Many people think that in a bull market, with prices rising, they can make money just by buying with their eyes closed. However, the reality is that many people still lose a lot. Why is that? There are many underlying reasons.
Let's talk about the timing of entry and the positions held. The upward trend in a bull market isn't a straight line; fluctuations are common. Many people see others making money and blindly follow suit, choosing to buy coins that have already risen significantly, which is typical chasing the highs. For example, if a coin rises from $10 to $50, and you jump in at $50, a slight correction to $40 means you've already lost $10.
The issue of position is also crucial. Some people start with small investments, but when they see the price continually rising, they think about buying more to earn more, filling their positions at high prices, which drives their cost up significantly. If a price correction occurs, their losses can be substantial. Others go to the extreme and invest all their money at once, fully committing their positions. If the price drops, they find themselves unable to invest more to lower their costs since they have no money left, just watching their losses grow.
Let's talk about leverage. It's like a double-edged sword; if used improperly, it can hurt you. In a bull market, the profit-making effect is obvious, and many people think leverage is a good thing that can double their returns. As a result, they dare to use 10x, 20x, or even higher leverage. However, cryptocurrency prices are particularly volatile, with daily fluctuations of 10% up or 20% down being common. If you use 10x leverage to buy, and the price drops by 10%, you lose all the money you invested, and even if the price rebounds later, you're already out. Many people become overly confident in a bull market and increase their leverage too high, resulting in losing everything due to minor fluctuations.
Choosing the wrong coins is also a major reason for losing money. Not all coins can rise in a bull market; most of the time, mainstream coins lead the way, while smaller altcoins vary greatly. Some people, in pursuit of high returns, choose those newly named or hotly debated altcoins, like 'AI Coin' or 'Metaverse Coin.' Many of these coins have little real value and are just manipulated by operators behind the scenes. Prices may skyrocket in the short term to attract you to buy in, but once the operators have made enough profits and exit, prices will plummet. If you buy at a high, it's very common to lose 80% or 90%.
Some people think mainstream coins rise too slowly and are not interesting, so they ignore reliable ones like Bitcoin and Ethereum and insist on dabbling in small coins. As a result, when small coins drop, mainstream coins may still rise, leading to losses on both fronts.
Taking profits and stop-losses seems simple, but doing it well is very difficult. In a bull market, many people become dizzy with profit and grow greedy. For example, if you buy a coin for $10 and it rises to $20, you've already doubled your money, yet you still think it can go higher and hesitate to sell. As a result, the price drops back down to $8, turning your profit into a loss, and you regret it deeply.
Setting stop-loss points also requires knowledge. Some people set their stop-loss points too close, like selling when there's a 5% drop. However, in a bull market, normal price fluctuations can easily exceed 5%, causing them to sell prematurely, only to see the price rebound afterward, leaving them frustrated. Others don’t set stop-losses at all, thinking it’s fine to incur some losses, believing there will always be a rebound. In the end, they end up losing even more and find it hard to cut their losses.
Frequent trading is also a big pitfall. Some people think there are many opportunities in a bull market and that trading more can yield more profits, trading non-stop all day long. But do you know that each trade incurs transaction fees? Even if the fee seems small per transaction, it adds up significantly over time. For example, if each transaction incurs a 0.1% fee and you trade 10 times a day, by the end of the year, your fees will exceed three times your initial capital. Moreover, frequent trading leads to mistakes; sometimes you make a small profit, but one bad judgment can wipe out all your previous gains, resulting in an overall loss.
The regulation in the cryptocurrency market is not very strict, and there are many tricks involved. In a bull market, some operators manipulate the market by secretly buying a lot of coins at low prices and then using large funds to drive the price up, making everyone think the coin is going to rise, thus attracting retail investors to buy in. Once the retail investors have entered, the operators sell all their coins, causing the price to plummet, leaving the retail investors as the bag holders, losing money before they even realize it.
There are also misleading information that can heavily impact investors. If a project team releases false good news, claiming they will be listed on a major exchange, and a big influencer promotes it, many people will believe it and buy at high prices, only to find out the good news was fake and the price drops sharply.
Lastly, let’s talk about psychological factors. In a bull market, greed and fear are amplified. Greedy individuals always want to sell at the highest point; when the price rises to their target, they think it can go even higher and miss the best timing, turning potential profits into losses. Fearful individuals hesitate to buy at first, then see the price continually rising, fearing they will miss the opportunity, and hurriedly buy at high prices, only to encounter a correction immediately after and get trapped.
Therefore, while a bull market overall is rising, making money in it isn't so easy. You have to choose the right coins, manage your positions well, use leverage wisely, take profits and stop losses in time, avoid unnecessary trades, and not be misled by false information in the market to have a chance to make money. If you fail to do these things well, a bull market can still lead to significant losses.
