I just realized something quite interesting about investor psychology in crypto — why we’re more likely to “hold and swallow the loss” rather than cut our losses. This is a phenomenon that most people have experienced, but not everyone understands the underlying reasons clearly.

In fact, when we’re at a loss, our brains tend to cling to the positive information we’ve already set in advance, creating a false sense of expectation. At this point, we stop assessing other risks and only focus on the hope that the price will recover. That’s the psychology of holding losses — maintaining your position while the price is falling, fearing that selling will lock in a loss, and expecting the asset to rise again. On the other hand, when prices go up, we often rush to cut our losses because we’re afraid of missing out, even overlooking even higher upside potential.

But the important thing is — holding losses isn’t always wrong. I’ve found that it can be right or wrong depending on how well we understand that project. If you truly understand a good project but the price has never gone up, then DCA and holding your coins to wait for the bull wave/uptrend wave is a reasonable strategy. Solana is a typical example — those who recognized its potential held their coins from when it was at $100 to see it rise to $240+, while others sold out of fear.

There are altcoins and NFT-Fi projects that hit the bottom during a prolonged downtrend for a few months, but when the market recovers, their prices can increase 10-20 times. The issue is how to tell the difference between an opportunity to keep holding coins and a real loss of money. This requires the ability to read the market to distinguish between an upward trend wave and a rebound wave, along with technical analysis skills to determine the right time to cut losses.

If you’re down 20-30% and you invested a large amount, a passive mindset is normal. But instead of giving up, take the time to learn more about the project and the market. That’s how to turn “holding losses” from a passive, forced decision into a well-founded investment strategy. The key lies in distinguishing whether you’re holding coins because you truly understand deeply, or simply because you’re afraid of losing money.