Introduction: Why is investing in cryptocurrencies risky?
In 2025, cryptocurrencies became part of the global economy, but they are still a young market open to volatility and challenges. According to market reports, coins like Berachain (BERA) and Hyperliquid (HYPE) faced losses exceeding 50% of their value in a short period. Even leading coins like Bitcoin (BTC) and Ethereum (ETH) experienced sharp corrections, such as BTC falling from $115,000 to $109,579 in May 2025.
Investing in cryptocurrencies offers great opportunities, but it requires a deep understanding of the associated risks. In this article, we will review the main risks facing investors in the crypto market, along with practical tips to avoid them, such as using two-factor authentication (2FA) and technical analysis on Binance.
1. Sharp market volatility: What makes prices rise or fall quickly?
The cryptocurrency market is known for its extreme volatility, but in 2025 it became more severe due to factors like artificial intelligence (AI) and technical updates (like the Ethereum Pectra upgrade). Here are the main reasons for the volatility:
A. Sudden volatility.
Some coins like Berachain (BERA) and Hyperliquid (HYPE) show fluctuations exceeding 50% in one week.
Example: BERA lost 48% of its value between April and May 2025 due to a withdrawal of $2.3 billion from Boyco Vaults.
B. Hype-driven risks.
Coins like Pepe (PEPE) or Sui (SUI) may rise by 30,000% or more due to tweets or announcements on Telegram.
Example: SUI rose by 65% in one week after rumors of a partnership with Pokémon Company.
C. Whales influence.
Large wallets (Whales) control price movements, especially in small caps.
Example: SOL faced pressure after whales sold $165 million in liquidity in April 2025.
Tips to reduce volatility risks:
Use limit orders to avoid buying at peaks or selling at lows.
Monitor technical analysis through tools like RSI and MACD on Binance Charts.
Do not invest more than you can afford to lose, and use stop-loss to protect your profits.
2. Security risks: How to protect your account from hacking and fraud?
Despite the evolution of platforms like Binance and OKX, cyber fraud (Scams) and hacking remain significant risks. Here are some common security risks:
A. Social engineering attacks.
Hackers use Telegram or X (Twitter) to deceive users and request private keys.
B. Exchange hacks.
Some unreliable platforms may be hacked, like Mt. Gox and FTX in the past.
Solution: Transfer coins to an external wallet (Hardware Wallet) like Ledger Nano X.
C. Loss of private key.
If you lose the seed phrase, you will not be able to recover your funds.
Tips to improve security:
Enable 2FA (Google Authenticator or Authy).
Use whitelisting to identify allowed addresses.
Do not store private keys or seed phrases online (like Google Drive or Dropbox).
3. Regulatory risks: How do laws affect the market?
Cryptocurrencies are a global market, but they face legal restrictions in some countries, such as the United States or the European Union. Here are the main regulatory risks:
A. SEC and GDPR regulations.
SEC tightens trading rules, such as the Ripple vs SEC case that affected XRP’s price.
GDPR in the European Union limits the use of personal data on platforms.
B. Bans in some countries.
The United States bans some coins or classifies them as "support for terrorism," preventing trading.
Example: HBAR and ADA are at risk of being banned if platforms do not comply with renewable energy laws.
C. Changes in tax laws.
Some countries like Egypt have started imposing taxes on crypto profits, changing the dynamics of investment.
How to protect yourself from regulatory risks?
Choose licensed and regulated trading platforms like Binance or KuCoin.
Avoid coins that do not comply with local laws or that face legal lawsuits.
Check for legal updates such as the AI Act or Crypto AML Regulations.
4. Cyber fraud: How to avoid falling into the trap?
Cyber fraud is one of the biggest challenges in the crypto market, with the emergence of fake projects (Scams) like Smitham (SMITHAM) or Taurus Coin (TAU). Here are the types of fraud and how to protect yourself:
A. Rug pulls.
It is when developers gather liquidity and then run away with it, like Smitham which lost 100% of its value in 2024.
Solution: Do not invest in projects that do not share team details or the whitepaper.
B. Fake projects.
Some coins announce false partnerships or fake technical updates.
C. Phishing emails.
Messages claiming to be from Binance requesting the backup code or seed phrase.
Solution: Do not click on links inside messages, and check the Anti-Phishing Code on Binance.
Tips to avoid scams:
Do not share the private key or seed phrase with anyone.
Check the official updates of the project through official channels like trusted X or Telegram accounts.
Use tools like Lookonchain or Whale Alert to track large withdrawals from big wallets.
