Emotional judgments of bulls and bears will only hurt you!

Most ordinary crypto investors tend to oversimplify the market and divide the market status into only bull or bear markets. However, unlike the clear definition of traditional financial markets, crypto investors have no unified view on the definition of market status.

For example, if the market rebounds quickly after a sharp drop in a short period of time, should this be considered a bear market? Or, if the market continues to decline moderately and lacks a clear rebound, how should this be defined? Furthermore, if a cryptocurrency such as Bitcoin still performs strongly when the overall market is weak, how can we judge the overall market situation?

The root of this ambiguity lies in the emotional fluctuations of the market, the high instability of cryptocurrencies, and the differences in the understanding of market cycles. In the field of cryptocurrency, different participants have different time horizons, from the long-term planning of founders and the medium-term perspective of venture investors to the short-term operations of traders and the ultra-short-term behavior of speculators, which undoubtedly increases the complexity of judging market status.

However, the key to the problem is not the binary views of investors, but their inability to reconcile these conflicting concepts in different time frames. For example, going long with high leverage simply because of optimism about cryptocurrencies, or going short across the board when bearish on a particular type of cryptocurrency, can lead to serious investment mistakes.

In fact, even if some views may be correct in the long run, such as "AI and cryptocurrencies are the future", the correctness of these views will lose its meaning if investors suffer huge losses in the short term due to overinvestment. Therefore, it is crucial to understand the specific stage of the market. Although we cannot accurately predict market price trends, we can obtain excess returns by judging the market status probabilistically.

Mature investors are able to recognize this and make decisions with probabilistic thinking. They will constantly adjust their views and strategies based on new information every day, because future market trends depend largely on the input of this new information.

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