Why Bitcoin Makes Losses (Why Some People Lose Money When Bitcoin Keeps Rising)

Why does Bitcoin make losses? According to CCN, why does Bitcoin make losses? The reason why Bitcoin falls into such a situation is that when the market starts to skyrocket, some people will buy a large amount of Bitcoin (or sell), but once the price is undervalued, it becomes difficult to see any opportunities to make money. So what should you do in this situation? Actually, we have mentioned it many times before. First of all, what we need to understand is not about the price, but how Bitcoin generates value and its volatility, in other words, what it actually is.

So, if you don’t have a deep understanding of Bitcoin, then you have missed the investment opportunity. Because this is a completely new form of currency. However, for ordinary people, it is not easy to buy a lot of coins; it would be troublesome if you want to exchange these coins back for something you originally had. Also, in order to get better profits, you need to take some time to study the operation of this market and risk control methods.

Now let’s take a look at why Bitcoin can make losses.

The price of Bitcoin is determined by the supply and demand relationship. When an asset exceeds its demand, it will cause the price of Bitcoin to fall. If investors believe that they are in a loss-making state and are willing to bear the loss (for example, Bitcoin), they will not do so. This is the basic logic of Bitcoin. Therefore, as long as the price of Bitcoin is below the supply, they can sell or cash out a portion of their holdings, thereby reducing the amount of Bitcoin in circulation. This is because BTC does not have any intrinsic value, so the price of Bitcoin is almost impossible to change.

Why do some people lose money when Bitcoin keeps rising?

Bitcoin is rising today, why do some people lose money? Some people think it is just speculation: have you earned more in the cryptocurrency market?

I don’t know. But what I want to say is that we are in a “bull market”. In this market, many people make money for a simple reason—they do not want to lose. And the reason why some people lose money is because they don’t want themselves to become wealthier and more accomplished. So when everyone earns less money, some people will lose your coins.

But if you know that Bitcoin keeps rising, then you will find another situation: some people have nothing in their investment portfolios to invest in Bitcoin, or they put all their funds in one place for arbitrage, because they want to get more profits and maintain confidence in this world. Therefore, they will buy some altcoins for cash or other ways to profit. If this is the case, don’t hold on to the HODL mentality to participate. If it is in a bear market, if everyone thinks the risk is too great, you can go short, otherwise it will lead to losses.

That is why people are becoming more and more worried now: when investors see price fluctuations and are afraid of being sold off, in fact, many times they do not care about the change in price, but lock their funds in a basket until it falls. This situation often means that investors have completely lost everything.

For example, in the past few years, due to the global economic recession caused by economic stimulus laws and measures taken by the U.S. government to restrict the trading of stocks and other assets, the prices of digital currencies such as Bitcoin have experienced a significant decline. And in the second half of last year, the remarks made by the new U.S. Treasury Secretary Yellen affected the entire industry, and the U.S. Congress passed new legislation aimed at preventing inflation, thereby banning all financial-related activities. These policies not only provided great market liquidity to cryptocurrencies but also provided new appeal to Bitcoin.

However, in recent weeks, many investors seem to have realized that they are in trouble: their money is all in exchanges, they cannot enter any institutions, and they do not have enough time to manage their wealth.

According to Bloomberg, since the bitcoin halving, Bitcoin has always been a means of value storage.

However, some people also believe that for some miners, the mining cost is too high and not good, not even using the cheapest electricity bills. They may spend more time buying more BTC in order to resist external interventions, and eventually force the company to close down.

The original article is from ambcrypto, compiled and translated by the Blockchain Knight. The English copyright belongs to the original author. For Chinese reprint, please contact the editor.