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Fallacies in the Cryptocurrency Community That Lead to Investment Failures Among the Ignorant Crowd

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Fallacies in the Cryptocurrency Community That Lead to Investment Failures Among the Ignorant Crowd

There are many failed investors in cryptocurrency investments, each with different reasons for their losses. Clarifying the investment mistakes of the failed investors helps to improve the quality of one's own thinking and also allows individuals to examine which misconceptions they need to correct.

@iamfakeguru often shares his views on the cryptocurrency market and trends on Twitter, including investment perspectives. This article summarizes the reasons for failures in cryptocurrency market investments, prompting investors to reflect on themselves.

The Foolish Levels of the Cryptocurrency Market

What kind of fool are you? The crypto market is designed to redistribute its own funds. Regardless of whether you like it or not, people are more likely to incur losses than gain token profits. Do you know what are the particularly stupid reasons behind future failures?

This article attempts to summarize the most common misconceptions and false beliefs of traders in the crypto sphere, inspired by Edwin Lefèvre's "Reminiscences of a Stock Operator" and @marwolwarl.

TA Believer/ Non-TA Denouncer

This group consists of those who believe in technical analysis and those who completely disbelieve in technical analysis. What's the point of drawing a bunch of lines on a chart? Shouldn't market psychology be reflected in human behavior instead?

The followers of technical analysis may be as numerous as its adversaries. Discussions for and against technical analysis may have lasted as long as the market has existed, and it seems that the debate will never end. The author admits to not practicing technical analysis but after looking at thousands of charts, it seems that certain tokens may "perform" in a predictable way.

Plain Fool

These are absolute gamblers who know nothing. Everyone, including themselves, knows this fact. They blindly invest, hoping to make money through luck, until some downturn events wipe out their assets.

Compared to investing, their investments in the crypto sphere are more like gambling. Thousands of "so-called opportunities" appear every day, hoping to win among countless junk coins, NFTs, and DeFi garbage, which mostly lead to losses.

Semi-Sucker

Those who "buy the dip" and think they understand the game, believing their knowledge and skills are mature and understand the market. These experienced fools study not the market itself but the comments and viewpoints of higher-level fools on the market.

Semi-Suckers know how to avoid losses in a certain way and prevent beginners from losing money. They are truly supporters of the interests of others. Their professional careers in the crypto field can last for a while, but it is only long enough to be hit hard by investment failures and eventually fall into despair.

Soft-ear Mike

These are people who have listened to too many experts' opinions without developing their own thought process. They enter market trades based on others' tips and opinions but have no idea what to do and lack conviction, eventually leading to an early exit from the market.

After realizing their mistakes, they continue to trade, incurring trading fees, but will be squeezed out of positions again and again. These people do not realize that after following the "buy" instructions, they need to wait for the "sell" instructions to appear before selling.

Bagholder

Bagholders enter the market trades with firm beliefs, confusing "good projects" with "good investments." They say foolish things like "I'm in it for the tech" and believe that the team has created a high-quality project, showing no concern for speculators' interests and trends.

At the foolish level, "firmly believing in bad trades" is better than "making bad trades without belief or theory," but this state will lead to endless regrets such as "unrealized profits" and "if only I sold at the top."

Profit Lover

These people conduct appropriate market analysis but ultimately exit positions for meager profits. Unlike bagholders, their conservative trading strategies limit their victories.

Profit Lovers say, "No one goes broke taking a profit." However, what these people fail to realize is that no one becomes wealthy by doing so. The goal of investment portfolios is to profit in fiat currency. However, prematurely accepting profits will decrease expectations and reduce wins.

DeFi Gigabrain

These people are supporters of complex strategies and, after multiple wins in a bull market, eventually become overly reliant on their abilities. DeFi Gigabrains tend to construct complex systems that prevent them from seeing what is happening.

In some cases, they may borrow funds for over-leveraged trades. If these individuals lack skills and have a prideful attitude in institutional funds and large projects, it may sometimes result in losses of millions or billions of dollars in shocking collapses. L...F...G...?

The Hound

Experienced and technically savvy in the crypto game, The Hound believes they should and must continuously trade, leading to losses due to the desire to act constantly. They feel they must bring home some money every day, as if they have a fixed job.

Those who can invest correctly and sit tight are rare. However, over time, patience and calmness will bring the greatest rewards. Trading games can be addictive, especially if one is good at it, and suppressing this instinct is not an easy thing to teach.

Conclusion

The wise in the crowd, reliable winning players are those who can

  • Allocate risk based on the main market trends and conditions
  • Buy or sell based on established trends
  • Differentiate between good projects and good investments...
  • Understand the motives of tipsters and disseminators
  • Have the patience to wait for short-term rebounds
  • Have a solid thought process and logic to determine when to exit during major trend changes
  • Switch from one investment to another, compounding their earnings