The easiest stage to make money in the cryptocurrency world, 99% of people actually missed it!

I. Introduction: The myth of wealth in the cryptocurrency world and the paradox of “99% missed opportunities”
The unique charm and high risk of the cryptocurrency marketThe cryptocurrency market has attracted countless attention around the world with its amazing wealth creation effect. In this emerging market, it is not uncommon for asset prices to increase several times or even dozens of times in a short period of time, which has made the narrative of "getting rich overnight" widely circulated in the currency circle and stimulated a large number of investors' desire for quick returns. For example, Bitcoin soared from about US$1,000 at the beginning of 2017 to nearly US$20,000 in December, an increase of 1,900%. In 2021, Bitcoin once again soared from about US$8,000 at the beginning of 2020 to more than US$64,000 in April 2021, an increase of 700%, and reached an all-time high of US$69,000 on November 10, 2021. These cases undoubtedly bring great appeal to the market.
However, coexisting with such high returns are extremely high risks and volatility. Cryptocurrency prices can fluctuate violently, and their value can rise or fall sharply in a single day, creating an unstable state for investors and traders. For example, in early 2018, Bitcoin fell more than 80% from its all-time high. On May 19, 2021, the price of Bitcoin fell rapidly from a high of about $43,000 to around $29,000, with a maximum drop of more than 30%. This violent volatility may not only cause assets to shrink significantly in a short period of time, but may even reduce the investment to zero.
The coexistence of this "wealth myth" and "high risk" itself constitutes a paradox of attraction and repulsion. On the one hand, it attracts a large number of investors who are seeking quick returns and are eager to copy the success of others. On the other hand, its inherent volatility, complexity and immaturity make it difficult for most people to manage it without professional knowledge and risk management awareness, resulting in losses or missed opportunities in the turbulent market. This phenomenon lays the foundation for the subsequent report to explore why the vast majority of investors failed to seize opportunities and instead became "harvested leeks."
Background, purpose and core issues of the reportThis research report aims to deeply analyze the cryptocurrency market's generally considered "most profitable phases" and reveal the market mechanisms, key drivers and historical laws behind them. More importantly, this report will systematically explore why the vast majority of investors fail to seize these obvious opportunities and often suffer losses in these phases from multiple dimensions such as behavioral finance, investment strategies, market structure and macroeconomic environment.
The core question is: Are there certain stages in the cryptocurrency market where the risk-return ratio is relatively better and the money-making efficiency is higher? If so, what are the characteristics of these stages? The deeper question is why in these seemingly "easy to make money" periods, the vast majority of market participants fail to profit from them, or even suffer losses? This report will try to answer these questions and provide investors with a clearer market picture and a more rational investment perspective.
A preliminary definition and discussion of the “easiest stage to make money”In this report, the "easiest money-making stage" is defined as a period when the market is in a specific cycle, driven by a specific narrative, and asset prices show a significant and sustained upward trend. During these periods, excess returns can be obtained through relatively simple investment strategies (such as early layout and long-term holding), and the risk-return ratio is relatively better, and the efficiency of making money is higher.
It should be emphasized that this does not mean a stage without risk or expertise. The cryptocurrency market itself is high-risk and can experience sharp corrections even in a bull market. Therefore, "easy money" does not mean "easy money", but means that under certain market conditions, through the right cognition, strategy and discipline, it is possible to obtain returns with higher efficiency and a better risk-return ratio. Understanding the nature of these stages is crucial for investors to cross the cycle and make money wisely.
II. In-depth analysis of the “wealth creation” cycle in the cryptocurrency circleA. Bull Market: The Engine of Wealth GrowthDefinition, characteristics and drivers of a bull market
Bull Market, in the international financial market, refers to the upward trend of a certain market, industry or financial instrument, and the prices of financial products continue to rise over a period of time. It experiences sustained and/or substantial growth, usually manifested as insufficient supply, high investor confidence, and rising prices. When prices are seen rising rapidly in a given market, it may indicate that most investors are optimistic or "bullish" about further price increases. Generally, when prices rise by more than 20% relative to the low point over a period of time, it is considered to have entered a bull market.
Typical characteristics of a bull market include:
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Volume precedes price: An important factor in bull market momentum is whether trading volume gradually increases moderately. In the process of pushing up stock prices, rolling volume represents the continuous influx of market funds, and market investors begin to warm up. With the increase in trading volume, pushing up stock prices can drive the overall bullish atmosphere. This feature reveals the importance of early market signals. Before prices have soared sharply, a moderate increase in trading volume may herald the start of a bull market, which provides investors with forward-looking analytical capabilities with an opportunity to intervene early. However, most market participants are often attracted to enter the market when prices have risen significantly and market sentiment is high, missing the best time to layout.
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Market investment atmosphere: As the market in the early stage of the bull market gradually rises, trading volume also begins to expand, and investor participation increases. The entire market will form an optimistic mood, which will amplify investors’ investment sentiment and make them more willing to invest in risky markets.
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Policy support: Favorable macro policies or industry policies, such as the government’s positive attitude towards cryptocurrencies or clarified supervision, can also provide support for the bull market.
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Historical Bull Market Review: 2017 ICO Frenzy and Bitcoin Surge
The bull run in 2017 was the first time that the cryptocurrency market really entered the mainstream vision. During this year, Bitcoin soared from about $1,000 at the beginning of the year to nearly $20,000 in December, achieving an astonishing increase of 1,900%. The market performance during this period was staggering, and Bitcoin's daily trading volume increased from less than $200 million at the beginning of 2017 to more than $15 billion by the end of the year.
The main drivers of this bull run include:
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ICO (Initial Coin Offering) craze: 2017 saw an explosion in ICOs, with a large number of new projects raising funds by issuing tokens, attracting a large number of new investors. These new investors also developed a strong interest in Bitcoin as a major trading pair, driving its price up.
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Retail Investor Influx: This bull run was primarily driven by an influx of retail investors, resulting in unprecedented media attention, bringing cryptocurrencies into the mainstream conversation and establishing Bitcoin as a major financial asset.
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However, although the ICO craze in 2017 brought a huge wealth effect, it was also accompanied by a large number of frauds and project failures. According to statistics, nearly half (46%) of the ICO projects issued in 2017 ultimately failed, and many projects were considered "simple money-making behaviors", and some projects even failed in the financing stage. This phenomenon reveals an important problem: even in the "easiest stage to make money", the lack of supervision and information asymmetry make retail investors face huge risks. Many investors blindly flocked to ICOs when they hoped to participate in the huge gains of early Bitcoin or Ethereum, and eventually became "taker" rather than real winners. For example, China officially banned all ICOs and domestic cryptocurrency exchanges in September 2017, resulting in a sharp sell-off in the market. This shows that when the market lacks effective supervision, speculation and fraud will greatly damage the interests of retail investors, causing them to miss real wealth opportunities and become victims instead.
Historical Bull Market Review: Institutional Entry and Web3 Narrative in 2021
The 2021 bull run showed a more mature side of the cryptocurrency market, with the price of Bitcoin soaring from about $8,000 at the beginning of 2020 to more than $64,000 in April 2021, a 700% increase, and reaching an all-time high of $69,000 on November 10, 2021.
The main drivers of this bull market are different from those in 2017, with a greater focus on institutionalization and macro narratives:
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Institutional investment: The inclusion of Bitcoin in the balance sheets of well-known companies such as MicroStrategy, Tesla, and Square marks a major shift in market perception and promotes the legitimacy and demand for Bitcoin. In 2024, the cumulative inflow of Bitcoin ETF exceeded US$4.5 billion, showing strong institutional demand. The entry of large institutional investors (such as asset management companies, banks, and sovereign funds) has enhanced the status of cryptocurrencies as legitimate investment assets.
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"Digital Gold" Narrative: Amid global economic uncertainty caused by the COVID-19 epidemic, central banks around the world have implemented quantitative easing measures and governments have injected large-scale fiscal stimulus, sparking concerns about inflationary pressures. Against this backdrop, Bitcoin is seen as a "digital gold" hedge against inflation and a means of storing value, attracting investors seeking alternative assets.
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Web3 technology development: Technological innovations such as zero-knowledge proofs (ZK proofs) are gradually becoming mainstream. The Web3 concept promotes new forms of value exchange, financializing art, music, memes, etc., making them transcend traditional economic models.
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Regulatory progress: The U.S. SEC approved a spot Bitcoin ETF, opening the door for traditional investors and further boosting institutional demand and positive market sentiment.
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However, while the institutionalization trend of the 2021 bull market has enhanced the legitimacy and stability of cryptocurrencies, it also means that the market has become more complex and professional. For large institutional players, the lack of a clear counterparty and risk framework makes it difficult for them to enter the field, so builders who take regulation seriously, prioritize custody solutions, and follow best operating practices are attracting institutional interest. This shows that the improvement of market efficiency and professional thresholds may put retail investors at a disadvantage in the game with institutions. Institutions have stronger financial strength, information acquisition capabilities, and risk management tools, and are able to conduct deeper fundamental analysis and macro judgments. This explains why even in an institutionally driven bull market, retail investors may still "miss out" or "lose money" because they find it difficult to compete with professional institutions on an equal footing, and are easily sold out by institutions at high levels, or cut their losses in panic during a pullback.
