It is well-known that $\operatorname{SL}(2,\mathbb{C})$ is a simply connected Lie group. However I seem to be able to think of a loop that is not contractible. Where could my mistake be?
Let $g(t) = \operatorname{diag}(e^{it},e^{-it})$ be defined from $0$ to $2\pi$. It is a loop based at identity, and its eigenvalues trace two loops around the punctured complex plane $\mathbb{C}\setminus\{0\}$. Deforming this loop to the constant loop at identity would induce those eigenvalue loops to contract to the constant loop at $1$. But this is impossible due to the puncture in the complex plane. (The eigenvalues can never be zero because the deformation must stay in $\operatorname{SL}(2,\mathbb{C})$.)
Edit: For an answer, please state an explicit contraction as that is the only way to clear my doubts completely.
Write
$$ D(t)=\begin{bmatrix} \exp(it) & 0 \\ 0 & \exp(-it)\end{bmatrix}, \quad C(s)=\begin{bmatrix} \cos(s) & -\sin(s) \\ \sin(s) & \phantom{-}\cos(s) \end{bmatrix}. $$
Define
$$ H(t,s)=\begin{cases} D(t) & 0\le t\le \pi \\ C(s)D(t)C(s)^{-1} & \pi\le t\le 2\pi.\end{cases} $$
for $0\le s\le\pi/2$. Observe that $H(t,0)=D(t)$ for all $t$ whereas $H(t,\pi/2)$ traces out a semicircle for $0\le t\le \pi$ and then backtracks for $\pi\le t\le 2\pi$. Thus we have homotoped $D(t)$ to a more obviously contractible loop.
Note that conjugation doesn't affect the spectrum, so nothing happens to that along the way. As the others have said, the way to interpret the spectrum is as two eigenvalues moving away from $1$ on the unit circle in opposite directions, then instead of passing over each other interpret them as bouncing off of each other at $-1$. This loop (in configuration space) is clearly contractible.
If you want to understand where I got the example from, I can explain that too, but it requires some background in quaternions. (Although all of the background can be gleaned from past posts of mine that I can link if need be.)
This also has a visual interpretation. If we interpret $\mathrm{SU}(2)$ as $\mathrm{Spin}(3)$ (the double cover of $\mathrm{SO}(3)$), then this copy of $S^1$ in $\mathrm{Spin}(3)$ double covers a copy of $S^1$ in $\mathrm{SO}(3)$. Visualize this as two rotations around an axis in three dimensions. We can slowly "edit" this "animation" by rotating the axis itself during the second revolution until the axis is upside down - rotating around the axis upside down goes backwards. This is essentially equivalent to the plate trick.