The Five Most Dangerous Mindsets at the End of a Bull Market
There is only one reason people lose money at the end of a bull market: your profits didn't grow as fast as your ego. If you recognize two or more of the following five mindsets in yourself, you are already on dangerous ground—you need to immediately review your positions and begin taking profits, not keep hunting for the next opportunity.
Pre-requisites
Before you start the self-check, confirm two things:
Pull up your position records and P&L statements—don't rely on memory, look at the real data.
Make sure you have added to positions or chased a rally at least once in the past month—if you haven't, treat this article as a warning; if you have, read it carefully.
1. "This time is different"—the standard opening line of a bubble
What to do: Check whether you have been using "the fundamentals have changed" to justify the continuous price rise.
How to do it: Ask yourself three questions—Does this rally have a macro narrative behind it (e.g., rate cuts, ETF approval)? How is this narrative different from past bull markets? If you remove that narrative, does the price action still look reasonable?
Every cycle, the market invents a "this time is different" story. In 2020 it was DeFi, in 2021 it was NFTs, in 2024-2025 it is ETFs and institutional adoption. But the underlying drivers—amplified emotion and accumulating leverage—have never changed.
What "done" looks like: You can articulate at least one counter-argument for why "this time might be the same" (for example: ETF inflows are not infinite, and the pattern of retail investors being left holding the bag has never failed).
Common failure mode: Mistaking a "new narrative" for a "new law." A new narrative can explain a rally, but it does not guarantee that the rally will never end.
2. "Fortune favors the bold"—mistaking survivorship bias for a strategy
What to do: Check whether you have started to mimic the logic of "the bolder you are, the more you make."
How to do it:
Review your last three position adds: were they triggered by conditions in your original plan, or because you saw others making more money?
If the reason for three consecutive adds was "If I don't buy now, it will be too late," FOMO is already driving your decisions.
The most deceptive trap in a bull market is "fortune favors the bold"—the bold often make a fortune early in the cycle, but the "warriors" who refuse to take profits end up as the main characters in a tragedy. Confidence soars on the way up, they grit their teeth through the first pullback, start self-hypnosis when the drawdown exceeds 10%, and eventually their account holds nothing but memories of "what they once had."
What "done" looks like: You can clearly distinguish between "adding to a position according to plan" and "chasing a rally," and you can confirm that at least two of your last three buys were based on the former.
3. Treating unrealized profits as skill—the peak of overconfidence
What to do: Check whether you have started to believe the illusion that "I really know what I'm doing."
How to do it:
Open your trading records from the past three months and calculate your percentage gains—are they driven by a broadly rising market, or did you truly nail key turning points?
If Bitcoin went up 50% and your account went up 80%, you generated genuine excess returns; but if Bitcoin went up 50% and your account went up 40%, you underperformed the benchmark—you made money only because the market was good, not because you were smart.
The most dangerous person in the market is the one who made money in a bull market and thinks it was thanks to their own skill. This mindset directly leads to betting with bigger positions in the next round and giving back all the profits—plus the principal.
What "done" looks like: You have calculated your "excess return." If it is negative or close to zero, your strategy is not superior to simply holding Bitcoin.
Risk reminder: Overconfidence is the precursor to taking on leverage. As soon as you start thinking "this time it can't possibly drop," the market will most likely teach you a lesson.
4. "It will come back up"—refusing to accept that the trend may turn
What to do: Check your attitude toward current losing positions.
How to do it: Re-evaluate every position using a zero-based mindset—pretend you do not hold this position now; would you buy it at the current price?
If the answer is "yes," holding is reasonable.
If the answer is "no," the only reason you are still holding is "anchoring bias"—you are trapped by your entry price and unwilling to admit the trade may be wrong.
The most common psychology at the end of a bull market is "unwilling to sell when it is up, even less willing to sell when it is down." The result: you didn't sell on the way up, and you definitely won't sell on the way down, until you are fully trapped at the top.
What "done" looks like: You have handled at least one position that "you definitely wouldn't buy if you didn't already hold it"—whether reducing or fully exiting, you have taken an action.
5. "Watching others make money hurts more than losing my own"—FOMO in its most advanced form
What to do: Check whether you are taking on trades beyond your risk tolerance because "everyone else is making money."
How to do it:
For your most recent buy, how much was driven by "I should have bought earlier" versus "it makes sense to buy now"?
Were you swayed by a community or KOL frequently posting their wins?
FOMO peaks at the end of a bull market. One telltale sign: you spend far more time each day checking prices and scrolling through groups than you do on planning. Social media is flooded with "overnight riches" stories. Herd mentality takes over, and you rush in—usually right as the market is peaking.
What "done" looks like: You have turned off at least half of the push notifications from investing apps, or actively left at least one overly noisy chat group.
Self-check Card for the Five Dangerous Mindsets
| Dangerous Mindset | Quick Self-check Question | Action if You Answer "Yes" |
|---|---|---|
| This time is different | Am I using a narrative to explain all the upside? | Write down three arguments against yourself |
| Fortune favors the bold | Was my last add according to plan or chasing? | Halt all new positions, observe for one week |
| Treating unrealized profits as skill | Did my returns beat the market? | If not, significantly cut positions to half |
| It will come back up | Would I still buy this under zero-based thinking? | Close the positions "I wouldn't buy" |
| FOMO at its most advanced | Did I recently buy because someone else showed off their gains? | Delete apps or leave groups, cool off for 48 hours |
After completing this self-audit, you will know which mindset is your most dangerous. If you checked three or more boxes, the standard response is to execute a "mandatory cool-down operation" immediately—convert 20% to 30% of your total positions into conservative assets and leave them untouched. Do not make any new purchases for the next week. Do only one thing: observe how the market moves and how your emotions react. Looking back after a week, you will be much clearer-headed than you are now.
