Bitcoin bull market is coming? How to deal with the pain of missing out?

The 312 crash and the recent surge have revealed a strange phenomenon: missing out is far more frustrating than being stuck. After being stuck, you feel more relaxed psychologically, as you can just hold on a little longer. Missing out is completely different, like you have been hungry for three days and three nights, and suddenly a full banquet is placed in front of you, but you are only allowed to look at it but not eat it.

When facing losses, we can find various objective reasons to shift the blame to the market. However, when the market is rising, the market has done nothing but provided opportunities. We cannot shift the blame and it is difficult to convince ourselves psychologically. The common goal of all investors is to pursue profits. When profits suddenly fly away, the investor's reaction will be like something he has had for a long time but was suddenly taken away. Munger calls this the "deprivation superreaction tendency."

1. Deprivation Superreaction Tendency

The Mungers once had a gentle and kind dog that exhibited the canine deprivation superreaction tendency. There was only one way to make this dog bite, and that was to take the food away from its mouth when it was being fed. If you did that, this friendly dog ​​would automatically bite you. It couldn't help it. There was nothing stupider for a dog to do than to bite its owner. But the dog couldn't help being stupid. It was born with an automatic "deprivation superreaction tendency."

The same is true for people and dogs. The joy of picking up 1,000 yuan for free cannot offset the pain of losing 100 yuan. This is why missing out is far more painful than being stuck. The joy of making a profit of 1,000 yuan is nothing compared to the pain of losing 100 yuan. The tendency to overreact to deprivation, or in other words, loss aversion.

In investment transactions, human nature is most afraid of being controlled. The human nature here is actually animal nature. Evolutionary psychologists believe that the tendency of loss aversion is related to the human evolution process.

In the primitive era, the external environment of human beings was very harsh. Every decision directly affected survival. The frequency of death threats faced by decisions was even far greater than the chance of survival. It was this long-term selection pressure that shaped the widespread loss aversion tendency. Obviously, the "ancient evolutionary memory" is still embedded in our genes.

The tendency of deprivation super reaction after missing out is actually a normal human reaction. When you realize that this tendency is about to occur, please press the pause button in time, instead of chasing high to reduce the pain of missing out. In an irrational state, chasing high is likely to mean standing guard at a high position.

Therefore, since you have missed out on opportunities, you should temporarily leave the market and calm down first. Investment decisions made by people in an irrational state will eventually end in tragedy.

2. Why do we always miss out?

Let me tell you a very interesting phenomenon: whether it is last year’s bull market or this time’s bottom rebound, the main group that missed the opportunity are the old investors.

For old investors, after the 312 crash, Bitcoin has completely entered a bear market, and of course the entire market is still in a bear market. What about new investors and bottom-fishers? In less than two months, Bitcoin has almost tripled. If this is not a bull market, then what is it? For the top, the recent increase is just a drop in the bucket, but for the bottom, this increase is very gratifying. For the market, is it important for old investors to be stuck at the top?

Only the newcomers laugh, who cares about the old ones crying. The market doesn’t care about the previous price, doesn’t care whether the old routine is being played out, and doesn’t care about the desolation of the old leeks. After the 312 crash, the number of practitioners in the entire industry was almost halved. Some resigned and some changed careers. The practitioners can be said to be the most determined old leeks, but there are still many practitioners who still believe that Bitcoin will fall to $2,000.

Since the bull market in 2017, Bitcoin has never broken through its previous high. After 312, the bear market mentality has become more solidified. Old investors will never believe that Bitcoin will soar again, and always think that there will be new lows. For example, the early holders of Bitcoin, Litecoin, and Ethereum did not die in the cold winter of 2015, but left the market during the rise of 2016.

The most difficult part of the bull-bear transition is the change of mindset, because past lessons and experiences have always reminded old investors that this is a bear market and it will plummet to new lows. It is conceivable that once the real bull market comes, how many old investors will be bearish again and miss out.

So, be a "newcomer".

Forget the so-called past highs, forget your position costs, forget your painful experiences, re-enter the cryptocurrency circle as a newcomer, re-examine yourself and observe the market.

3. So, what should you do after missing out?

It is very normal to miss out on opportunities. Since the market is too chaotic and disordered, it is impossible to find general rules. Over-analysis and forced predictions are tantamount to seeking fish in a tree. Therefore, accepting the fact that the market is unpredictable is the first step to building a psychological advantage.

The most frightening thing is the mentality of a die-hard bear. Once bitten by a snake, one will be afraid of the rope for ten years. It is not scary to fail a few times, but it is scary to fail forever.

There is no need to be afraid of "missing this opportunity and losing that opportunity", as the principal is not reduced, so what is there to be afraid of? In the cryptocurrency world, opportunities to make money are available every day. A bull market will not end in one day, and a real bull market will always give investors another chance to get on board.