Three Major Cognitive Traps for Retail Investors
In the asymmetric information battlefield of the cryptocurrency market, ordinary investors are always at a structural disadvantage. The three traps carefully designed by the market makers precisely target human weaknesses.
The first trap is "Information Disguise." When a certain cryptocurrency suddenly skyrockets and social media is flooded with discussions, it often signals a prelude to a meticulously planned harvest. Market makers create the illusion of a "technical breakthrough" by controlling the market, combined with collective endorsements from key opinion leaders (KOLs), packaging bad news as good news. Driven by FOMO (fear of missing out), retail investors chase high prices, unaware that they are becoming the opponents in the game—while the exchange’s order book has already shown an overwhelming amount of sell orders.
The second trap is "Leveraged Casino." Contract trading is essentially a perfect business model designed by exchanges: whether prices rise or fall, transaction fees are collected; regardless of wins or losses, the margin money belongs to the platform. While retail investors indulge in the "myth of becoming rich with hundred-fold leverage," they overlook the law of probability—within a normally distributed market, extreme leverage inevitably leads to zero probability, while exchanges always make a profit.
The third trap is "Liquidity Black Hole." The myth of a hundred-fold surge in animal coins and celebrity coins is fundamentally a game of market manipulation under liquidity scarcity. Market makers create a false sense of prosperity by controlling over 90% of the chips, and when retail investors try to cash out, they find there are no buyers, leading to a dramatic price drop with even a small sell-off, ultimately becoming the "bag holder" as liquidity dries up and value approaches zero.
Breaking these traps requires cognitive upgrading: replace K-line worship with fundamental analysis, constrain leverage impulses with the Kelly formula, and use liquidity indicators to filter targets. In today's market, where institutional investors account for 80% of trading volume, retail investors can only establish a robust investment system to avoid becoming providers of market liquidity.
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