Your "scarcity mindset" is the greatest enemy of encryption trading.

It is not the market, not a Whale, and not manipulation.

Written by: VKTR

Compiled by: Deep Tide TechFlow

This is not financial advice.

I have held my ETH position for almost two years, and it has basically been at break-even. It's like dead money, with no movement at all. It sits in my portfolio like a zombie, while other stocks in the market are racing around me.

Cursed Chart

Now it finally shows a decent profit, but that doesn't change the fact that it might be one of the worst trades of my life. The reason is not the entry point or investment philosophy, but because I couldn't bring myself to abandon this trade and redeploy the funds to something more valuable.

This is a manifestation of a scarcity mindset. I am so afraid of "giving up" that I would rather watch my money go to waste for two years than admit I was wrong and seek better opportunities.

This phenomenon is everywhere. Traders self-destruct not because they can't understand charts or time entries, but because they are unable to make clear decisions about their funds.

I know a trader who made 2 million dollars during the bull market in 2021. By 2022, however, he lost everything. Another trader panic sold all his assets when the market first dropped by 30%, and then watched helplessly as the price increased by 50 times, while continuing to hold stablecoins. The same psychological setup, different disasters.

Long-term observation of any trader will reveal the same pattern. They make a fortune, only to suffer the consequences of not believing in their own decisions. A 40% surge turns into a 20% loss because they hold their positions too long. A 10x runner is sold at breakeven because they don't believe it will continue to rise. A trader who sells a junk coin to zero will eventually panic sell the next runner due to the "a bird in the hand is worth two in the bush" mentality.

I have experienced both situations. It's not the nonsense of diamond hands, nor the panic of paper hands, but I've seen enough good opportunities ultimately turn into regrets, which is enough for me to recognize the true patterns. Sometimes I hold my positions too long, and sometimes I sell too early. The commonality doesn't lie in my strategy or analysis.

That is fear.

This is not belief, this is not discipline, this is not faith in technology.

Although it sounds a bit daunting, it could be childhood trauma.

Invisible Cage

I believe that most trading mistakes are actually due to a scarcity of funds. Every tweet about "holding on through the pain" and every group chat message saying "I sold too early" indicates that someone has believed since a young age that such opportunities won't come again. Every trader who cannot make clear decisions usually understands early on that money is scarce and valuable, and it is best not to waste the limited opportunities.

Most of the traders I know grew up in the anxiety of the middle class, checking their accounts before making purchases. Parents would argue over bills. Every penny is precious because it might never be available again.

This kind of bullshit follows you into trades like a curse.

Imagine this: you made a 40% profit on a trade. Your scarcity mindset starts calculating. "If I hold on a bit longer, this money could change my life." So you continue to hold. You hold on for too long. Watching your profits evaporate because you can't accept that a 40% gain is enough.

Or the opposite scenario: you made a 40% profit, and your scarcity mindset whispers, "Take the money and run. You may never see green again." So you sell it and then watch it rise to 400%, while you hold cash and blame yourself for not believing in the setup.

Scarcity mindset chooses financial trauma over financial freedom

Both reactions stem from the same viewpoint: believing that opportunities are limited and precious.

Behavioral economists have studied this for decades. When you grow up under financial pressure, your brain instinctively thinks that every decision could lead to disaster. The experiences from your childhood are manipulating your trading account, and they are likely causing you to lose money.

Abundance Asymmetry

At the same time, there is another type of trader in these markets. They often have money from a young age, or at least have a stable financial situation. They make decisions without any hesitation. They profit on positions, cut losses, and adjust their positions appropriately. There is no emotional attachment, no vicious cycle of "what if...".

They sincerely believe that there will be more opportunities in the future, while many of us do not think so.

Abundant traders believe: "I will let this winner run and manage my risks appropriately. There will always be another trade." Scarce traders believe: "This might be my only chance to achieve financial freedom, so I will either lock it in immediately or let it go to zero."

One method can create wealth, while another can bring anxiety.

Why Everyone Makes Wrong Decisions

The most expensive lie in the cryptocurrency space is not "diamond hands" or "always profitable," but rather the idea that there is a right answer to every transaction.

Really, I think we are just afraid. Afraid of missing out. Afraid of making mistakes. Afraid that once we take a wrong step, we will never have this kind of opportunity again.

