Don't be a hamster who came for a haircut
In the crypto market, you can often hear the expression "hamsters for a haircut." But what does this mean, and why is it so important to avoid this fate? Let's figure it out.
Who are hamsters?
Hamsters are new or inexperienced traders who:
1. They run after the crowd, buying assets during the hype, when the price is already at its peak.
2. They succumb to panic and sell at the bottom, locking in losses.
3. They have no clear plan and act emotionally.
Major players — the so-called 'whales' — use such traders to their advantage, provoking their mistakes through artificial market movements.
A vivid example: meme-coins TRUMP and MELANIA
The recent hype around meme-coins TRUMP and MELANIA perfectly illustrates the 'hamster trimming':
1. Hype phase:
After a surge of interest in these tokens on social media and a sharp price increase, crowds of newcomers started actively buying them, fearing to miss the 'chance to get rich'.
2. Sell-off phase:
Major players and developers took advantage of the hype and massively locked in profits, causing a sharp price drop.
3. Panic phase:
When prices began to fall sharply, the 'hamsters' who bought at the peak started to panic sell, locking in losses. As a result, most of them ended up without capital, while major players increased their profits.
Result: someone lost everything in a matter of hours, while someone earned on their mistakes.
How does the trimming mechanism work?
1. Hype phase:
Media, social networks, and crypto influencers begin to massively promote the asset. The price skyrockets, attracting a crowd of hamsters who buy 'on emotions', thinking the price will go even higher.
2. Sell-off phase:
When most hamsters have already entered, the whales start locking in profits by selling their assets. This causes the price to drop.
3. Panic phase:
Hamsters, seeing the drop, start to panic and sell, locking in losses. Whales buy assets at a low price, preparing for the next cycle.
How to avoid being a hamster?
1. Study the market:
Understanding technical analysis, fundamental factors, and market psychology will save you from mistakes.
2. Act according to the plan:
Before entering the market, define your goals, entry and exit levels. Do not succumb to emotions.
3. Do not chase the hype:
If the asset has already increased by 100% in a short period, you’re likely late. Wait for a correction or other opportunities.
4. Manage risks:
Never invest more in the market than you are willing to lose. Use stop-losses and diversify your portfolio.
Result
The example of TRUMP and MELANIA once again proves: in the market, it’s not those who chase the hype that win, but those who think ahead. Liquidity is created through the emotions of the crowd, and the task of major players is to take advantage of it.
Don't be a hamster. Be a professional.