It simply makes those sweaty hands and anyone who doesn't understand bitcoin completely to leave it and creates bearish market, and once it recovers, they regret it.
When investing in bitcoin, you should know the risk of putting your money in a volatile system where you just aim to flip or profit in a short period of time. That's why a lot of investors who'd sell due to fud that they might lose their investment. However, knowing the process of how bitcoin works would give the hodlers to have huge profit especially holding even knowing the worse situation of bitcoin. Diamond hands always will give you a good opportunity to increase your chance to profit. Also knowing your timing when selling is also a good decision for a good investor.
It simply makes those sweaty hands and anyone who doesn't understand bitcoin completely to leave it and creates bearish market, and once it recovers, they regret it.
But it doesn't mean that you can just sell all of your assets and buy bitcoin, because a greediness always bad, no matter how good the investment you take. Just do simple research, invest responsibly, and enjoy it.
I agree that you don't have to put all your money because of fomo, trend and etc. This will just lead you to lose more cause you to loss a lot and have an urge to throw all your assets just to get back your money. I suggest to start little by little which you invest the money you afford to lose.
Trust to me, it was me that convert everything into bitcoin because of fomo after its skyrocketting price in 2017, and somewhere in 2019 when bitcoin price dropped extremely low, there was an urgent situation irl that forced me to sell major part of my bitcoin. Hurtful but nothing else I could did, and some important lessons taken. Don't put all of your assets in one basket, and always prepare an emergency fund.
Bitcoin price is actually behaving quite good in the last weeks. You should in general not buy bitcoin If you just buy it for the price. If you do it you will 100% have a bad time
So if your friend is only interested in earning money, tell him to go work and sell his bitcoin.
And in fact, most people have that kind of mindset who believes bitcoin as an investment that generates instant profit. I also tell my friends to work harder every time they ask about bitcoin and want to learn it because they think it give much money. Im 100% sure this kind of people will sell their bitcoin immediately once its price decreases without knowing the reason why that happens.