B. Altcoin Season: The Explosive Power of Small CoinsDefinition and triggers of altcoin seasons
Altcoin Season refers to a period in which cryptocurrencies other than Bitcoin (altcoins) outperform Bitcoin over a period of time. Usually, this phenomenon occurs in the late stage of the bull market, when the price of Bitcoin reaches a "blue sky breakthrough" (that is, breaking through the historical high and entering the price discovery stage) and trends higher. Smart traders will transfer Bitcoin profits to Ethereum and other altcoins for the so-called "catch-up trade." This spillover effect of funds has caused the altcoin market to achieve explosive growth in a short period of time.
Altcoin season triggers usually include:
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Bitcoin price breaks through historical highs: Bitcoin enters price discovery mode, and market sentiment is generally optimistic.
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Ethereum to Bitcoin exchange rate (ETHBTC) is trending higher: This shows that Ethereum is beginning to outperform Bitcoin, which is a signal that the market has entered a "risk-on" mode, which is conducive to the prosperity of altcoins.
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The total market capitalization of cryptocurrencies excluding Bitcoin (TOTAL2 index) is trending close to the top of the Bollinger Bands: This shows strong momentum in the altcoin market and increased upward volatility.
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Declining Bitcoin dominance: When Bitcoin’s share of total market capitalization declines, it usually signals an increase in investor interest in altcoins and that funds are beginning to flow into alternatives other than Bitcoin.
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Altcoin trading volume increases, and specific sectors perform strongly: As investor interest shifts from Bitcoin to altcoins, altcoin trading volume will increase significantly. At the same time, the progress and token issuance of emerging technology sectors such as DeFi, GameFi, and NFT can also drive investor interest in the altcoin market.
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Historical performance and typical cases
Historical data shows that altcoin seasons tend to see impressive gains:
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Late 2017-Early 2018: During this period, Bitcoin’s dominance dropped significantly from 86.3% to 38.69%. The ICO boom fueled the explosion of altcoins such as Tezos and EOS, with Tezos raising $232 million and EOS raising $4.1 billion.
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Early 2021: In the wake of the global pandemic, many traders and investors began looking for investment opportunities beyond Bitcoin. This sparked interest in non-fungible tokens (NFTs), DeFi projects, and memecoins, with altcoins such as Shiba Inu and Solana attracting a lot of investor attention. During this period, Bitcoin dominance fell from 70% to 38%, while altcoin market share increased from 30% to 62%.
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Case of amazing growth: Historical data shows that major altcoin bull markets usually begin about 180 days after the Bitcoin halving. For example, after the Bitcoin halving on July 9, 2016, the total market value of altcoins soared from approximately US$13 billion to US$540 billion in January 2018, an increase of 4,050%. After the halving on May 11, 2020, the altcoin market increased from US$90 billion to US$1.7 trillion in less than a year, an increase of more than 1,788%. In April 2021, some low-market-cap altcoins such as Solana even increased by more than 150 times in a few months.
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The "astonishing increase" and "unimaginable decline" of the altcoin season are in sharp contrast. Although early entrants may make huge profits, retail investors often cannot help but follow the trend and enter the market when market sentiment is hot and various currencies are generally rising. At this time, the market is already at a high level. Once the profitable funds are withdrawn from the market, the decline will be very alarming, and even Bitcoin will be dragged down together. This situation often makes small retail investors become "leeks". This shows that although the altcoin season is the "easiest stage to make money", it may also be the "easiest stage to lose money" for retail investors, because high returns are often accompanied by extremely high speculation and risks, and require precise entry and exit timing. Driven by FOMO emotions, retail investors blindly chase high prices and enter the market. Once the market reverses or collapses rapidly, they will suffer huge losses and eventually be trapped or forced to sell at a loss.
C. DeFi Summer and NFT craze: wealth opportunities in a new paradigmDeFi Summer 2020 Core Mechanisms, Key Projects and TVL Growth
2020 has been widely dubbed the “year of DeFi,” with decentralized finance (DeFi) experiencing explosive growth in total value locked (TVL). This metric measures the total value of assets locked in DeFi protocols. DeFi’s TVL grew 2,000% from $700 million at the beginning of 2020 to over $13 billion by the end of the year. In 2021, DeFi’s TVL peaked at $250 billion.
The core mechanism of DeFi Summer is Yield Farming. This model emerged in the DeFi Summer of 2020, and the protocol attracted a lot of funds by issuing new tokens to reward users for providing liquidity. This caused the APY (annualized rate of return) to soar to thousands or even tens of thousands of percent, attracting a large number of liquidity providers and speculators. Among them, the Compound protocol, through its COMP token reward mechanism, started the craze of liquidity mining and became the detonator of this trend.
Key projects that have performed well in DeFi Summer include:
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Compound: As a lending protocol, its COMP token reward mechanism has triggered a yield farming craze.
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Uniswap: As a decentralized exchange protocol (DEX), its trading activity is astonishing. In some periods, its transaction fee income even exceeds that of the entire Bitcoin network. Uniswap’s UNI token airdrop has also become a landmark event in the history of encryption.
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Aave, Synthetix: These lending and synthetic asset protocols have also attracted a lot of funds and users, becoming an important part of the DeFi ecosystem.
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Although the "high returns" and "explosive growth" of DeFi Summer have created a significant wealth effect, the "incentive yield farming" and "excessive token issuance" models behind them often lead to "unsustainable APY" and "Ponzi economics" characteristics. The rewards of many protocols are paid through newly minted tokens. This dilutive issuance method will flood the market with a large number of tokens, leading to inflation and reducing the value of rewards over time. This means that many so-called "easy money" are built on dilution and unsustainable models rather than real value creation. When the market heat cools down or the inflow of new funds slows down, these high-yield models will be difficult to maintain, eventually causing token prices to plummet and causing losses to investors who entered later.
The explosive growth, driving factors and representative projects of the NFT market in 2021
2021 is the "first year" and "revolutionary year" of NFT, and the non-fungible token (NFT) market has achieved unprecedented explosive growth. NFT sales reached US$18.5 billion, an astonishing 570 times increase from 2020. As a mainstream NFT trading platform, OpenSea's transaction volume exceeded US$1 billion in August 2021.
There are many factors driving the explosion of the NFT market:
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The growing popularity of blockchain technology and cryptocurrency: provides support for the underlying technology of NFT.
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The rise of the metaverse concept: driving the demand for digital assets and virtual worlds.
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People spend more time at home during the epidemic: prompting more people to explore digital assets online.
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Celebrity effect and brand participation: The active participation of artists, celebrities and well-known brands (such as Gucci, McDonald’s, Coca-Cola, etc.) has greatly enhanced the popularity and appeal of NFT.
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Representative projects and high-priced transactions include:
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Beeple’s digital collage (Everydays: the First 5000 Days) sold for $69 million.
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Pak’s (The Merge) sold for $91.8 million, becoming the most expensive digital artwork ever sold.
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CryptoPunks, Bored Ape Yacht Club (BAYC), and Axie Infinity have become top NFT series, with trading volumes and floor prices hitting new highs.
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As a pioneer of P2E (Play-to-Earn) games, Axie Infinity’s market value once reached 6.36 billion US dollars, attracting a large number of players.
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However, although the NFT market has created sky-high-priced artworks and gaming assets, research shows that its value inflation is more "driven by speculative factors rather than fundamentals." An analysis shows that more than 95% of NFT series are now "worthless," and even the most famous NFT series have seen a significant decline in price, trading volume, and attention. This deeply reveals the "speculative bubble" nature of the 2021 NFT craze, in which most investors want to make money quickly without considering the risks and the true potential value of NFTs. Under the appearance of "easy money" is extremely high information asymmetry and the risk of "passing the parcel." Only a few early participants and "whale" investors profited through precise entry and exit timing, while most retail investors ultimately suffered huge losses because they bought at high prices and prices fell rapidly when the market heat subsided.
Table 1: Review and characteristics of the “wealth creation” cycle of major cryptocurrencies
Cycle Name
Time Range
Main drivers
Typical assets/projects
Core Features/Narrative
Bitcoin's approximate increase
Major Market Players
Wealth Effect and Risk
2017 Bull Market
2017 full year
ICO craze, retail investors pouring in, media attention
Bitcoin, Ethereum, ICO tokens (Lisk, Status, Nano, etc.)
“Blockchain changes the world”
About 1,900%
Retail investors, early investors
Huge wealth effect, but accompanied by a large number of ICO frauds and project failures   
DeFi Summer 2020
Second half of 2020
Yield farming, liquidity mining, decentralized financial innovation
Compound, Uniswap, Aave, Synthetix
“Use crypto to earn more crypto”
N/A (mainly DeFi tokens)
Early DeFi participants and high-risk takers
TVL has grown explosively, and high APY has attracted funds, but there are risks of Ponzi economics and excessive issuance of tokens.
2021 Bull Market
2021 full year
Institutional entry, Web3 narrative, NFT craze, global economic uncertainty
