Why Do Crypto Traders Keep Losing Money? Analyst Bitbull Explains

Bitcoin nearly touched $85,000 last week before struggling to hold $80,000 days later. Traders who bet on the recovery suddenly found themselves facing another selloff as the cryptocurrency market demonstrated its characteristic volatility.

The reversal came despite leveraged bets remaining elevated while buyers pulled back. According to Glassnode's latest market report, Bitcoin's futures market remains heavily exposed to further price swings, creating a dangerous environment for traders.

Paper Trading Pitfalls

For Bastian Keller, the trader better known as Bitbull, many investors make their most expensive mistakes in trading psychology. Speaking to BeInCrypto at TOKEN2049 Singapore, he challenged the common advice to practice with fake money before risking real capital.

Keller believes paper trading creates unrealistic confidence because traders know they have nothing to lose. He recommends starting with very small amounts of real money to understand the emotional pressure of trading.

Revenge Trading Cycle

Keller learned these lessons through his own trading losses before entering cryptocurrency in 2018. His experience led him to identify what he calls the trading 'circle of death' that destroys trading accounts.

A trader loses money but instead of accepting the loss, they immediately enter another position to recover it. When that fails, they take an even bigger risk, leading to what Keller describes as revenge trading.

Market Conditions Worsen

Bitcoin's latest reversal shows how quickly confidence can disappear. Glassnode reported that Bitcoin futures open interest climbed from $36.5 billion to $37.5 billion over the past week, even as spot buying weakened.

The market faces two major events: the Federal Reserve's October 28 interest-rate decision and the November 3 US midterm elections, with analysts expecting increased volatility. This environment makes it particularly dangerous for traders to chase short-term movements.

Keller encourages traders to consider slower strategies that do not require watching charts every few minutes. His most practical advice remains simple: 'First of all, don't trust everyone,' extending to trading influencers, automated signals, and market predictions.