Investor Psychology: Why Do We Always Sell at the Bottom – Buy at the Top?

Introduction:

In the crypto market, there is an unofficial but very frequent rule: Retail investors often buy at the top and sell at the bottom. Why is this the case? The answer lies in human psychology – fear and greed.

⸻

1. FOMO Effect (Fear of Missing Out)

When the market is booming, coins are rising by tens or hundreds of percent, investors easily get swept up in the FOMO wave.

They feel that if they don't enter a position immediately, the opportunity will slip away. The result is: buying at the peak, when it is already too late.

⸻

2. Fear of Loss When the Market is Crashing (FUD)

When the market drops sharply, negative news floods in, many people panic and sell off.

They do not want to see their accounts go negative further, so they accept taking losses at the bottom – often just before the market recovers.

⸻

3. Emotional Vicious Cycle

• Prices rise → Excitement → Buy in

• Prices fall → Worry → Wait for a rebound

• Prices drop sharply → Panic → Sell off

• Prices recover → Regret → Buy back at a higher price

This is the repeating cycle that causes many people to “travel a long road and still incur losses.”

⸻

4. Solutions to Escape the Psychological Trap

• Discipline with investment strategy: enter positions according to plan, not emotions

• Allocate capital wisely: DCA, not all-in

• Understand market cycles: prices do not rise forever, nor do they fall forever

• Learn to stand aside: Sometimes, doing nothing is the best choice

⸻

Conclusion:

Investing is not just a financial game, but also a battle with one's own emotions.

Those who control their emotions – control their profits.