Bitcoin #bitcoin 10% retracement has caused many altcoins to give back their gains. Many friends have held altcoins heavily for more than half a month, and as a result, a one-day pullback has evaporated all the previous profits, directly returning to the starting point.
This phenomenon is not merely a market fluctuation but a reflection of investors' psychological mechanisms.
Many people, when facing floating profits, always hope to "make a little more"; but during a pullback, they are often reluctant to stop-loss due to the fear of confirming losses. This behavior can be explained by the "loss aversion" theory — humans are about twice as sensitive to losses or smaller gains as they are to profits.
In other words, compared to the satisfaction brought by gains, the psychological impact of losses is much stronger. For example, when a trader makes $1,000, they might think, "What can I do with a thousand bucks?" and may even feel unsatisfied because others are earning more;
But if they lose $1,000, the psychological feeling is magnified, thinking, "This is my half-month salary, wasted." This psychological mechanism drives investors to exit early during uptrends, while they are reluctant to acknowledge losses during downtrends, ultimately amplifying the impact of pullbacks.
This magnification effect of losses directly influences traders' behavioral patterns, making it difficult to make rational decisions.