People lost money because often times when they first get in, they don't really understand the asset and are just trying to make a buck... this causes them to sell at a loss when they may have held the crypto if they really understood what they were investing in... investing in bad shitcoins is another reason, but also comes down to lack of adequate knowledge and not doing due diligence when it comes to researching and understanding these assets.
Lack of knowledge is another bad thing which can lead to great loss in crypto, most newbies who comes into crypto newly sees shitcoins with it's high pumps and there get too excited jumping in at the top and when a market correction occurs the price of the shitcoins they invested in dumps badly on them thereby causing great loss, since it's a shitcoin there is a probability of that coins rising to it's previous ath and the newbie with lack of patience sells at loss.