How do Traders and Investors get caught in the web of Confusion
A lot of traders want to benefit during data release period or any news relating to that specific asset. If there are headlines that a crypto asset is going to be listed on a new exchange trader will be bullish on that asset. Also if there are are issues affecting that crypto asset e.g legal issues a lot of traders will be bearish. This leaves us with a lot of unanswered questions like: Is that all necessary or is it a wise move? Lets get into detail and see what it really is.
Factors which mostly affect traders mindset
Centralized Exchange Listings
Fear Of Missing Out (FOMO)
Utility of Crypto currency
Centralized Exchange Listings
If you are in Telegram groups or any social media groups of different crypto project, you will hear a lot of investors asking questions like when is Centralized Exchange Listing. They have a mentality of thinking that if a crypto currency is listed on a CEX then its going to explode and they will be bullish on that asset. I have see a number of crypto project getting listed and then then fell hard and that is when you start to realize that getting listed does Not mean that the project is going to surge.
So what happens is when projects are new they are hyped and you hear the team behind claiming that the project will soon be listed on big CEX and traders and investors jump in and buy a lot then when the project is listed the dumping process start. The reason for that is if a project has no life it will be just listed on CEX and the team behind dumps their tokens and traders and investors will be dead and forever trapped in everlasting losses. The below picture shows how the project spike up on launch and hit more that $2200 and fell hard now ranging.
What trader should know is they should buy the idea behind the project and the implementation of the idea not to buy juts because they claim it will be listed on big CEX. The below picture say it all, that project is down 95% and a lot of traders are trapped in there they can not cash out.
Fear Of Missing Out (FOMO)
During a hype A lot of fellow traders suffer do to FOMO as they will be told you should jump in before its too late and the price will be spike and the moment you but it start selling. The reason why this happens is because if i want to liquidate my positions there should be sellers willing to buy so for me to do that i should give you a reason to buy that's when i will start telling you that you should jump in before its too late when i sell you buy and you will forever hold worthless tokens.
As a trader avoid trading during financial data release period and avoid trading news all the time as this will be the moment the markets get manipulated most. The buyers and sellers will all be trapped and no one will cash out, that's is why we have hedge funds those guys they can hold both sells and buys and will move markets when its necessary. So as a trader avoid being caught in the web of confusion and take a break during that period.
Utility of Crypto currency
Most crypto when its being advertised they claim its gonna be used as a payment method just like Bitcoin and investors fall for that crap. They end up buying sh*t coins which will never make it on the market. Now we are in the Era of NFTs and a lot are now minting useless NFTs and a lot of investors are buying those useless NFTs. Some tokens are just copying ideas of certain good projects but they fail to deliver and the token will be doomed to fail.
Conclusion
Well in my opinion a professional trader or investor should take his time to asses and see the future of the project before jumping in. Also avoid buying as a result of hearing some financial news online relating to some tokens. There was a time when Shiba was hyped and hyper's were saying we are gonna delete a zero this year but now we are in 2022 it never happened. Never buy as a result of peer pressure.
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