's not because doing these things makes life better, but such people do not make subjective emotional judgments in anything they do. They have a standard of what is good and what is bad, and when something crosses that boundary and is harmful, they won't cross the line and will not engage due to emotions.
Whether it's good or bad emotions, they are of no benefit to personal development. Being too happy or too excited can lead to overreactions; as we often say, being too carefree can lead to problems. Being too down can also lead to a lack of energy.
Those who earn millions in the cryptocurrency world are definitely not disturbed by emotions; the key lies not in how miraculous their methods are, but in their ability to control emotional interference.
However, this is something that an ordinary person cannot achieve without going through three cycles; those who can do it must have encountered an industry veteran who guided them through this phase.
The seven stages of making money in the cryptocurrency world.
Stage one, the protection period for novices; buying during a bull market leads to profits, witnessing the charm of the cryptocurrency world, watching assets skyrocket, feeling happy every day, and ultimately feeling they bought too little, borrowing money to buy in one go, being trapped at the peak, not thinking of selling no matter how much it rises. When the bear market ends, the profits turn into losses, self-comforting and deciding to hold on; at this moment, you understand 'value investing.'
Stage two, having suffered losses from holding on, begins to study trading techniques, can capture hotspots, buys and earns, and runs when profits are made, ultimately missing out on major trends, earning very little.
Stage three, in-depth research, studying techniques, beginning to explore bottom fishing and topping, but as they keep bottom fishing, prices keep falling, and when they run out of capital, the decline has not stopped; you understand the methods of technical bottom fishing.
Stage four, delving into technology, gaining further understanding of techniques and knowing how to choose targets, but lacking in capital management, may encounter a black swan event and lose everything.
Stage five, the mindset enters a conservative stage, fearing coins, not daring to make rash moves, doubting all information, beginning to research targets independently, cautiously buying, learning to observe market sentiment, starting to understand the market's hype logic and capital expectations, and also understanding risk management.
Stage six, shedding arrogance, becoming humble, respecting the market, no longer greedy, believing the market is always right, and being able to take away a portion of profits is already a success. No longer ambitious to earn A9 or A8, just being able to earn is enough, not minding A6 or A7.
Stage seven, able to seize opportunities in market fear, able to identify crises within FOMO emotions, can grasp market hotspots, understands whether coin prices are high or low, is not greedy or fearful of the market, and begins to seek small gains rather than aiming for big profits all at once, accumulating 3-5 times from major hotspots and 50% from small hotspots, understands when to go to cash and when to give up, enters only when there are big opportunities, and realizes the most important thing in life is to exit when necessary. At this moment, you have achieved success in the cryptocurrency world.
