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FOMO leads to poor entries near market tops, and panic selling often locks in unnecessary losses.
Investors lacking a strategy or discipline during periods of volatility are most vulnerable to short-term downturns.
Long-term holding and proper security reduce risks and increase the odds of positive returns in crypto.
The cryptocurrency market is once again making headlines, with Bitcoin surging past all-time highs and bringing the broader altcoin market along with it. Yet, many investors are losing money even as prices skyrocket. Why is it that during the most exciting moments in crypto, more people lose than win?
Bitcoin price has shown extreme volatility, swinging thousands of dollars within a single day. Many traders keep a close eye on BTC to time their entry and exit points in the crypto market. Bitcoin price today reflects a slight recovery after a week of downward trends and market uncertainty.
Let’s unpack the psychology, behavior, and timing errors that commonly lead to losses during Bitcoin’s biggest rallies.
Factors like supply, demand, regulation, and investor sentiment influence the price of Bitcoin. When Bitcoin starts climbing rapidly, as it has since spot ETFs were approved in early 2024 and again in mid-2025, it creates a sense of urgency in the market. This phenomenon is known as FOMO, or Fear of Missing Out.
During these periods, new retail investors flood in, buying at or near the top because they believe the price will keep going up indefinitely. The irony is, these very purchases help fuel the last leg of the rally. But as history shows, markets don’t rise forever.
Once early investors begin to take profits, prices start to decline. Those who bought late often panic-sell at a loss during the first pullback, converting what could have been a temporary paper loss into a permanent financial one.
Most retail investors don’t buy Bitcoin when it's down; they buy when it’s in the news. However, data shows that the most successful investors are those who accumulate when the market is quiet and prices are suppressed.
For instance, Bitcoin reached a cycle peak of $67,000 in November 2021, only to decline by more than 75% in the following year due to macroeconomic concerns and events such as the FTX collapse. Those who bought during the hype and sold in fear realized huge losses.
In contrast, long-term holders who accumulated around $16,000-$20,000 reaped massive gains in the following rally.
Crypto bull markets are fueled by a mix of optimism and greed. While enthusiasm can be healthy, unrealistic expectations often lead to poor decision-making. Many investors start chasing lesser-known altcoins or 'next Bitcoin' narratives, hoping for even bigger returns. Unfortunately, most of these tokens lack the security, adoption, or long-term viability of Bitcoin.
Joe Kelly, CEO of Unchained Capital, advises newcomers to focus on fundamentals and personal security rather than hype. 'Bitcoin has a far more resilient foundation than most of its imitators,' he says.
He also stresses the importance of keeping your crypto holdings safe and private, warning against oversharing ownership or using insecure wallets.
Also Read: Block Earner Launches Bitcoin-Backed Home Loans for Up to 50% Property Value
Bitcoin's rapid price surges may appear attractive, but they come with intense volatility that often shakes out inexperienced investors. Many new entrants lack a clear plan, entering trades based on emotion rather than analysis.
When prices swing wildly, sometimes by thousands of dollars in hours, those without conviction tend to panic sell, locking in losses that could have been avoided. Experts have released a cautious Bitcoin price prediction, citing global economic shifts and regulatory updates.
Success in crypto requires more than timing the market; it demands the discipline to stick to a strategy, even when the market moves against you in the short term.
Despite the volatility, one compelling stat remains true: Bitcoin has never delivered a loss over any four-year holding period. Most investors who held their Bitcoin for at least three years have seen positive returns, even if they bought near prior highs.
What makes long-term investing in crypto viable is not just patience but a conviction belief in the underlying technology and ecosystem growth. Bitcoin today is supported by global institutions, regulatory clarity in many regions, and integrated financial tools. That fundamental strength is far more developed than it was in prior cycles.
Another reason investors lose money isn’t related to market prices, it's theft and fraud. During bull markets, cyberattacks increase. Scams, phishing links, fake apps, and rug pulls all proliferate as new users flood into cryptocurrency.
Security breaches can result in the complete loss of funds, particularly for individuals unfamiliar with self-custody or hardware wallets. Unlike traditional banks, there’s no way to recover stolen cryptocurrency.
Ensuring strong security practices, including cold storage, two-factor authentication, and avoiding suspicious websites, is vital. One major reason why investors lose in crypto is their tendency to panic sell during temporary market dips.
Also Read: What is Driving Bitcoin's Growth in 2025?
If you are checking out a crypto app to get rich in a week, you are probably a bit late to the party. There is nothing wrong with investing in a bull market; however, if you don't have a plan or a realistic timeframe, you’ll likely lose money most of the time.
Those who stay calm during dips, avoid chasing pumps, and commit to a long-term thesis tend to outperform. On the other hand, those lured by hype, unaware of risks, and quick to panic when prices dip are the ones who end up buying high and selling low, the classic formula for losing money.
Crypto is not a lottery ticket. It is a high-volatility investment, but it can be very rewarding as long as the investor treats it like a rational asset class that needs discipline, research/education, and time.
1. Why do people lose money during Bitcoin bull runs?
They buy during peak hype and sell during sharp pullbacks, reacting emotionally instead of strategically.
2. Is it still a good time to invest in Bitcoin?
That depends on your goals and timeframe. A long-term view typically outperforms short-term speculation.
3. What’s the biggest mistake crypto investors make?
Jumping into trades without a plan or understanding of market cycles often leads to avoidable losses.
4. How can I protect my crypto during bull markets?
Use cold wallets, two-factor authentication, and never share details about your holdings publicly.
5. Has anyone made money in crypto by holding long-term?
Yes, historically, Bitcoin has not delivered losses over any four years if held patiently.
