Why is it easier to suffer huge losses in a bull market in the cryptocurrency industry? Analyze the content of bull market losses on Twitter, focusing more on operational aspects such as chasing the rise of Tugou coin, contract liquidation, and randomly adding positions after short selling. These are indeed the direct reasons for losing money, but the deeper root cause is still cognitive bias. The bull market logic of the cryptocurrency industry is similar to that of the stock market, but due to its lack of physical support, extreme leverage, and blank regulation, the consequences of "insufficient understanding" will be magnified tenfold, ultimately leading to faster and more severe losses. 1. The cryptocurrency industry is an "extreme zero sum game", a more brutal wealth transfer machine than the stock market The zero sum property of the stock market will be upgraded to "extreme zero sum" in the cryptocurrency circle. The stock market at least has corporate performance and dividends as value anchors, while the vast majority of projects in the cryptocurrency industry do not have physical businesses, profit models, or even complete technology implementation. Essentially, it is a pure capital game of "using the money of new entrants to pay for old entrants". At present, the cryptocurrency industry does not create any wealth, only accelerates wealth transfer. Every penny you earn is money lost by other investors; And the money you lose will either be earned by whales (large fund holders) or directly withdrawn by project parties through "unlocking and smashing the market" and "rug pull", without even a bottom line of "keeping some principal" in the stock market, and in extreme cases, it may even return to zero. The only driving force behind the bull market in the cryptocurrency industry is the incremental funds generated by FOMO sentiment (fear of missing out). Whether it's Musk calling for orders, a KOL promoting "hundredfold coins", or a certain exchange launching new coins, the essence is to attract more retail investors to enter the market. In the bull market in 2021, the concept of "Metauniverse" and "Web3" alone could make the counterfeit currency soar dozens of times, without any value support, and it was all dependent on the foam of funds. The 'fund transfer efficiency' of the cryptocurrency industry far exceeds that of the stock market. The cryptocurrency market operates 24 hours a day without any limit up or limit down, and some altcoins can cause their prices to plummet by more than 30% with a large amount of capital. Retail investors do not even have time to stop losses. Not to mention the "insertion" of the contract market (instantaneous price fluctuations under extreme market conditions), which directly causes leveraged players to liquidate their positions without even a chance to react. 2. The crazier the bull market, the fiercer the investment, and the leverage is 10 times higher than that of the stock market In the bull market of the stock market, investors will increase their positions and use margin trading and securities lending, but the "money adding" in the cryptocurrency circle has no bottom line - because the threshold is lower, the leverage is higher, and the temptation is more direct. Low threshold amplifies the desire to invest. Opening an account in the stock market requires at least an ID card, while in the cryptocurrency industry, mainstream coins can be bought for a few tens of yuan, and even "local dog coins" can be bought for a few cents. In a bull market, seeing others make money by buying "air coins", retail investors will go from "investing a few thousand" to "investing tens of thousands", and then misappropriate credit cards, borrow online loans, and even mortgage houses - after all, there is a myth circulating in the cryptocurrency circle that "a spear can turn a bicycle into a motorcycle", and this temptation is more stimulating than the "steady profits" of the stock market. Leverage is much more extreme than the stock market. The minimum threshold for stock market margin trading and short selling is 100000 yuan, and the leverage is generally 1-2 times. However, the leverage of cryptocurrency contracts can be easily increased to 10 or 20 times, and some platforms even have 100 times leverage. Under 10 times leverage, if the coin price drops by 10%, the position will be liquidated; Under 100 times leverage, a 1% drop will return to zero. At the end of the bull market in 2021, many retail investors used 50 times leverage to chase after the rise, resulting in a 2% pullback and losing all their capital, faster than the "huge losses" in the stock market. Off site funding is even less regulated. Off exchange capital allocation in the stock market is still subject to policy restrictions, while in the cryptocurrency market, capital allocation is through contracts, and credit trading can be leveraged without collateral. These capital fees are not only high, but also directly 'flat out' during market fluctuations, without even room for negotiation. 