Weak Hands In Crypto: The Psychology Of Risk & Sacrifice
A lot of people say they cannot live a life of risk, but the truth is that they're scared of taking sacrifices that might not have 100% certainty of yielding favorable dividends. In life, everyone subconsciously lives a life of risk, and the reason why some people are mostly not conscious is that when a risk doesn't pose an imminent danger, but the futuristic danger is a possibility, they still go on to live it because the present is better to them than the future.
Take a look at crypto for example. Weak hands will always exist and this isn't because these guys do not learn from the "weak-actions" when the market retrogresses they're scared of making sacrifices, such sacrifices entail bearing the psychological pain of loss, loss in USD value, and bearing the horror of a complete collapse.
Losses Are Meant To Be Incurred
Weak hands are not demons, neither are they invisible, they're your fellow enthusiast who predicted 100k BTC in the last bull run, they're quick to predict unbelievable prices, but find it hard to believe that, extremely low prices are real too, so they're enthusiast in the bull run, but weak hands in the bear market.
These people aren't there for the long haul, their mentality is already short-termed, so they'll rather take losses, than show a little bit of resilience, and when the bull market begins to eclipse the bear, this is when they begin to invest again. Believe me, weak hands are greedy, they're the ones who wait for the topmost tops to sell, rather than taking some profits along the way, the idea of having it all counters the imagination of losing it all.
Higher Prices & The Accumulation Of Risk
You'll think their patience to wait for ATHs before they sell will be the same when the bear market comes, but they're quick to want to leave instead, but I can categorically tell you that too much greed can potentially turn one into a weak hand, especially when they calculated never taking profit when they should and how being faced with a possibility of losing everything.
Weak hands will forever be part of crypto because they're the ones seeking stability while making profit at the same time. It's classic, eating one's cake and having it. These people could easily put their money into stable assets, I mean, HBD, for example, offers 20% APY, even if it reduces to 10% it's still a great deal.
A great deal might equal small profit
But who wants that?
I mean, these people could easily buy stable assets had it been they can take the time to analyze and accept themselves as potential weak hands, and earn the little they can while having their stability, but no! They'll choose to go all out to make profit, but fail to accept the conditioning that comes with the process of profiteering in crypto.
We all know what we've signed up for. The possibilities of loss are inevitable, but weak hands are wired differently. They do accept these possibilities, this is why they disappear as a fart on a windy day when these possibilities start becoming reality. For example, I know F1 motor racers that have died and I know the ones that have succeeded, made millions of dollars, and are living the good life.
Risk & Sacrifice
Both the ones that died and the ones that are living and enjoying their money all knew what they signed up for. While risk and sacrifices seem like a distant cousins, in doing the latter, we're always sure of incurring the former. We all know the crypto market has a mind of its own and because of this, it weeds off weak hands before doing anything significantly positive.
However, it's a two-way thing. People need weak hands to buy even cheaper, but on the other hand, when they dump, it takes the market lower, creating a different form of undefined FUD in the process. In this space, we have weak hands who are seeking constant stability and massive profiteering.
I believe no business venture in the world would offer this.
A little bit of instability creates opportunities
......but we're not wired to love or thrive on instability, most times we always take the time to train our minds to accept the volatility that comes with instability because it's part of the sacrifices we make for the greater good. This is how crypto works, we live with the knowledge that unforeseen circumstances lurk now and then, but we try to mitigate this thought with the believability of more profit, and less loss in the long run.
The psychology of weak hands in Crypto is quite an interesting conversation.
We're seeing different behavioral tendencies to crypto these days and this is because unscrupulous entities and SBF have rocked the boat, this has created more weak hands over time. Crypto requires more Sacrifice and patience these days, and it'll be interesting to see if we'll create more or less weak hands in the process.
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I don't think crypto is for everyone and it makes me think about something I heard about when I was learning about the stock market. If you are worried about your position and you are losing sleep, then you need to cut back your position or get out. Crypto prices move a lot and people need to understand that they will sometimes not move the way they want them to.
I do agree that learning about the crypto or asset will make it easier for you to follow through on your own plans. So research won't hurt but the facts are always changing so you need to spend time to make sure nothing bad has happened.
