The people who trade cryptocurrencies are usually 'harvested' for the following reasons:
Market manipulation: Whales or major players manipulate prices through large buy and sell orders, attracting retail investors to follow suit, and then suddenly sell off, causing prices to plummet, leaving retail investors trapped.
Information asymmetry: Major players or insiders possess more information and use insider knowledge to act early, while retail investors can only rely on publicly available information, making them prone to buying at high prices.
FOMO (Fear of Missing Out): Retail investors blindly chase prices out of fear of missing out on market movements, resulting in being trapped during market corrections.
Leverage liquidation: When trading with high leverage, even small price fluctuations can lead to liquidation, causing significant losses.
Project exit scam: Some project teams raise funds through ICOs or token issuances and then abscond with the money, leaving investors with nothing.
False advertising: Project teams exaggerate technology or prospects to attract investors, while the actual project has no value, ultimately leading to a price drop to zero.
Emotional trading: Retail investors are easily influenced by market sentiment, buying high and selling low, resulting in frequent losses.
Technical traps: Events like hacker attacks or exchange thefts can lead to asset losses for investors.
Policy risk: Changes in government regulatory policies can lead to severe market fluctuations, catching investors off guard.
Lack of experience: New investors lack understanding of the market and risk control capabilities, making them easy targets for being 'harvested.'
In conclusion, trading cryptocurrencies carries extremely high risks, and investors should act cautiously to avoid blindly following the crowd.