In the crypto world, some people achieve a leap in wealth due to accurate trend judgments, while others fall into despair due to a single decision mistake. This market, which operates 24/7 and fluctuates by more than 50%, never lacks opportunities to make money, but it also lacks traps that can leave investors with nothing. If you ask what the most dangerous thing to do in the crypto world is, the answer is not 'buying low-priced coins' or 'using leverage', but rather the core issue that runs through most loss cases — blindly chasing highs and selling lows.
1. Chasing highs and selling lows: The 'death loop' of retail investors in the crypto world
The so-called 'chasing highs and selling lows' refers to investors blindly following the trend to buy when the market is rising in an attempt to ride the 'fast money train'; and then in a panic selling when the market is falling, fearing that losses will worsen. This seemingly 'trend-following' operation has become a 'black hole' that consumes principal in the crypto world.
Last year, a certain virtual currency experienced a daily increase of over 300% due to conceptual hype, and social media was filled with posts bragging 'doubling upon entry'. Many investors, seeing others profit, disregarded the currency's lack of actual application scenarios and unclear team backgrounds, entering heavily at high prices. However, just 3 days later, the project team suddenly 'ran away', causing the price to plummet to zero, leaving countless high-chasers with nothing overnight. Similar plots have repeatedly unfolded in the crypto world: in 2021, Dogecoin surged and then plummeted due to celebrity effects, and in 2023, a certain DeFi project collapsed after attracting funds with 'high returns', with a large number of retail investors chasing highs ending up as 'bag holders'.
More deadly is that chasing highs and selling lows can create a vicious cycle of 'loss — panic — worse decisions'. When investors buy at high prices and encounter declines, they often hold onto the illusion of 'bouncing back' when they lose 10%, become anxious when they lose 30%, and panic completely when they lose 50%, eventually selling at the lowest point; and when the market rebounds, they hesitate to enter again for fear of being trapped, watching the opportunity pass by, ultimately falling into the vicious cycle of 'buying leads to drops, selling leads to rises'.
2. Why is chasing highs and selling lows especially deadly in the crypto world?
Compared to traditional markets like stocks and funds, the characteristics of the crypto world amplify the dangers of chasing highs and selling lows.
First, there is a severe information asymmetry in the crypto world, and the cost of 'hype' is extremely low. Some project teams easily create 'upward illusions' by spending money on trending searches, hiring 'water armies' to post fake profit screenshots in communities, and collaborating with KOLs to promote 'hundred-fold currencies'. Ordinary investors often lack the ability to differentiate professionally, easily mistaking marketing hype for 'real market conditions' and blindly following the trend to chase highs.
Secondly, the widespread use of leverage tools in the crypto world amplifies operational risks. Many exchanges offer 10x or even 100x leverage to attract users, allowing investors to leverage small amounts for large profits. However, when investors use leverage while chasing highs, a market reversal can trigger liquidation with just a 5%-10% drop, leading to total loss of principal and potentially incurring debt. In the 2022 cryptocurrency bear market, data from one exchange showed that over 60% of liquidation cases stemmed from the combination of 'chasing highs and selling lows + high leverage'.
Finally, the speed of emotional transmission in the crypto world is extremely fast. Since most market participants are young and obtain information primarily through communities and social platforms, emotions of panic and greed can spread rapidly in a short time. When a particular cryptocurrency experiences a slight decline, warnings like 'cutting losses' and 'collapse rhetoric' in the community can trigger a collective sell-off, turning a normal correction into a 'stampede-like decline', where those selling in panic often sell at the bottom.
3. Break the vicious cycle: 3 core principles for survival in the crypto world
Avoiding chasing highs and selling lows does not mean investors should give up all trading opportunities, but rather establish a rational investment logic. The following 3 principles can help investors survive long-term in the crypto world.
1. Do your 'homework' first, then discuss 'entry'
Before buying any cryptocurrency, you must answer 3 questions: What is the underlying technology of this cryptocurrency? Does the project have actual application scenarios? Does the team have publicly verifiable backgrounds and past performance? If the answers are vague or suspicious, even if the increase is tempting, you must resolutely stay away. For example, Bitcoin's value stems from its decentralized technology architecture and global consensus, while Ethereum's value lies in its support for smart contract ecosystems. Assets with clear value support, even if they fluctuate in the short term, have long-term recovery potential; while projects that rely solely on concepts like 'metaverse' or 'Web3.0' without substantial progress are essentially 'air coins', and chasing highs will ultimately lead to becoming a 'bag holder'.
2. Set 'stop-loss and take-profit' points, refuse 'emotional decision-making'
Before entering the market, you should set clear stop-loss and take-profit points based on your risk tolerance and strictly implement them. For example, set the stop-loss line at a 15% loss; once touched, regardless of whether a rebound may occur later, exit immediately to prevent further losses; set the take-profit line at a 50% gain; once the target is reached, decisively reduce your position to secure profits. This 'mechanical' operation can effectively combat greed and panic, avoiding falling into the trap of chasing highs and selling lows due to emotional fluctuations.
3. Control your position, don’t bet your 'entire fortune'
There is a saying in the crypto world: 'Do not invest more than 10% of your funds in cryptocurrencies.' This is not absolute, but the core logic is worth referencing — no investment should bet the entire fortune. Even if you are very confident in a particular cryptocurrency, you should keep your position within a bearable range to avoid losing the opportunity to recover due to a single mistake. At the same time, don’t be anxious about 'missing out on opportunities'; the crypto world is never short of opportunities, but lacks the patience to preserve capital and wait for opportunities.
The essence of making money in the crypto world is the practice of 'counteracting human nature'
Behind the high returns of the cryptocurrency market lies high risk. Chasing highs and selling lows is considered the worst thing to do because it aligns with human greed and fear but goes against the fundamental logic of investing — profit comes from assessing value, not following emotions.
Those who can profit long-term in the crypto world are often those who can restrain their impulses and think independently. They do not blindly enter the market due to short-term gains, nor do they panic and exit due to short-term declines; instead, they patiently wait for the opportunity to appear, decisively acting when there is a mismatch between value and price. After all, in the crypto world, living long is more important than making quick profits.
As the market continues to change, we must closely monitor market signals to seize new entry opportunities. Follow C姐 to navigate the bull market and seize this major opportunity!
