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Telnet password is encrypted

I am just trying to test telnet connection (using one real pc and one virtualized) and I configured a telnet connection between them.

Now, I tried to capture telnet packets using wireshark. When I went to "follow TCP route" after logging to another pc through CMD I can see the password - it is encrypted - but it should nio be, right? Passwords should be encrypted in SSH...I am kinda lost atm, anyone who could help me with this please?