Why do some people lose everything in cryptocurrency trading while others achieve financial freedom?

The outcomes of cryptocurrency trading can be roughly categorized into three types: one results in total loss, one leads to financial freedom, and one involves a flurry of activity with minimal returns. Let's discuss these three scenarios.

The first type results in total loss in cryptocurrency trading.

In this situation, many people are eager to get rich quickly, leverage their investments, trade obscure coins, or even borrow money to trade cryptocurrencies. The volatility in the crypto market is often greater than that in traditional financial markets, and it's common to see a decline of over 50%. Those using leverage may face liquidation directly. Alternatively, if an obscure coin goes to zero or a project runs away, the holders are left bankrupt.

There is also the risk of losing private keys, exchanges being hacked, phishing scams, and other frequent incidents. It's essential to minimize these security risks and avoid operational mistakes.

The second type results in financial freedom from cryptocurrency trading.

The path to wealth is simple, yet very few are willing to grow rich slowly. The majority who achieve financial freedom from trading are those who simply hoard coins. They only buy Bitcoin and mainstream coins, purchasing whenever they have money, holding onto their investments without selling, and passively maintaining a full position, regardless of volatility. They should not be called traders but rather hoarders, similar to those who buy real estate or gold as quality assets. In summary, it's about heavy investment and long-term holding.

The third type involves a flurry of activity with minimal returns.

This situation often involves smart and diligent individuals who invest time in researching various obscure projects and airdrops. However, they frequently do not dare to heavily invest in these assets themselves, so despite their hard work, they earn very little.

There are also various swing traders who constantly monitor the market, believing they can avoid minor corrections, but they can easily get left behind and miss out on significant market movements.

Lastly, there are individuals whose personalities are simply not suited for investing. Investing goes against human nature, yet most people chase rising prices and sell in panic, entering the market at high prices and cutting losses at low prices, unable to capitalize on major market trends.