3. Mistakenly treating luck as a divine skill, the stock gods in the cryptocurrency industry are even more blind In a bull market of the stock market, investors will at least look at indicators such as PE and ROE, while in a bull market of the cryptocurrency industry, the vast majority of people dare to call themselves "knowledgeable about the cryptocurrency industry" before even reading the project white paper. In a bull market, 'buying with closed eyes makes money', mistaking the market trend for ability. The characteristic of a bull market in the cryptocurrency industry is a "general rise", especially for altcoins - perhaps a "Tugou coin" with a strange name can rise 5 or 10 times with just a few "call orders" in the community. After retail investors make money by buying, they will not think that the market is good. Instead, they will think that they have "accurate vision" and "understand hot topics". Some people even dare to call themselves "gods of the cryptocurrency circle" because they cannot even understand the K-line. KOLs and media amplify their arrogance. And KOLs in the cryptocurrency industry may have been ordinary people in the past few months, relying on "posting profit charts" to gain followers. In a bull market, they will promote various "prediction deletion posts" and "potential coins", and retail investors will believe in them when they make money. It wasn't until the bear market arrived and KOLs deleted their accounts and ran away that individual investors realized they didn't believe in "gods" but in "sickles". Neglecting 'zero risk'. Projects in the cryptocurrency industry may "run away" at any time. In a bull market, retail investors think that 'as long as the price rises, they will sell', but they forget that many project parties will 'unlock and smash the market' at high levels - throwing a large amount of tokens they held early into the market, directly causing the coin price to drop by more than 90%, without even the opportunity to stop losses. 4. A 24-hour roller coaster, a more confusing "pullback trap" than the stock market In the cryptocurrency market, which operates 24 hours a day without any limit up or limit down, the "pullback" in a bull market is more confusing and prone to pitfalls. Accustomed to "big fluctuations" and mistaking "collapse" for "correction". In a bull market in the cryptocurrency industry, it is common for stocks to rise 50% and fall 25% in a single day. Retail investors gradually adapt to this "roller coaster ride" - if they fall 10% today, they will rise 15% tomorrow. Over time, they will feel that "falling is an opportunity to increase their positions". But when a bear market really comes, such as the LUNA crash in 2022, with a single day drop of 99%, retail investors still think it's a "normal pullback" and want to "buy the bottom", but the result is directly zero. Institutions and project partners run faster. Whales can complete shipments within a few minutes. At the end of the bull market, the project team will first raise the coin price through "positive news" to attract retail investors to buy, and then quietly sell all the tokens in their hands; Exchanges may even "unplug the net" in extreme market conditions, making it impossible for retail investors to close their positions and only watching themselves liquidate. Frequent trading amplifies risk. The transaction fees in the cryptocurrency industry are higher than those in the stock market, and 24-hour trading makes it difficult to stop - retail investors may think that "more trading can earn more money" and engage in daily buying and selling, as well as currency exchange operations. But the volatility in the cryptocurrency circle is faster. Out of 100 trades, the first 99 were made, and as long as the last one encountered a "dip" or "crash", all previous gains could be lost, and even owed money to the platform. Finally, the huge losses of the bull market in the cryptocurrency industry are the ultimate amplification of "insufficient cognition" Some people say that the bull market in the cryptocurrency industry loses money because they chase after the rise and kill the fall, open too many contracts, and buy the wrong currency. But these are just appearances - the real reason is that the characteristics of the cryptocurrency circle infinitely magnify the consequences of 'insufficient cognition'. The bull market in the cryptocurrency industry has never been a 'wealth creation field for ordinary people', but a battlefield where 'high cognitions harvest low cognitions'. The more bullish the market, the more sober it is - what you think of as "luck" may be a "trap" set by others; The 'opportunity' you think of may be a 'sickle' prepared by others. The financial laws of hundreds of years also apply in the cryptocurrency industry: behind prosperity is harvest, and the result of prosperity is to use your money to serve people who understand the rules better than you. Encouragement together!