Last year I met an old investor, Old Zhang, who loved to play "high sell low buy" in the bull market. Every time Bitcoin spiked, he would short it, claiming that "counter-trend trading is smarter". What happened? During that big market last year, he got liquidated 5 times in a row and ended up losing all his principal.
This is a typical case of - being too clever for your own good!
What have the dealers been doing these past two years? They have been training retail investors to form conditioned reflexes:
- After a big rise, wait for a pullback
- After a big drop, buy the dip
- Once it breaks the previous high, they want to short
It's like training a puppy; every time the market pulls back, you give it a piece of meat. Once retail investors develop the habit, the final time is just closing the door and beating the dog!
I have personally witnessed the most brutal harvest:
In April 2021, Bitcoin dropped from 60,000 to 50,000, and many "smart people" started shorting. As a result, the dealer shot it up to 65,000 in one go, leaving these people with nothing.
Remember the two major hobbies of the dealer:
1. The bottom shakes you out - "It’s over, it’s going to drop further"
2. The top lures you to take over - "This time it’s different"
Now do you understand why shorting in a bull market is a death wish? Because you think you're "getting a bargain", but in reality, you are helping the dealer complete the final step of harvesting. In a bull market, there is only one thing to do - hold on to your coins, don’t get thrown off the train!