Bitcoin, Ethereum, Solana, NFTs (CryptoPunks, BAYC, Axie Infinity)
“Digital Gold”, “Metaverse”, “Play-to-Earn”
About 700%
Institutional investors, retail investors, celebrities
Asset prices hit record highs, but the market fluctuated violently, and most NFTs eventually became worth zero.
Altcoin Season
Late bull market
Bitcoin profit spillover, emerging technology narrative, Bitcoin dominance decline
Ethereum, Solana, Dogecoin, Shiba Inu, etc.
“The explosive power of small currencies”
N/A (Altcoins outperform Bitcoin)
Retail investors, speculators
Some altcoins have seen astonishing increases (150x, 4050%, etc.), but their declines are also huge, and retail investors can easily become “leeks”   
Table 1 helps readers quickly understand the similarities and differences between different cycles by summarizing the key information of each "wealth-making" stage in a structured manner. It provides a clear macro timeline, integrating scattered bull market information to facilitate readers to grasp the market trend. By comparing the driving factors, participants and risks, the table reveals the complexity behind "easy money" and provides a historical basis for the analysis of the reasons for "99% miss" in subsequent chapters. For example, it intuitively shows the evolution from retail-led to institutional-led, as well as the risk characteristics of different stages.
III. The underlying reasons why 99% of investors miss out on opportunitiesA. Investor psychological biases from the perspective of behavioral financeFear and Greed: Emotion-Driven Irrational Decision Making
In the cryptocurrency markets, trading can trigger a range of strong emotions, including fear, greed, excitement, and frustration. These emotions often cloud investors' judgment and lead to impulsive decisions, such as entering or exiting trades too early or too late. Successful traders need to be aware of these emotions and learn to manage them effectively to avoid making irrational decisions that lead to losses.
The Crypto Fear & Greed Index is an important market sentiment indicator designed to capture the emotional state of market participants and determine whether the cryptocurrency market is overheated (driven by greed) or undervalued (driven by fear). The index is scored from 0 (extreme fear) to 100 (extreme greed) and is calculated based on indicators related to the Bitcoin trading market, including Bitcoin volatility, trading volume, the proportion of social media keywords in Bitcoin, and Google search volume.
The application strategy of this index is:
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When the index is clearly at a high level for a period of time (80-100 range, indicating "extreme greed"), it shows that the market is relatively greedy, often accompanied by sharp fluctuations in Bitcoin prices, indicating signs of a high-point reversal. This is the time to consider selling or reducing holdings to lock in profits or set stop-loss orders.
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When the indicator is at a low level (0-20 range, indicating "extreme fear"), it shows that the market is relatively panic, which is conducive to the subsequent bottoming out and stabilization. This is the time to consider active buying, because panic selling may provide an important entry point.
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Historical data confirms the correlation between the Fear and Greed Index and market movements. For example, on October 25, 2021, the Crypto Fear and Greed Index reached 72 points (in the "Greed" zone), which is comparable to market sentiment when Bitcoin reached its all-time high of $69,000 in November 2021. This suggests that greed sentiment was already prevalent before the market peaked.
The Fear and Greed Index is a key tool for understanding the "99% Missed Out" phenomenon. Most retail investors are driven by FOMO (fear of missing out) when the market is "extremely greedy" (price highs). They see prices rising rapidly and worry about missing out on potential future gains, so they buy at high prices. However, when the market is "extremely fearful" (price lows), they panic and sell at a loss, fearing further losses. This irrational behavior of "buying high and selling low" directly leads to their missing out on the early gains of the bull market and the opportunity to buy at the bottom of the bear market. The formation of this behavior pattern is that when the market rises, the soaring prices trigger investors' FOMO and extreme greed, causing them to blindly buy high; and when the market pulls back or falls, panic and extreme fear prompt them to sell at a loss, thus perfectly missing the subsequent rebound or bottom opportunities.
Herding and herd mentality: the trap of blindly following the trend
The herd effect (Herd Mentality), also known as the herd mentality, refers to the fact that in the absence of sufficient information and lack of understanding, it is difficult for investors to make reasonable expectations about the future uncertainty of the market. They often extract information by observing the behavior of people around them. In the continuous transmission of such information, the information of many people will be roughly the same and reinforce each other, thus producing herd behavior. This effect is particularly evident in social media, because the networking characteristics of social media can easily cause the phenomenon of irrational emotional contagion among investors, leading to the "herd effect" and "stock price linkage".
The herd effect is one of the fundamental reasons why retail investors "chase highs and sell lows". When there is a "bull market" in the market, small and medium-sized investors tend to blindly follow the trend and rush into the market when prices are high, just in time for early investors to "happily transfer the stocks to you at high prices". This blind obedience makes it impossible for them to make independent judgments. Even if the obstacles blocking the road are no longer there, the sheep behind will still jump like the sheep in front. This phenomenon is particularly common in the cryptocurrency market, where many investors make investment decisions based on popularity or large price fluctuations.
This blind following mentality makes retail investors vulnerable to scams or failure. When market sentiment is high, social media is full of various "get-rich-quick myths" and "next-generation Ethereum" narratives, and investors follow the trend and enter the market without conducting sufficient research simply because "everyone is buying." This behavior may not only cause them to take over at high levels, but also make them victims of "pump and dump" scams, as scammers use social media hype to attract investors. Ultimately, this herd behavior that lacks independent thinking makes retail investors the "leeks" that are harvested at the "easiest stage to make money."
Confirmation bias and the disposition effect: Stubbornness and the stop-loss dilemma
Confirmation Bias refers to the tendency of investors to seek out information that confirms their existing beliefs and ignore or reject information that contradicts their views. This bias can lead to incorrect analysis and decision-making. For example, if an investor firmly believes that a certain cryptocurrency will continue to rise, he may only read articles and podcasts that support this view and ignore any negative news.
Confirmation bias makes investors overly optimistic in a bull market, and they selectively ignore negative signals or signs of overheating, resulting in missed selling opportunities. They may ignore warnings that the market may be about to reverse because they are looking for evidence to support their bullish views, which ultimately leads to profit taking or even losses.
The Disposition Effect refers to investors selling profitable assets too early and holding losing assets for a long time. This behavior stems from the mentality that investors like to make more profits than losses, but it may eventually lead to greater losses. Among retail investors, a very common and destructive behavior is "inability or unwillingness to stop losses." After the asset falls, they may choose to continue holding because of loss aversion, hoping that the price will rebound and return to the original cost.
The disposition effect makes investors unwilling to admit losses in a bear market, and they are optimistic, which leads to further losses and ultimately misses the bottom rebound. When investors hold losing assets, their aversion to losses makes them unwilling to sell, even if it means continued losses. This stubborn behavior makes them miss the opportunity to reallocate funds to high-quality assets or to buy at the bottom of the market. The two biases of confirmation bias and disposition effect work together to make retail investors make wrong decisions at the key nodes of the bull-bear transition, perfectly missing the "easiest stage to make money", and instead turning small profits into huge losses, or turning small losses into irreversible liquidations.
Overconfidence and the anchoring effect: Overestimating ability and sticking to initial information
Overconfidence Bias refers to investors overestimating their abilities and underestimating risks. This bias may lead to more frequent trading and irrational investment decisions, which can have an adverse impact on investment returns. For example, if an investor is lucky enough to choose the right investment several times, he may think that he has more investment skills than he actually does, leading to increasingly risky investments and ultimately unbearable losses.
Overconfidence leads retail investors to trade frequently and over-leverage, believing they can outperform the market, but in fact they buy "junk stocks" due to excessive speculation and poor information accuracy. This tendency to overestimate their own abilities makes it easier for them to ignore market risks and potential negative signals, thereby blindly adding positions when the market is at a high point, or refusing to stop losses when the market falls.
Anchoring Bias refers to people’s tendency to estimate the value of an asset based on initial guesses or less relevant information, and their reluctance to make adjustments based on the emergence of new information. This means that when investors first come into contact with the price of a cryptocurrency, this price will form an "anchor point" in their minds, and even if subsequent market conditions change, they will find it difficult to flexibly adjust their judgments.
The anchoring effect makes investors stick to a certain "psychological price", and it is difficult for them to adjust flexibly even if market conditions change, thus missing out on good buying and selling opportunities. For example, they may anchor the value of a certain currency because of its historical high price. Even if the current market has undergone tremendous changes, they insist on waiting for it to return to the "anchor price" before selling or buying, thus missing out on new opportunities to enter or exit the market.
Overconfidence and anchoring effects, these cognitive biases, together contribute to the wrong operations of retail investors in the "easiest stage to make money". Overconfidence makes them take unnecessary risks, while the anchoring effect limits their ability to adapt to market changes, ultimately preventing them from seizing real wealth opportunities.
Table 2: Common investor psychological biases and their manifestations in the crypto market
Psychological bias
definition
Performance in the crypto market
Mechanisms that lead to missing the “earning phase”
Related research snippets
Fear and Greed
Emotions drive irrational judgments, fear leads to selling, and greed leads to chasing highs.
When the market is extremely greedy (index is high), FOMO sentiment drives people to chase highs; when the market is extremely fearful (index is low), people panic sell.
Enter at a high price and exit at a low price, perfectly missing the bottom and the top.
  
