I just realized something quite interesting about the psychology of anyone investing in crypto. When prices drop, we tend to be much more stubborn than when prices rise. Specifically, holding onto losses is always harder to control than taking profits when the market is green. Why is that? Today, I want to share some thoughts on this issue.

First, it’s important to understand these two concepts. Holding onto losses is when you still hold your position despite the asset’s value decreasing, hoping it will recover. Conversely, taking profits is when you decide to sell immediately as prices go up to lock in gains. On the surface, both are normal decisions. But in reality, holding onto losses is easier to do, and this is the problem.

There’s a very human reason behind this. Our nature is to fear losing what we already have more than missing out on opportunities. When prices fall, the brain clings to positive information we’ve heard before and sets unrealistic expectations. These expectations cause us to forget to evaluate other risks. At this point, holding onto losses becomes a natural action because we don’t want to admit we were wrong.

In the crypto market, this phenomenon is even more apparent. Many people think that when prices rise again, they should take profits, but if they haven’t lost money yet, they hold onto their coins. However, without market analysis skills to distinguish between upward waves and rebounds, or knowing when to cut losses, these decisions can lead to significant losses. If you’ve already lost 20-30% and invested a large amount, holding onto losses is normal. But it can also lead to giving up and becoming indifferent.

Interestingly, holding onto losses can be right or wrong, depending on your understanding of the project. If it’s a good project with potential, then holding through DCA (Dollar Cost Averaging) and waiting for the upward wave is a reasonable strategy. A prolonged downtrend of several months is not uncommon. Many altcoins, NFT-Fi tokens seem at the bottom, but when the market recovers, they can increase 10-20 times. Solana is a classic example. The SOL token once dropped to $5, divided into 5 parts, then rose to $240. Many people sold at just $100 because they feared missing out, but if they understood the project’s potential, they could have held and gained enormous profits.

The key is to distinguish when to hold onto losses and when to cut losses. This requires deep knowledge of the project, the market, and emotional control. Holding onto losses isn’t always right, just as cutting losses isn’t always optimal. The key is to understand clearly what you are holding, why you are holding it, and when to let go.