Does the volatility in the crypto market really scare people?

Yes, take the classic example of Luna. You have 10,000 Luna, and while you were sleeping yesterday, it was worth 1 million USD. When you wake up, it has turned into 700,000 USD. You say to yourself, after being in the crypto world for so long, a mere 30% drawdown, and UST has only depegged by 10%, I trust Do Kwon, so you sleep soundly again. The next day, you wake up to find it has dropped to 10,000 USD. At this point, you're thinking it has already fallen by 99%, how much lower can it go? If I buy the dip now and it rises to 10 USD, that’s ten times my investment, great! So, you sell everything you have and gather another 200,000 USD to buy 200,000 Luna. Now you can't sleep, you're constantly monitoring the price hoping it will bounce back, but you can only watch helplessly as the price drops from 1 to 0.1 all the way to 0.000001 before it gets delisted. In the end, in just three days, your 1.2 million USD asset has shrunk to just enough for a meal. You are completely devastated.

Aside from Luna, there are many differences between the crypto market and traditional financial markets. First, it operates 24/7 without breaks; second, there are no daily price limits; third, the entry threshold is extremely low; fourth, there are many people abusing leverage; and fifth, the price fluctuations of altcoins are boundless. Particularly, the combination of the third, fourth, and fifth points makes it quite normal to become rich overnight or face liquidation overnight. Be cautious with leverage, everyone. You might think that five times leverage is low, but you are unaware that there are days with over 20% volatility every year. Due to leverage, the more it drops, the harder it becomes to stop the slide, ultimately leading to a chain liquidation. Why did ETH reach over 800 during this bear market? It’s simply because the liquidation prices on-chain are clear, and there are funds ready to buy the cheap assets.