Why is it so difficult to break the wealth gap even in the cryptocurrency world?
The "Matthew Effect" is an extreme phenomenon where the rich get richer and the poor get poorer, and I've been particularly aware of this in recent days.
Even though my account has more than doubled in funds, the overall trading is actually losing money.
I'm down about 0.49 Bitcoin, which is equivalent to 1.5 million TWD.
Each time the funds slightly retract, like at the beginning of July and August, most people cut their losses at the low points.
In the end, those who stayed in the market and fully benefited from the trades are almost all large investors.
Large investors account for nearly 70% of the total funds, and their average total earnings do not even compensate for the losses of the small investors who cut their positions.
This gives us two insights:
1. Small investors panic and cut losses when they see temporary losses.
2. The total funds can lose more than they earn, which indicates that loss-cutters make up the majority.
Large investors maintain a high quality of life,
traveling, enjoying fine dining, working out, socializing, and indulging in luxury goods, and when the time comes, they just click a few times and relax.
Thus, the rich get richer and the poor get poorer.
Rich people spend their money,
while those who cut losses work to earn money, exchanging their labor for the economy driven by the spending of the wealthy.
In the end, the remaining winners are the "exchanges," "large investors," and "myself who follows trades."
Small retail investors cannot escape the fate of chasing highs and cutting losses, ultimately creating a tragic cycle.
The wealth gap due to the Matthew Effect will widen over time.
Even in the cryptocurrency world, it is a difficult chasm to break through.