Herd Effect
Lack of independent judgment and blindly following the behavior of the masses.
When seeing the general market rise, they can't help but follow suit and enter the market; they just follow the crowd on social media.
They are attracted to enter the market at the peak of the bull market and become "bag holders"; at the low point of the bear market, they are infected by panic and sell their shares.
  
Confirmation bias
Tend to seek out information that supports one's beliefs and ignore contrary evidence.
Believe that a certain coin will continue to rise, only look at the positive news, and ignore the negative warnings.
Missing the high sell signal will result in profit taking or even losses.
  
Disposition Effect
Selling profitable assets too early and holding losing assets for a long time.
Run away when you make a little profit, and hold on to it if you lose money.
Missed out on the big gains in the late bull market; losses continued to expand and could not be stopped.
  
Overconfidence
Overestimate your own abilities and judgment and underestimate risks.
Frequent trading, use of high leverage, and believing that one can predict the market.
This leads to excessive trading, high-risk investments, and ultimately to liquidation or losses due to misjudgment.
  
Anchoring Effect
Decisions are influenced by initial or irrelevant information and are difficult to adjust.
Sticking to a certain historical price or a price encountered for the first time and being unwilling to adjust according to market changes.
Missing out on new entry or exit opportunities, or missing out on profits by clinging to old prices.
  
Table 2 visualizes abstract psychological concepts into specific behaviors in the crypto market, helping investors identify their own possible biases. It clearly points out how each bias directly causes investors to miss out on money-making opportunities, and provides a psychological explanation for the "99% miss". By comparing themselves, investors can conduct self-assessment, thereby avoiding repeating the same mistakes in future investments and cultivating more rational investment habits.
B. Common investment strategy mistakes and risk management deficienciesExcessive leverage and liquidation: the tragedy of becoming rich overnight and losing everything overnight
Excessive leverage is the most direct reason why investors in the cryptocurrency market go from "getting rich overnight" to "losing everything overnight". A margin call refers to a situation where, under certain special conditions, the customer equity in an investor's margin account is negative. This situation occurs in the fields of virtual currency, futures, foreign exchange, and the stock market. Futures contract transactions of virtual currencies have the characteristics of two-way transactions and high leverage, which greatly amplifies the risks. For example, the reason why Bitcoin has such high gains and losses is because it has a leverage of up to 125 times.
In the "big casino" of cryptocurrency where "a 50% daily increase or decrease is normal", the extremely high volatility combined with high leverage means that any pullback may trigger a forced liquidation, depriving investors of the opportunity to wait for a rebound. Once a position is liquidated, all funds in the investor's margin account will be lost, and the purchased coins will be forced to sell, losing the opportunity to wait for them to rise again.
The most typical case occurred on May 19, 2021, when the price of Bitcoin fell rapidly from a high of about $43,000 to around $29,000, with the maximum decline exceeding 30%. On the same day, data from third-party platforms showed that the funds for liquidation exceeded 40 billion yuan, involving about 700,000 people, and many investors had their accounts cleared overnight. One of the investors, Mr. Zhou, entered the market with 500,000 yuan at the beginning of the year and once reached 3 million yuan, but when the market plummeted on May 19, he leveraged ten times to buy at the bottom. As a result, all 3 million yuan "evaporated" in more than an hour.
In addition, hacker attacks may also directly lead to liquidation. For example, on February 21, 2025, the Bybit platform was hacked and more than 400,000 ETH and stETH with a total value of more than US$1.5 billion were stolen, causing a heavy blow to the industry. This is not only a platform security issue, it may also indirectly lead to a large number of highly leveraged positions being forced to close.
Excessive leverage explains why many investors made money in the bull market but eventually went bankrupt. They pursued high returns and used high leverage, but when the market fluctuated violently or unexpected events caused prices to fall back, they had insufficient margin, which triggered forced liquidation, and their funds were reduced to zero, missing the opportunity to wait for the market to rebound.
Frequent trading and chasing ups and downs: Commissions and taxes erode profits
Frequent trading and chasing rising and falling prices are one of the main reasons why retail investors underperform the market in a bull market. Studies have found that it is precisely during bull markets that retail investors lose money or perform the worst. This behavior pattern is usually driven by short-term emotions and reliance on "rumors" rather than in-depth research.
Frequent trading will generate a large amount of commissions and taxes, which will be deducted directly from the investor's wealth regardless of whether the investor makes a profit or not. The more frequent the trading, the more profits will be contributed to the exchange and brokerage, and the greater the damage to the returns of one's own investment portfolio.
More importantly, frequent traders tend to be more speculative, have less accurate information, and have lower judgment, which leads them to buy "junk stocks" or low-quality crypto assets. They always tend to use recent events to predict long-term trends in the future. This is a "representative bias" that causes them to chase highs and sell lows. When the market rises, they buy at highs, and when the market falls, they panic sell. This behavior pattern causes transaction costs to accumulate continuously, and they often buy at highs and sell at lows, perfectly missing the "easy money" opportunities brought by long-term holding. In the end, the profits of retail investors are eroded by transaction costs, and they buy low-quality assets due to misjudgment, resulting in underperformance or even losses.
Lack of research and blind copying: the dangers of information asymmetry and “rumors”
Many investors trade without sufficient trading knowledge or skills. In a market with asymmetric information, retail investors have limited ability to obtain information. Even if they have rational expectations, they are often not confident in the information they receive, so they try to find out information from others and imitate or follow the methods of other investors.
Lack of independent research and blindly following orders make retail investors extremely vulnerable to "rumors" and "fake information." As an important information intermediary in the current capital market, social media has enriched investors' information acquisition channels and reduced the cost of information acquisition, but it also makes false information spread rapidly and investors find it difficult to distinguish the truth from the false. Some scholars believe that most social media users are retail investors, who are characterized by poor information processing capabilities and are prone to follow group actions, causing "herd effects" and stock price linkage. Social media may even become a "rumor factory" that hinders the market from discovering the price of potential false information.
This behavior pattern puts retail investors at a disadvantage in obtaining information, making them unable to make rational judgments, thus missing out on real investment opportunities or falling into scams. They may be tempted by promises of quick returns without conducting a thorough research on the projects they invest in to understand their technology, goals, and potential challenges. Ultimately, blindly listening to others or "rumors" leads them to invest in worthless projects or even become victims of scams.
Weak security awareness: hacker attacks and platform risks
Even if investors make the right judgments in the market, if they lack basic security awareness, their assets may be lost due to hacker attacks or platform risks. Buyers of virtual currencies need to rely on the capabilities of their own computer systems and third-party supply systems to protect the virtual currencies they purchase from theft. Virtual currency trading platforms and wallets are at risk of being hacked, which may result in the theft of user assets.
In recent years, several incidents of digital currency exchanges being hacked have shown that network security is an important issue facing digital currency. For example, on February 21, 2025, the Bybit platform was hacked and ETH and stETH with a total value of more than US$1.5 billion were stolen, which dealt a heavy blow to the industry. In addition, some virtual currency platforms have filed for bankruptcy, causing consumers to lose their funds or be unable to use their funds for a considerable period of time. If a consumer holds a virtual currency account on a platform that has fallen into bankruptcy, the court may deem it an unsecured creditor, which means that the consumer may not be able to withdraw his or her virtual currency, or may not be able to recover the full value of his or her virtual currency.
Scammers also often pose as legitimate businesses, asking users to send Bitcoin or provide online credentials. They use fake websites and fake social media accounts to conceal their identities and exploit people's trust.
These external risks constitute a significant obstacle. Even if investors grasp the "earning stage", they may "miss" the final profit due to security loopholes. Lack of security awareness and selection of unsafe platforms may cause assets to be lost due to hacker attacks, phishing scams or platform bankruptcy, resulting in loss of principal and thus being unable to enjoy the benefits brought by market growth.
Table 3: Common mistakes in cryptocurrency investment and preventive measures
Common Mistakes
Specific manifestations
Mechanisms that lead to missing the “earning phase”
Preventive measures
Related research snippets
Excessive leverage
Trade with high leverage.
When the market fluctuates violently, it is very easy to be forced to close positions, causing the principal to be reduced to zero and losing the opportunity to wait for a rebound.
Avoid leveraged trading or choose a small leverage ratio; stop loss in time.
  