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Haha, weak hands are always worried about their position, so that's why the choose the regular way out when the price don't go in our favor, but then our expectations of crypto aren't always the reality. The market has a mind of it's own and even good projects takes heavy beating sometimes, it's what they signed up for. But they're not aware.
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Risk is part of our existence if we look at life carefully, even in the comfort of our homes we go through accidents that sometimes might be life-threatening. So choosing not to take risks at least calculated risks now and then is not a life I want to live.
As for the weak hands in crypto, we will always have them around, they are part of the family.
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Weak hands are part of the family like you've Said hahaha, it's just crazy how much of a potential they could possess if they choose to act differently, but then, without them, there might not be cheap crypto to actually buy in the market.
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Lol, you know like siblings can be of the same parent but behave differently and you begin to wonder where did a brother or sister get a certain habit from. My mom always says that...
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I just feel that at this period, we needed them to hold to keep the sanity in place, after the FTX saga it's safe to say a lot of them are out..
They're truly our preposterous siblings
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Well, all I can say is we have been wired to have weak hands. Not a lot of people will love to see their see their money going to shit when they can do something about it.
Imagine they bought the btc top at 69k and it fell it about 50k whilst they were waiting for 100k. People are social media will fud that btc is dead and instead of Hodl for a longer time they will certainly get out. Now that they have gotten out and btc is at 18k, they feel like kings.
This reminds me of how I tried so hard in convincing a who bought the top and made huge losses. He said he won’t come back unless btc goes to the top again. This shows that most weak hands don’t even know what they are doing. They don’t take time to learn, they just FOMO here and there.
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Well, inasmuch as some people are sometimes programned to FUD, I still believe, it's within our means to control these tendencies. Imagine buying crypto at the top, I mean, who does that? It's meant to be bought at the low and not the top, people won't do their research because the think crypto is a money doubling venture. Making Money off crypto isn't easy, it's why they have to study it. The guy you mentioned isn't even a weak hand, he's just clueless.
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Many people in the crypto space forget what they signed up for when the market goes downward. It's like a distant memory lost inside their heads. They just do what they feel at the moment which is offloading their hands to remove the accumulating pressure. We're naturally built to be risk averse so in those moments rational thinking is normally offline. I think when the crypto space gradually gains stability, there will be less weak hands as their won't be much pressure to sell.
Well you're totally spot on. This is why I think Crypto hardly aligns with human logic whatsoever. But like you said, we abhor risk and we try so hard to stay away from it, but with Crypto, it seems inevitable and we just have to keep it up because it's what we've signed up for. Although it's true that people have the right to be scared but, it's what we signed up for. We're happy for the greens in the market.
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Yes, the greens in the market bring some sigh of relief and a breath of hope. Maybe the sunrise is around the corner.
That's true, what remains is some solidity and momentum. Hope is good even if nothing is certain yet.
Risks, sacrifices and the different psychologies of profit and loss. Thats how I will surmaarise this great piece in one sentence. Responding to more specific lines though..
One thing I learned early in my crypto journey is to have a longer term perspective, but still stay conscious or taking profit when I should. Being a little greedy when for example, one has done 200% profit on a particular crypto almost always leads to disaster.
Yes, for them loss does not exist. So when the reality bites, they rush into a decision they will definitely regret. They are not just wired long-term.
Sure. And funnily enough, they are usually the ones to inadvertently provide liquidity by selling off for a loss in a bad market, which turns to be profit for the guys that are here to stay.
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Thank you, I've been studying a lot of psychology as per bull and bearish trends and all these tends to be repetitive, we tend to behave in some certain way, as a reaction to profit and loss. Crypto is hardly an exception.
I've come to understand that the long game pays even better, I know that people do not want to lose everything, I know people want to take quick gains to build their life goals, but the people who tends to achieve it are those who gives it patience and time.
I just feel they're not ready to accept the fact that losing is part of the game. Losing is part of the game, but we signed up for it, even if we do not like it.
Without them, I don't think price will flunctuate enough for others to take advantage and buy as well. I think they're just relevant to the space in this aspect.
So true. Crypto seems to work like a complete economy. everyone has a place in it. Both the weak hands and the smart guys with vision are vital and valuable contributors in the game
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Exactly, and I think people and roles changes when the market takes different turns. This would have been more functional if the SBF issue didn't hit crypto, but now, we have to hope these all goes away. 2023 seems promising already.
