Take $BTC , for example. When it hit $70k, everyone was thrilled, and a drop to $50k felt like a gift—an opportunity to grab a great asset. Discussions about lower prices? Almost nonexistent! Some folks aimed to buy at $30-40k, but when the price dipped, fear kicked in, and they adjusted their expectations down to $20-25k. When prices finally hit those levels, buying felt scarier than ever because what if it dropped even lower? Eventually, when BTC hovered around $15-17k, some were still waiting for it to hit $8-10k. Even if it reached those numbers, buying would still feel intimidating, and they'd just keep lowering their entry price.
Isn’t it wild? People are more willing to buy at $50k, but the thought of buying at $15-20-25k freaks them out. It’s not just fear, either—some genuinely believe the price will keep falling and jump into short positions, even after a massive 75% drop that lasted over a year. Just look at the charts showing mass liquidations of margin positions; it’s a clear sign of irrationality.
And then there’s the even crazier behavior of selling after a long decline and locking in huge losses. Think that doesn’t happen? Sadly, it’s pretty standard right before a market turnaround, as some traders still think the drop is going to continue.
So, to wrap it up: after a long climb, buying doesn’t seem scary; after a long drop, it does. At the highs, everyone thinks prices will keep climbing, while at the lows, they expect more declines. It boils down to getting used to it, comfort zones, faith, and, of course, greed. Remember, markets are cyclical; nothing goes up or down forever.
Stay out of the Crowd
So why do people miss selling at highs and buying at lows? It often boils down to greed and a lack of understanding. Here are some tips to help you avoid these traps:
Get the Basics Down: Make sure you understand at least the fundamentals of trading—things like technical and fundamental analysis.
Put Knowledge into Action: Don’t just learn things; apply them right away! Use unfamiliar charts and grab a notebook to make virtual trades while you're getting the hang of it.
Understand the Market: Know how the market works. Everyone has different starting points; a trader with millions can't just jump in or out quickly, so keep that in mind.
Stick to Your Plan: If you don’t have a plan or strategy, you’ll likely get swayed by others’ opinions, which can be risky. Develop your own trading strategy and stick to it. Don't rely on signals from others—they’ll cloud your judgment when you need to make decisions.
Manage Your Risks: Always keep an eye on your risks.
Keep Learning: Make the most of your time and keep educating yourself! The crypto market is always changing, and only crowd psychology stays the same. What worked a year ago might not work today. Opportunities come and go in crypto all the time. So, instead of regretting not buying Bitcoin ten years ago when it shot up 10,000%, remember there are plenty of other crypto assets that have shown similar growth in just one bull cycle