Frequent trading
Buy high and sell low, buy and sell multiple times in a short period of time.
Transaction costs (commissions, taxes) erode profits; driven by emotions, it is easy to buy high and sell low.
Avoid excessive trading; develop and stick to a trading plan.
  
Lack of research
Not understanding the fundamentals of the project and blindly believing others.
Unable to distinguish high-quality assets from "junk coins"; easy to fall into scams and market manipulation.
Conduct thorough research before investing; pay attention to white papers and team background.
  
Blindly following orders
Imitate the investment behavior of others, especially celebrities or KOLs.
It is easy to fall into the "herd effect" and "pump and dump" scam and become a "bag holder".
Cultivate independent thinking skills; be wary of the celebrity effect; seek multiple perspectives.
  
Unwilling to stop loss
When suffering losses, one takes chances and fails to close the position in time.
Losses continued to expand, and the opportunity to reallocate funds to high-quality assets was missed.
Set and strictly enforce stop-loss points; avoid emotional decision-making.
  
Weak security awareness
Improper private key management and use of unsafe trading platforms.
Assets may be lost due to hacker attacks, phishing scams or platform bankruptcy.
Choose a regulated, reputable platform; use a cold wallet to store large amounts of assets; be wary of scams.
  
Table 3 directly lists the most common mistakes made by retail investors, which is very targeted. It provides clear preventive measures for each mistake and has practical guiding significance. By emphasizing the importance of risk management, the table aims to help investors develop a healthier investment mentality and strategy, thereby improving their ability to grasp the "money-making stage".
C. Challenges of market manipulation and information asymmetryPump-and-Dump and Rug Pull Scams: Fueled by Social Media
Pump-and-Dump and Rug Pull scams are the direct cause of the “99% missed” wealth in the crypto market because they directly lead to investors’ funds being wiped out.
A “pump and dump” is a deceptive price manipulation practice, typically performed by a group of insiders who drive up the price of an asset through coordinated speculation. These insiders then sell their holdings at the high, causing uninformed investors to suffer significant losses.
"Running away" is a more serious scam, in which the project owner or developer suddenly withdraws all liquidity or funds, causing the token to become worthless and investors to lose all their money.
Social media has played a role in fueling these scams, becoming a major venue for generating “hype” and attracting large amounts of liquidity. Scammers approach and convince users to invest in fake projects by impersonating celebrities (such as Elon Musk) or using fake social media accounts. They will carefully design scams, take advantage of FOMO emotions and the prospect of huge, life-changing financial gains, and lure victims to send cryptocurrency for “identity verification” or to participate in “giveaway activities”, and ultimately run away with the funds.
Typical cases include:
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Squid Game Token’s “carpet pull” scam: The project relied on social media hype and investors’ FOMO psychology to gain a lot of attention, but then the value plummeted and the project owner ran away with the money.
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Celebrities involved in pump and dumps: Jason Derulo and Caitlyn Jenner have accused cryptocurrency influencer Sahil Arora of orchestrating a meme coin pump and dump scam for his own personal gain. The influencers failed to disclose key information (such as internal holdings and risk) and quickly sold large amounts of tokens after promoting them.
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Fake Token Scam: The official X (formerly Twitter) account of football star Mbappe was hacked and used to promote the fake MBAPPE token, which soared to millions of dollars in market value in a short period of time, and then quickly collapsed to zero.
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These scams take advantage of retail investors’ FOMO emotions and desire for quick returns, create false prosperity through the amplification effect of social media, and ultimately reap investors who blindly follow suit. These scams are more likely to succeed in low-liquidity assets and high-volatility market conditions. For retail investors, these scams turn the “easiest stage to make money” into the “easiest stage to be deceived” because the funds they invest will eventually return to zero.
Fake news and celebrity influence: Abuse of trust
Information spreads extremely quickly on social media platforms, but investors often have difficulty identifying false information, and even stock markets price false information. Social media can become a "rumor factory" that prevents the market from discovering the price of potential false information.
Celebrity effects are a catalyst for amplifying market sentiment and the spread of false information. Celebrities (e.g., Kim Kardashian, Lindsay Lohan) promote crypto products through social media, but often do not disclose conflicts of interest, and the currencies they promote will fall sharply after short-term returns. For example, Lindsay Lohan promoted the Tronix (TRX) token without disclosing that she was paid $10,000 for it. The study found that the average return on cryptocurrencies after being mentioned on Twitter was 1.83% on the first day, but three months later, the average loss was as high as 19%. This is consistent with the widespread suspicion of "pump and dump", that is, digital asset developers or brokers drive up the value through online promotion and then quickly sell it off, allowing insiders to obtain excess returns.
Retail investors tend to invest blindly because of their trust in celebrities, rather than based on project fundamentals. This abuse of trust turns the "easiest stage to make money" into the "easiest stage to be scammed" because retail investors' decisions are misled by external, often fraudulent "halos". They fail to conduct adequate due diligence, invest simply because of the celebrity effect, and eventually become victims of scams.
Lack of supervision and market chaos
Lack of regulation is the root cause of the chaos in the crypto market, providing a breeding ground for market manipulation and fraud. The laws and regulations on cryptocurrencies in many countries are still unclear, and some governments have even imposed restrictions or outright bans. This unclear regulatory environment has led to a lack of adequate supervision of the digital market, allowing certain forces to manipulate prices and create artificial market chaos.
In the absence of regulatory protection, investors face a huge risk of losing funds, which undermines people's confidence in cryptocurrencies and limits the healthy development of such currencies. Unregulated exchanges may lack proper internal controls and are more vulnerable to fraud, theft, and hacker attacks. In addition, the anonymity of cryptocurrencies may also be used for illegal activities such as terrorist financing or money laundering, which has caused concern among governments and regulators.
This environment means that even in the real "earning stage", retail investors may be discouraged or suffer losses due to market chaos and unpredictable risks. The lack of supervision leads to a lack of market transparency and prominent information asymmetry, making it difficult for retail investors to obtain real and reliable information and make wise investment decisions. In such a market, speculative bubbles and market manipulation are prevalent, further exacerbating the risks for retail investors.
IV. Impact of the macroeconomic and policy environmentQuantitative Easing and Interest Rate Policy: The Impact of Liquidity on the Crypto MarketThe global macroeconomic environment, especially the monetary policies of central banks, have a profound impact on the cryptocurrency market. Global liquidity (Global M2 money supply) is highly correlated with Bitcoin prices. When global liquidity expands, it means that there are more funds in the market available for investment and lending, and Bitcoin tends to rise; conversely, when liquidity shrinks, Bitcoin tends to fall. This dynamic relationship has led to Bitcoin being called a "liquidity barometer" by some analysts.
Central bank monetary policies (such as quantitative easing and interest rate adjustments) directly affect market liquidity:
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Interest rates: When central banks raise interest rates, borrowing costs increase, which typically slows economic growth and reduces investor appetite for riskier assets, such as cryptocurrencies, as money flows into higher-yielding traditional financial products. Conversely, a low interest rate environment boosts investor sentiment and encourages money to flow into riskier assets, thereby increasing capital inflows into cryptocurrencies.
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Quantitative Easing (QE): Quantitative easing policy injects a large amount of liquidity into the market through methods such as the central bank purchasing bonds. For example, in 2019, the central bank was forced to cut interest rates and restart quantitative easing, and the outbreak of the COVID-19 epidemic further intensified the implementation of monetary and fiscal stimulus measures. This "flooding" behavior has led to abundant market liquidity and promoted the prices of risky assets including cryptocurrencies.
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The "flooding" of the macroeconomy (quantitative easing, low interest rates) is an important macro driver of the "easy money stage" of the crypto market. When global liquidity is abundant, investors will seek high-risk and high-return assets to hedge against inflation or pursue higher returns, thereby driving up cryptocurrency prices and forming an "easy money" stage. However, once macroeconomic policies shift (such as interest rate hikes, balance sheet reduction), liquidity tightens, and the crypto market tends to be hit hard, causing the "easy money" stage to end quickly or even reverse into a bear market. The correlation between Bitcoin and other asset classes (such as stocks and gold) also shows that its price performance is closely related to global liquidity conditions. Therefore, investors need to pay close attention to macroeconomic indicators and central bank policy trends to judge changes in market liquidity and better grasp cyclical opportunities in the crypto market.
Geopolitical and regulatory changes: uncertainty and market volatilityGeopolitical tensions and events have a significant impact on cryptocurrency prices and overall market perception. When global uncertainty spreads, such as geopolitical conflict or economic crisis, investors often view Bitcoin as a safe-haven asset, causing its price to rise.
Regulatory changes are another key factor affecting crypto market volatility. Regulatory changes in one country can affect the global Bitcoin market. For example, the U.S. Securities and Exchange Commission (SEC) approved a spot Bitcoin ETF, opening the door for traditional investors and greatly boosting institutional demand and positive market sentiment. However, the Federal Reserve's tightening monetary policy and expectations of high interest rates may also suppress risk appetite, leading to lower prices for major cryptocurrencies such as Bitcoin and Ethereum.
The statements and policies of politicians can also have a direct impact on the crypto market. For example, former U.S. President Trump’s pro-cryptocurrency policies, such as threatening to set up a Bitcoin reserve fund, are believed to have fueled a speculative frenzy and caused the price of Bitcoin to surge from $70,000 to over $100,000 after he won the election. This political endorsement has brought new optimism to the market.
Geopolitical and regulatory changes have brought huge uncertainties to the crypto market. Although favorable policies can give rise to the "money-making stage", such as the SEC's approval of the Bitcoin ETF, which provides institutional investors with a more standardized entry path, thereby driving the market up. However, sudden regulatory tightening (such as China's ban on ICOs and domestic cryptocurrency exchanges in 2017, which led to a sharp market sell-off) or geopolitical conflicts may reverse market trends in an instant, catching investors off guard. This makes the window period of "easy money" extremely fragile, requiring investors to have keen macro insights and be able to respond quickly to changes in the external environment. Otherwise, even when the market is on an upward trend, it may suffer losses quickly due to external shocks.