Honestly, 2023 should be nice and just act like all the scandals of 2022 never happened.
that is interesting. what I have experienced, when a new trader gets into such a market, becomes a weak hand. with the passage of time, learns, adapts, and makes good strategies.
With losses, people learn and make profits with experience. the sacrifice of capital to gain experience. and then get a high price for the experience.
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Weak hands will get stronger eventually at some point.
Learnt from last year experience of mine.... Not in bear market but actually DeFi sidechains there were some coins that I SoDL early and gave huge returns later.
FOMO, FUD is still somehow take Control over mind sometime and at least one thing now I know is not selling in loss and have that HODL mindset for long term.
The primary reason why they're called weak hands is because they're the early sellers when the market goes haywire. So I doubt they're ever strengthened overtime, except they're motivated to make profit. At the end of the day, having faith in the project you're vested really matters a lot. I doubt weak hands do their research, they just follow the trend.
This is The only reason why some small traders are always remain and called small traders.
I have talk about this several times that not everyone is mentally fit for investment and it risks.
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Where I come from they say that nothing ventured, nothing gained.
Risks are inherent in the very meaning of life and are taken every day even in situations that seem insignificant.
As far as financial life and investments are concerned, one must know how to take the right risks at the right time; I also believe that even the risks must in some way be planned and weighted.
This post gave me a lot to think about, thank you very much!
Nice text, I like the analogy with the F1 racers. Patience is truly the key to everything, and a good way to make sure that you can be patient enough is to follow the rule `1 in investing : Invest only what you can afford to lose. When you use that minding, you can overcome the weak hads syndrome I believe (contratly to those who invest to gest something quickly in return). Thanks for the post(s) and ongoing advices
Yeah, the analogy of the F1 racers fits in. I mean, we all know what we've signed up for. But in crypto's case, we can choose to be modest, so as not to be overly volatile, this should probably be cultivated in our investing pattern.
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The green persists. I can see the bear going for a break. Weak hands put a little seasoning to the game.
Right now buying is a little bit chaotic. You can truly miss if not paying attention.
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Yeah, one can miss out if they're actually not paying attention like you've mentioned. I'm hoping we maintain a momentum.
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Lol, sometimes people need these "weak hands" to sell so they can buy more...I am glad I have been with people who are intensive in handling my shortcomings and advising me to stay grounded.
Money is a beast that needs taming
Yeah, I mentioned that weak hands creates extra cheap liquidity, but sometimes when the dumps are too much and there's no one to pick it up, the phenomenon of weak hand becomes complicating.
Very true...But in my heart of heart, I want weak hands out of the market. They are the ones destroying it. Hive needs strong hands and hearts too...Nice post though...I hope you enjoying this little sigh of relief the market is giving us.
A lot of people are wired that way :( ... I think it's very similar to the way a gambling addict might think? Always on to the next quick profit, rather than accepting growth as it is possible?
Sure, sometimes they win big - but many more lose everything...
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The gamble of winning big or losing everything in a ratio 1:1 is something I'll never choose, rather I'll choose to learn and slowly grow. Like you said, it's similar to gambling and this is the results. It's sophisticated in crypto, without time, it's easier to think you're losing in the short run
Definitely... I got a nice stack of coins once by flipping a small amount, then when they dipped too far I just let them stake until they pumped. It worked well at least for me that I did short term investing, then left it alone when the market changed for that particular project.
!PIZZA
That's a very good way of flipping some nice profit, I think when we get creative, we can come up with ideas that eventually works wonders for us, just like you did for yourself.
Yeah, it was a good experience :) ... I just sunk a small amount of the profits back into the same masternode coin now that it's back down there :) If lightning hits twice I'm going to be really happy...
If not, I won't be disappointed with what I walked away with. It wasn't a lot to begin with, but I'm always glad to see my guesses work 😂
!PIZZA
These are astute observations. !BBH
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Crypto is not easy as it seems and holding is the most difficult thing. Sometimes you will face such a bad situation that will lead you to forced selling and I have experienced this.
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Well, people who play the long game are th biggest winners eventually.
strong hand and gray hair seems normal now in second bear run:D