Since its birth, cryptocurrency has become a high-profile emerging issue in the financial field. However, in this market, a significant phenomenon is that few people adhere to the spirit of long-termism, and most participants are keen on short-term and fast speculation. There are complex causes behind this phenomenon, and it has had a multifaceted impact on the cryptocurrency market itself and the broader financial ecosystem.
Why short-term speculation is prevalent
1. The attraction of high volatility
1. Price volatility characteristics
The price of cryptocurrencies fluctuates extremely rapidly. For example, Bitcoin can rise or fall several times in a short period of time. This high volatility provides great profit opportunities for speculators. If an investor buys Bitcoin at the bottom of the price and then sells it at the peak when the price rises rapidly, he or she can make a considerable profit.
Compared with traditional financial assets such as stocks, cryptocurrencies lack relatively stable value support factors such as real economic performance. Their prices are more affected by factors such as market sentiment, technological development expectations and regulatory news, which makes price fluctuations more difficult to predict but also full of speculative temptations.
2. The psychological drive for quick profits
Humans are naturally wired to pursue quick returns. In the cryptocurrency market, many investors are attracted by the possibility of getting rich quickly as they see others making huge profits through short-term trading. They hope to replicate this success and are unwilling to spend a lot of time waiting for possible long-term returns.
2. Market Emergence and Information Asymmetry
1. Lack of mature market mechanism
The cryptocurrency market is relatively new. Compared with the traditional financial market, its regulatory system is not yet perfect and its market mechanism is not mature enough. For example, there is no strict information disclosure system like the stock market. This provides some speculators with opportunities to profit from information gaps.
Some project owners may use exaggerated publicity, market manipulation and other means to push up the price of cryptocurrencies and attract short-term speculators to enter the market. Ordinary investors, due to the lack of accurate information, are often prone to follow suit and participate in such short-term price speculation.
2. Technical barriers and misleading information
Cryptocurrency involves complex blockchain technology, which is difficult for most ordinary investors to understand. This leads to a lot of misleading information in the market. For example, some so-called "experts" publish one-sided investment advice on social media, inducing investors to engage in short-term speculative operations.
3. Social and cultural factors
1. Social media and group behavior
Social media plays a huge role in the spread of cryptocurrency markets. When a cryptocurrency is widely discussed and recommended on social media, it often triggers group follow-up behavior. For example, after Dogecoin was mentioned by some celebrities on social media, its price rose wildly. This group behavior is more based on short-term market heat rather than consideration of the long-term value of cryptocurrency.
In the social media environment, people are easily infected by group emotions, forming a "herd effect". Everyone is pursuing the benefits brought by short-term price fluctuations, while ignoring the value of long-term investment.
3. The impact of the lack of long-termism
1. Impact on the stability of the cryptocurrency market
1. Price Bubble and Crash Risk
A large amount of short-term speculation can easily lead to a bubble in cryptocurrency prices. When speculators buy in large quantities based on the expectation of short-term profit, the price will be pushed up and deviate from its actual value. However, once the market sentiment changes, such as negative regulatory news or technical loopholes, these speculators will quickly sell, causing the price to fall sharply, and may even cause a market crash.
This unstable price trend is not conducive to the healthy development of the cryptocurrency market, and will also make it difficult for cryptocurrency projects with real potential to obtain stable financial support and development environment.
2. Hindering the market’s maturity
The lack of long-termism makes market participants pay more attention to short-term price fluctuations rather than long-term development factors such as technological innovation and application scenario expansion of cryptocurrency projects. This will hinder the cryptocurrency market from transforming from a highly speculative market to a mature financial market with actual value creation capabilities.
2. Impact on Investors
1. High risk and unsustainability
Short-term speculation in the cryptocurrency market faces extremely high risks. Due to the unpredictability of price fluctuations, speculators may suffer huge losses. Moreover, this investment strategy based on short-term speculation is unsustainable and it is difficult to achieve stable wealth growth in the long run.
In contrast, long-term investment, if based on in-depth research and rational judgment of cryptocurrency projects, is likely to yield stable returns in the long-term development of the project.
IV. Conclusion
In the cryptocurrency market, the prevalence of short-term speculation and the lack of long-termism is an important phenomenon that needs attention. This phenomenon is the result of the combined effects of many factors such as the characteristics of cryptocurrency itself, the market environment, and social culture. This phenomenon not only has a negative impact on the stability and maturity of the cryptocurrency market, but also is not conducive to the wealth accumulation and risk control of investors themselves. In order to promote the healthy development of the cryptocurrency market, it is necessary to strengthen supervision, improve investor education, improve the market information disclosure mechanism, and other efforts to guide more market participants to establish a long-term spirit.