Narrative influence of mainstream media and social mediaMainstream media and social media act as “sentiment amplifiers” in the cryptocurrency market, greatly influencing retail investors’ investment decisions by shaping narratives and spreading information (including false information and bias).
Social media has a significant impact on cryptocurrency market volatility. Studies have shown that sentiment on Twitter (positive, negative, or neutral) significantly affects trading volume and liquidity: neutral sentiment tweets can continuously enhance liquidity, negative sentiment can immediately trigger a surge in volatility, and positive sentiment can have a delayed but lasting market impact. News media coverage also has a "social signal" effect on market sentiment and Bitcoin price volatility, and negative news can cause prices to fall. For example, when Bitcoin entered a bear market in 2018, mainstream media coverage shifted from praise for prices in 2017 to views that investors had lost confidence.
Information bias is an important aspect of media influence. Artificial intelligence is difficult to get rid of the biases embedded in data and algorithms, and customized content may form an "information cocoon", which poses challenges to individual cognition and value formation. Social media platforms may also become "rumor factories", hindering the market from discovering the price of potential false information. Investors often find it difficult to identify false information on social media and are prone to follow group actions, leading to a "herd effect."
During the "easy to make money" stage, optimistic reports from mainstream media and social media may exacerbate FOMO sentiment and attract more people to enter the market at high levels. For example, when the price of Bitcoin soars, the media will report extensively, attracting new investors to pour in. When the market pulls back, negative reports will intensify panic and lead to selling at low levels. This information dissemination and emotion amplification mechanism makes it more difficult for retail investors to make decisions based on rational analysis, thus missing out on real opportunities. They may blindly chase high prices due to excessive media publicity, or panic sell due to the amplifying effect of negative news, and eventually become victims of market fluctuations.
V. The game between institutional investors and retail investors: Who is the winner?Trends and impacts of institutional entryThe entry of institutional investors (such as MicroStrategy, Tesla, BlackRock, Fidelity) is one of the most important structural changes in the cryptocurrency market in recent years. These institutions have greatly promoted the legitimacy and demand of Bitcoin by allocating Bitcoin as an asset reserve or through ETFs.
MicroStrategy is the most typical case. The company began buying Bitcoin in August 2020 and used it as its main reserve asset. It currently holds more than 590,000 Bitcoins and is the world's largest corporate Bitcoin holder. MicroStrategy's strategy is to simply "buy and hold" (HODL), believing in the long-term appreciation potential of Bitcoin, and continuing to purchase more Bitcoin through the issuance of stocks and debt. This strategy has not only brought huge benefits to its shareholders, but also brought positive effects to Bitcoin's ecosystem and investor base, reducing the available supply in the market, pushing up prices, and enhancing the legitimacy of Bitcoin.
In 2024, the US SEC approved the spot Bitcoin ETF, further opening the door for traditional investors and boosting institutional demand and positive market sentiment. The cumulative inflow of funds into Bitcoin ETFs exceeded US$4.5 billion, showing the strong demand for crypto assets among institutional investors.
The entry of institutions is changing the structure of the crypto market, moving it from the "Wild West" dominated by early retail investors to a more mature and standardized one. This means that the future "easy money-making stage" will rely more on the macroeconomic cycle and institutional capital flows, rather than simply retail investor sentiment. Institutional investors usually have stronger financial strength, more professional research teams, more complete risk management systems, and more abundant information access channels. This puts retail investors at a disadvantage in the game with institutions, because institutions are able to conduct more in-depth fundamental analysis and macro judgments, and can execute transactions at lower costs and higher efficiency. Therefore, the institutionalization trend has raised the threshold for retail investors to seize opportunities, making it more difficult for them to obtain excess returns, and they may even be "harvested" by institutions in market fluctuations.
Statistical evidence that retail investors lose money in bull marketsA shocking but common phenomenon is that even in a bull market, retail investors are often the group that loses money or performs the worst. Studies have found that it is precisely during bull markets that retail investors lose money or perform the worst. For example, evidence from the Taiwan stock market shows that over a period of time, about 70% of investors underperform the market, less than 10% of investors can outperform the market, and about 20% of retail investors perform roughly the same as the market. In the U.S. stock market and the Taiwan stock market, there are very similar findings that basically less than 10% of retail investors can consistently outperform the market.
The main reasons why retail investors lose money in a bull market include:
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Frequent trading causes commissions and taxes to erode profits: The more frequent the transactions, the more commissions and taxes are generated, which directly erode investment returns and cause greater damage to the returns of the investment portfolio.
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Highly speculative, poor information accuracy, and buying "junk stocks": Frequent traders tend to be more speculative and have a worse judgment on the accuracy of information, which makes them more likely to buy low-quality assets.
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Unable to stop loss or unwilling to stop loss: Many retail investors take chances when they suffer losses and are unwilling to stop loss in time, which leads to continued expansion of losses and ultimately missing the opportunity to reallocate funds to high-quality assets.
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The statistical evidence of retail investors losing money in the bull market directly refutes the common perception that "bull markets are profitable", and profoundly explains the phenomenon of "99% missed opportunities". This is not because there is no "profit-making stage" in the bull market, but because the behavior patterns of retail investors (overtrading, chasing ups and downs, unwillingness to stop losses) are contrary to the long-term trend of the bull market, making them unable to make profits even in the bull market, and instead becoming the "liquidity outlet" for institutions and early investors. When the bull market starts, retail investors often lack patience and overconfidence, resulting in frequent trading and chasing ups and downs, resulting in high transaction costs, misjudgment, and ultimately underperforming the market or even losses.
Analysis of opinions and strategies of famous investors (Cathie Wood, Michael Saylor, Raoul Pal, Arthur Hayes, Lyn Alden)By analyzing the views and strategies of some well-known investors in the cryptocurrency field, we can further understand why a few people can consistently make profits while the majority miss out. These investors usually have deep market insights, rigorous analytical frameworks, and strong psychological qualities.
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Cathie Wood (Ark Investments): As the founder, CEO and chief investment officer of Ark Investments, Cathie Wood focuses on disruptive innovation. She invested in Bitcoin early and has long been optimistic about its potential, believing that Bitcoin could reach $2.4 million by 2030. Her investment philosophy emphasizes long-termism and in-depth research in the field of innovation. She regards Bitcoin as "digital gold" and an emerging market currency that can hedge against inflation and currency depreciation. She believes that as institutional investors allocate more assets to Bitcoin and the scarcity of Bitcoin supply, its price will continue to rise.
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Michael Saylor (MicroStrategy): As the founder and executive chairman of MicroStrategy, Michael Saylor is a staunch supporter of Bitcoin. He sees Bitcoin as "digital gold" and a long-term reserve asset, adheres to a "buy and hold" (HODL) strategy, and believes that Bitcoin will eventually reach $21 million. His company accumulates Bitcoin by issuing stocks and debt, treating it as a primary balance sheet reserve rather than a short-term investment. He believes that Bitcoin's scarcity (a fixed supply of 21 million coins) and network effects will drive its long-term appreciation.
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Raoul Pal (Real Vision): As a well-known macro analyst and CEO of Real Vision, Raoul Pal believes that the current crypto cycle is similar to that of 2017 and may extend to 2026. He emphasized that global liquidity (especially Global M2 money supply) is a leading indicator of crypto market performance, and believes that the weakening of the US dollar and the expansion of global liquidity will continue to drive crypto assets up. He advises investors to maintain a long-term perspective, through market fluctuations, and emphasizes the importance of patience in investing.
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Arthur Hayes (BitMEX co-founder): Arthur Hayes, co-founder of BitMEX, is known for his bold market predictions, but he also admits that predictions are often biased. He emphasized the impact of macroeconomics and regulation on the market, and believed that Bitcoin could reach $250,000 by the end of 2025, mainly driven by monetary easing policies and regulatory progress in the United States. He pointed out that retail investors should be wary of new stablecoin IPOs that may be overvalued, and suggested trading them like "hot potatoes." He believes that fund managers trust spot Bitcoin ETFs more, which will attract capital, and retail investors may pay a premium for this.
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Lyn Alden (Macro Analyst): Lyn Alden is an analyst focusing on macroeconomics and investment strategies. She emphasizes the impact of macroeconomic factors (such as global liquidity and interest rates) on the crypto market, and believes that Bitcoin is highly correlated with global liquidity, but is not unaffected by short-term events or internal market dynamics. She also pointed out the risks of leverage opacity and Ponzi schemes in DeFi and CeFi, and warned investors to be wary of projects that offer unsustainable high returns.
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What these well-known investors have in common is an emphasis on macro analysis, long-term vision, and a deep understanding of risks. This is in stark contrast to the short-term speculative, emotion-driven behavior of retail investors. Their strategy is often "be greedy when others are fearful, and be fearful when others are greedy", or insist on long-term holdings and crossing cycles. Through in-depth research and a grasp of the macro economy, they are able to identify structural opportunities in the market and resist short-term emotional fluctuations. This further confirms that the reason for the "99% miss" lies in the differences in investment philosophy and behavioral patterns. The reason why a few winners are able to grasp the "easy money stage" is precisely because they are able to overcome the weaknesses of human nature and adhere to rationality, discipline, and long-termism.
VI. Seizing future opportunities: Advice for investorsEstablish a sound investment framework and risk management systemFor investors who want to seize future opportunities in the cryptocurrency market, establishing a sound investment framework and a strict risk management system is the cornerstone. This helps investors get rid of emotional drives and enforce rational decision-making, thereby protecting the principal in market fluctuations and seizing real opportunities.
