Year-end is here, and many people are reviewing their investment statements for this year.

I noticed a phenomenon—people who actually lose money are often not because they chose the wrong coins. What defeats them is the anxiety caused by floating profits and losses, and the temptation of herd mentality.

Here's a common scenario: divide $1000 into two parts, $500 each, to buy two coins, A and B. A drops 20%, B rises 20%. Suddenly, you need to use money. Do you sell the profitable B to lock in gains, while stubbornly holding onto the declining A to comfort yourself? This is how the trap is set.

But in the crypto market, there is no such thing as "locking in gains"—those profits and losses are just numbers bouncing on the K-line before you sell.

The problem is, many people fall into a vicious cycle at this point. When a altcoin rises by 5 points, they rush to take profits, fearing a correction will wipe out their gains; when a mainstream coin drops by 20 points, they stubbornly hold on, deceiving themselves into thinking "I'm a long-term investor," only to end up deep in the red and lacking the courage to cut losses. The result is: when they profit, they only make a little, but when they lose, they lose all their principal. This is the psychological loss aversion at work.

There’s also the herd effect of chasing rises and selling declines. Hearing others shout "Dog coin 100x" makes them rush in, driven by FOMO, buying at the top; seeing sector rotations, they frequently switch positions, stuck in the cycle of "buying expensive, not the right ones," making it hard not to lose.

Breaking this cycle isn’t actually complicated. The key is to change your decision reference point and stop focusing on those numbers’ ups and downs.

First, establish fixed position allocations. For example, a framework where BTC accounts for 60%, altcoins 30%, and stablecoins 10%. When prices rise significantly, sell in batches; when prices fall, do regular dollar-cost averaging to add positions, and rebalance quarterly. This helps automatically reduce positions at high points and add at low points.

Second, focus on valuation logic rather than market sentiment. Although crypto assets are volatile, they still follow valuation principles. During bear markets, undervalued assets can be gradually accumulated; during bull markets, when prices are inflated, gradually realize profits.

Third, anchor on the intrinsic value of the project itself. Spend more time researching team backgrounds, ecosystem development, and technological innovation—hard indicators—rather than being led astray by short-term price movements.

Ultimately, the crypto market has never been about who can catch the 100x coin, but about who can lose the least in the volatility.

Fill the two pitfalls of herd mentality and floating profit/loss numbers, and you can reduce losses by 50%-80%. This already puts you ahead of most people—because the profits made in a bull market are ultimately preserved only through rationality in a bear market.