This phenomenon is everywhere. Those traders you might call "maximalists" cannot make clear decisions because every trade could change everything. They hold onto profitable stocks for too long, ultimately turning them into losing stocks. They sell profitable stocks too early and then watch helplessly as they head towards destruction. They keep increasing their positions without managing risk. They view every decision as irreplaceable.

They are trading childhood traumas, not the market.

The True Cost of Narrow-Mindedness

The scarcity mindset not only affects your trading but also impacts your entire relationship with money and opportunities.

I once made 5 times on a position but couldn't bring myself to take profits. I watched it slide down for three months, ultimately leaving me at breakeven, because I was plagued by the fear of "selling too early." But I have also panic-sold profitable stocks, at the time making 30%, only for it to rise to 10 times, because my mind couldn't believe I deserved to have that wealth.

Scarcity thinking can lead to specific types of self-sabotage:

• Decision paralysis - you can't decide when to buy, sell, or hold because every choice feels like it could ruin everything. You feel helpless and unable to manage risk dynamically.
• Binary thinking - you believe that every trade is either "diamond hands forever" or "instant profit." You can't increase or decrease your position because you don't trust yourself to make multiple correct decisions.
• Risk distortion - you either go all in on a trade or take no meaningful risks at all. You cannot find a middle ground to truly accumulate wealth.

Abundant Secrets

The solution may not necessarily be psychotherapy or meditation, although I find the latter to be helpful. The key is to make your brain believe that money is a renewable resource, not a limited one.

You might ask yourself: "What would someone with 10 million dollars do in this situation?" I can guarantee that they wouldn't hold onto stocks until a decline of 80% just because they "believe in the technology." But they also wouldn’t sell off in the first 20% of a bull market out of fear of volatility.

Experienced large-cap traders do not become emotional about individual trades. They focus on risk management and position sizing, rather than absolute returns. They prefer to make consistent decisions instead of chasing perfect decisions.

The Truly Effective Method

I wish someone had told me this five years ago, and the truly successful traders I have seen all do it this way:

Consider various scenarios rather than absolute ones. Set multiple profit targets and risk levels before trading. Don't let scarcity thinking persuade you that there is only one right way to do things.

Measure your trading size as if you are already very wealthy. If you have a million dollars, would you bet 100% of the risk on a single altcoin? Then why would you do that with your $10,000 account?

Practice dynamic risk management. Take profits when they are high. Increase positions when the judgment is correct. Cut losses when the judgment is wrong. Do not treat every decision as permanent.

Calculate opportunity cost. Every dollar tied up in an ineffective trade means you miss the chance to profit elsewhere. Every dollar you panic sell means you could have achieved compound growth.

Compound Effect

Abundant thinking can help you make more money than scarcity thinking. The mindset of desperately pursuing perfection in every trade usually leads to a decrease in good trades overall.

When you start to think deeply, you will make better decisions. You will take profits at the right time. You will let some winners run. You will stop-loss. You will wait for the right opportunities. You will stop revenge trading. You will stop falling into high-level narratives out of fear of missing out.

All these small decisions will accumulate. You will no longer be trapped in the boom and bust cycle of scarce trades, but will begin to accumulate stable and lasting wealth.

The market rewards patience, discipline, and strategic thinking, while punishing despair, greed, and emotional decision-making. Your mindset determines which category you belong to.

Break the Cycle

I still struggle with this. Even now, with a larger account size and more experience, I sometimes find myself making decisions out of fear rather than rationality. Scarcity thinking is deeply ingrained.

But I have learned to recognize it. Moreover, I have seen the same pattern in every trader who has shifted from continuous losses to continuous profits.

The first step is to recognize that your scarcity trap exists. It’s not your fault - it’s shaped by your childhood experiences with money. But you have the responsibility to change it.

Cure and Victory

Your relationship with money is formed before you learn to walk, and every transaction you make could lead to a loss of money. The scarcity trap is a poverty mindset dressed in the guise of strategy.

I have gone through a lot of hardships to understand this point. The money I lost when making those terrible decisions was more than the money I lost when making logical decisions. The times I turned winners into losers because of overthinking were more than when I followed the plan.

I believe this model is more destructive to traders than any bad technical analysis or market crash.

Your childhood experiences do not determine your trading fate. But you must realize that your scarcity mindset is the real enemy. Not the market, not the Whale, and not manipulation.

Your brain has collapsed, causing you to continue to collapse.

First solve this problem. Everything else is just strategy.