First, it is crucial to develop a clear trading plan. Investors should clearly define entry and exit criteria, stop loss and take profit levels, and maximum daily/weekly trading limits before trading, and strictly abide by them. A pre-defined plan is a psychological "anchor" that helps investors stay calm when emotions fluctuate and avoid impulsive decisions.
Second, fully assess your own risk tolerance. The investment amount should not exceed the tolerable loss, and the investment portfolio should be diversified to better withstand the ups and downs of the market. Diversification helps to spread risks and avoid "putting all eggs in one basket."
Furthermore, avoid excessive leverage. Excessive leverage is the most direct cause of the tragedy of "getting rich overnight" to "getting nothing overnight". Investors should try not to choose leveraged trading, or choose a small proportion of leverage to reduce investment risks. In a highly volatile market such as cryptocurrency, even a small pullback may trigger a forced liquidation, resulting in the principal being zeroed out.
Finally, timely stop loss is a key part of risk management. When a big drop occurs, investors should stop loss in time and not rely on luck. The main reason why many retail investors have poor performance is that they are unable to stop loss or are unwilling to stop loss. Setting and strictly enforcing stop loss points can effectively control losses, prevent small losses from turning into big losses, and retain the opportunity to re-position funds when the market rebounds in the future.
Develop independent thinking and critical analysis skillsIn the crypto market where information is exploding and rife with false information, cultivating independent thinking and critical analysis skills is the "immunity" against market manipulation, false information and herd effects.
Investors should conduct thorough research before investing and have a deep understanding of the technology, goals and potential challenges of the project they are investing in, rather than just being tempted by the promise of quick returns. This includes reading the project’s white paper and evaluating its team background, technological innovation and actual application scenarios.
At the same time, actively seek different opinions. Don’t just look for information that supports your existing beliefs. Instead, actively seek a wide range of perspectives and information sources, and be willing to re-examine your beliefs based on new evidence. This open mindset helps to form a more comprehensive and objective market judgment.
In addition, be wary of information bias. Be aware of possible bias and false information on social media and mainstream media. Social media is full of "follow the crowd" phenomena and "rumor mills", and the celebrity effect may also be abused, causing investors to blindly follow orders. By critically evaluating the source and content of information, investors can avoid blindly following the trend and make wise decisions at the "easiest stage to make money."
Focus on combining fundamentals with technical aspectsIt is dangerous to rely solely on sentiment or a single indicator for investment. Combining fundamental analysis with technical analysis can provide a more comprehensive view of the market, helping investors identify real value growth potential rather than short-term speculative hype, thereby more effectively grasping the "money-making stage."
Fundamental analysis focuses on evaluating the intrinsic value and long-term potential of a project. This includes in-depth research on the project team, its vision, white paper, underlying technological innovation, practical application scenarios, ecosystem development, and community support. For example, understanding whether the TVL growth of a DeFi protocol is sustainable, or whether the cultural value and practicality of an NFT project can support its price.
Technical analysis uses charts and indicators to determine market trends and potential reversal points. This includes observing whether trading volume is gradually and moderately increasing (volume precedes price), using the Fear and Greed Index to determine whether market sentiment is overheated or overly panicked, and identifying support levels, resistance levels, and various chart patterns. For example, when the Fear and Greed Index is in an extreme fear range, it may indicate a buying opportunity.
Combining the two means that investors must not only understand "what to buy" (fundamentals), but also "when to buy and sell" (technical aspects). For example, a project with strong fundamentals may be a better time to enter the market if it shows an oversold signal or bottom pattern on the technical side. This comprehensive analysis method can help investors avoid chasing highs driven by emotions at market highs, or selling at market lows due to panic, thereby more accurately grasping market cycles.
Beware of market sentiment and irrational behaviorRecognizing and managing your emotions is core to investor success. The extreme volatility of the crypto market can easily trigger strong emotions and lead to irrational behavior.
Investors should learn to "be greedy when others are fearful, and be fearful when others are greedy." This investment motto is particularly applicable in the crypto market. When the market is generally panic and the Fear and Greed Index is low, it is often a good buying opportunity for long-term investment; when the market is generally greedy and the index is high, it may indicate the risk of a pullback and it is time to consider selling or reducing holdings. By using tools such as the Fear and Greed Index, investors can try to reverse market sentiment and avoid becoming victims of the "herd effect."
At the same time, investors need to manage their emotions, be aware of the negative impact of emotions such as fear, greed, excitement, and frustration on decision-making, and learn to manage them effectively to avoid impulsive decisions. In trading, emotions can blur judgments and lead to entering or exiting trades too early or too late. Establishing a predefined trading plan and strictly adhering to it when emotions are high or low is an effective way to avoid emotional decision-making. By operating against market sentiment, investors can avoid being trapped at market highs and dare to deploy at market lows, thereby truly seizing the "easiest to make money" cyclical opportunities.
Considerations of long-termism and value investingThe concepts of long-termism and value investing, in stark contrast to the short-term speculative behavior of retail investors, are the key to traversing the crypto market cycle and obtaining excess returns.
Many successful investors and institutions, such as Michael Saylor, adopt a "buy and hold" (HODL) strategy, believing in the long-term appreciation potential of Bitcoin. They believe that despite the volatility of the cryptocurrency market, in the long run, its scarcity, network effects and narrative as "digital gold" will drive its value to continue to grow.
Successful investing requires patience to weather market fluctuations and corrections. Exponential growth in the cryptocurrency market often occurs during long holding periods rather than short-term operations. Short-term price fluctuations can be unsettling, but if investors have confidence in the fundamentals of the assets they hold and can withstand short-term fluctuations, they can avoid missing out on the long-term appreciation of assets due to frequent trading and emotional decision-making.
Adhering to long-termism means that investors can withstand short-term fluctuations and avoid missing out on the long-term appreciation of assets due to frequent trading and emotional decision-making. This is the antidote to the "99% miss". By taking a long-term view, investors can avoid being disturbed by short-term market noise and better grasp the real "money-making stage" in the crypto market.
VII. Conclusion: Cross the cycle and gain wealth by wisdomThis research report delves into the “easiest money-making phases” in the cryptocurrency market and explores why the vast majority of investors fail to seize these opportunities.
The core findings show that the cryptocurrency market does have cyclical "wealth-making" phases. These phases are often closely related to factors such as macro liquidity easing, specific narrative outbreaks (such as the ICO craze in 2017, the DeFi Summer in 2020, and the NFT craze in 2021), and institutional entry, which manifests as exponential growth in asset prices. For example, Bitcoin achieved amazing gains in the bull markets of 2017 and 2021, and the altcoin season also brought thousands or even tens of thousands of percent growth in some currencies.
However, "99% of people missed out" is not accidental, but the result of deep-seated reasons such as psychological biases in behavioral finance, investment strategy errors, market manipulation and information asymmetry. Psychological biases such as fear and greed, herd effect, confirmation bias, disposition effect, overconfidence and anchoring effect drive retail investors to chase highs and sell lows, perfectly missing the top and bottom of the market. Investment strategy errors such as excessive leverage, frequent trading, lack of independent research and blindly following orders further magnified the risks, leading to principal losses and even liquidation. In addition, the widespread "pump and dump" and "runaway" scams in the market, as well as the celebrity effect and false information, make retail investors very easy victims in an environment of information asymmetry. The lack of supervision also provides a breeding ground for these market chaos.
The purpose of this report is to emphasize that the "easiest stage to make money" does not mean risk-free or accessible to everyone. It is more like a small number of investors who have independent thinking ability, strict risk management, and can overcome their own psychological biases. The future crypto market will be more mature and institutionalized, which means that the opportunities for "wild growth" to get rich quickly may decrease, but at the same time, with the improvement of supervision and the advancement of technology, the market will become more transparent and predictable.
For investors who want to make a fortune in the cryptocurrency world, the key is:
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Deep understanding of market cycles and macro drivers: Recognize the impact of global liquidity, interest rate policy, geopolitics and regulatory changes on the crypto market.
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Identify and manage your own emotions and cognitive biases: Use tools such as the Fear and Greed Index to learn to "be greedy when others are fearful and be fearful when others are greedy" and develop emotional management skills.
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Insist on independent research and be wary of false information and market manipulation: Conduct thorough fundamental analysis of projects and maintain critical thinking about information on social media and mainstream media.
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Establish and strictly implement a sound investment framework and risk management system: formulate a clear trading plan, avoid excessive leverage, stop losses in time, and pay attention to asset safety.
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Embrace long-termism and navigate through bull and bear markets with patience: Learn the long-term holding strategies of successful investors such as Michael Saylor and believe in the long-term value growth of high-quality assets.
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The final analysis shows that the real "easy money-making stage" does not mean "making money easily", but means that under certain market conditions, through correct cognition, strategy and discipline, profits can be obtained with higher efficiency and better risk-return ratio. The essence of "99% of people miss out" is that the weaknesses of human nature are infinitely magnified in a highly volatile, information-asymmetric and unregulated market, resulting in most people being unable to overcome their own behavioral biases, and thus unable to seize or even reverse these opportunities. Therefore, the core of crossing the cycle and seizing wealth wisely lies in a deep understanding of human nature and the market and self-cultivation.
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The easiest stage to make money in the cryptocurrency world, 99% of people actually missed it!

The unique charm and high risk of the cryptocurrency market

Background, purpose and core issues of the report

A preliminary definition and discussion of the “easiest stage to make money”

II. In-depth analysis of the “wealth creation” cycle in the cryptocurrency circle

A. Bull Market: The Engine of Wealth Growth

B. Altcoin Season: The Explosive Power of Small Coins

C. DeFi Summer and NFT craze: wealth opportunities in a new paradigm

III. The underlying reasons why 99% of investors miss out on opportunities

A. Investor psychological biases from the perspective of behavioral finance

B. Common investment strategy mistakes and risk management deficiencies

C. Challenges of market manipulation and information asymmetry

IV. Impact of the macroeconomic and policy environment

Quantitative Easing and Interest Rate Policy: The Impact of Liquidity on the Crypto Market

Geopolitical and regulatory changes: uncertainty and market volatility

V. The game between institutional investors and retail investors: Who is the winner?

Trends and impacts of institutional entry

Statistical evidence that retail investors lose money in bull markets

Analysis of opinions and strategies of famous investors (Cathie Wood, Michael Saylor, Raoul Pal, Arthur Hayes, Lyn Alden)

VI. Seizing future opportunities: Advice for investors

Establish a sound investment framework and risk management system

Develop independent thinking and critical analysis skills

Focus on combining fundamentals with technical aspects

Beware of market sentiment and irrational behavior

Considerations of long-termism and value investing

VII. Conclusion: Cross the cycle and gain wealth by wisdom

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The easiest stage to make money in the cryptocurrency world, 99% of people actually missed it!

The unique charm and high risk of the cryptocurrency market

Background, purpose and core issues of the report

A preliminary definition and discussion of the “easiest stage to make money”

II. In-depth analysis of the “wealth creation” cycle in the cryptocurrency circle

A. Bull Market: The Engine of Wealth Growth

B. Altcoin Season: The Explosive Power of Small Coins

C. DeFi Summer and NFT craze: wealth opportunities in a new paradigm

III. The underlying reasons why 99% of investors miss out on opportunities

A. Investor psychological biases from the perspective of behavioral finance

B. Common investment strategy mistakes and risk management deficiencies

C. Challenges of market manipulation and information asymmetry

IV. Impact of the macroeconomic and policy environment

Quantitative Easing and Interest Rate Policy: The Impact of Liquidity on the Crypto Market

Geopolitical and regulatory changes: uncertainty and market volatility

Narrative influence of mainstream media and social media

V. The game between institutional investors and retail investors: Who is the winner?

Trends and impacts of institutional entry

Statistical evidence that retail investors lose money in bull markets

Analysis of opinions and strategies of famous investors (Cathie Wood, Michael Saylor, Raoul Pal, Arthur Hayes, Lyn Alden)

VI. Seizing future opportunities: Advice for investors

Establish a sound investment framework and risk management system

Develop independent thinking and critical analysis skills

Focus on combining fundamentals with technical aspects

Beware of market sentiment and irrational behavior

Considerations of long-termism and value investing

VII. Conclusion: Cross the cycle and gain wealth by wisdom

Explore More From Creator

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