5. Risks associated with emotional investing.
Emotional investing is buying or selling based on hype or personal experiences rather than logical analysis. Here’s how to avoid this type of risk:
A. Buying coins due to tweets or posts on Telegram.
Some coins like PEPE or BONK rise due to a single tweet from Elon Musk or posts in Telegram groups.
Solution: Do not invest in a coin without studying the whitepaper or confirmed partnerships.
B. Rushing to make decisions (FOMO - fear of missing out).
FOMO is the fear of missing out on a profit opportunity, which drives you to invest without analysis.
Example: Investors who bought HYPE at $13.50 without knowing the technical updates, and found that the price dropped to $9.3 in a week.
C. Relying on predictions without verification.
Some predictions like "SOL will rise to $350" may not be supported by data.
Solution: Use tools like Binance Research or CoinGlass to understand the fundamentals and liquidity.
Tips to avoid emotional investing:
Do not invest based on hype alone.
Monitor market data through DeFiLlama or CoinMarketCap.
Use DCA strategies (dollar cost averaging) to reduce the impact of volatility.
6. Risks associated with incorrect market analysis.
Incorrect market analysis is one of the biggest mistakes investors make, whether in technical analysis or fundamental analysis. Here are the main mistakes:
A. Relying on market orders.
Market orders buy the coin at the current price, increasing the risk of buying at the peak.
Solution: Use Buy Limit at support levels, like SOL at $172.98.
B. Not reviewing the whitepaper.
Some projects like Berachain (BERA) are used as a means to gather liquidity, but do not provide real solutions.
Solution: Read the whitepaper before investing.
C. Ignoring momentum indicators.
Such as Stochastic RSI or Volume Profile, which indicate correction opportunities.
Example: Ethereum (ETH) in May 2025, where Stochastic RSI indicated a level of $3,000 if it maintained support at $2,300.
Tips for proper market analysis:
Use tools like TradingView or Binance Analytics.
Monitor liquidity flows through Dune Dashboards or CoinGlass.
Do not ignore regulatory news like licensing in Japan or the UK.
7. Risks associated with small cryptocurrencies.
Small caps like Berachain (BERA) or Hyperliquid (HYPE) represent high-risk investment opportunities. Here’s why:
A. Low liquidity.
Some coins are only supported by limited platforms, making it difficult to sell them when needed.
Example: Smitham (SMITHAM) which lost 100% of its value due to poor liquidity.
B. Reliance on media hype.
Projects like PEPE or BONK rely on social posts rather than fundamentals.
Solution: Focus on coins with technical updates like Stacks (STX) which supports sBTC.
C. High volatility.
Small caps like BERA may rise by 30,000%, but they can also drop by 50% in a week.
Solution: Do not invest more than 5–10% of your portfolio in small coins.
Tips for investing in small caps:
Monitor coin listings on Binance or OKX.
Use tools like Dune Analytics to understand movements on the blockchain.
Do not invest more than you can afford to lose, and be wary of unverified projects.
8. Risks associated with stablecoins.
Stablecoins like USDT and USDC are considered safe, but they are not free of risks. Here are the main risks:
A. Risk of cash collateral loss.
USDC is managed by Circle, but financial audit reports may show that the cash backing is less than expected.
Solution: Use USDC only for short-term investments or hedging against inflation.
B. Market manipulation.
Some stablecoins are used to support the prices of small altcoins, leading to sharp corrections.
Example: USDT was used to support SOL in May 2025, increasing liquidity to $165 million, but it also increased the risk of correction.
C. Regulatory changes.
SEC may tighten cash collateral rules for stablecoins.
Solution: Use transparent-backed stablecoins like USDC or DAI.
9. Risks associated with futures trading.
Perpetual contracts on platforms like Binance Futures offer high profit opportunities, but they carry significant risks:
A. Losses due to leverage.
Leverage multiplies returns, but it also multiplies losses.
B. Sharp corrections.
Some coins like XRP or DOGE show sudden corrections due to regulatory news or technical updates.
Solution: Use stop-loss orders with every purchase or sale.
C. Relying on market orders.
Market orders are executed immediately, but they may cause you to lose control over the price.
Solution: Use limit orders to set the optimal price for buying or selling.
10. Risks associated with environmental coins.
Coins focusing on sustainability like Cardano (ADA) or Algorand (ALGO) represent investment opportunities, but face specific risks:
A. Changes in environmental policies.
Some countries may change renewable energy laws, affecting the demand for environmental coins.
Example: ADA relies on solar energy, but any change in energy policies may affect its value.
B. Competition from traditional currencies.
Major coins like BTC and ETH may reduce interest in environmental coins.
Solution: Focus on coins that provide real value.
C. Relying on uncertain partnerships.
Some projects announce partnerships with unreliable companies, leading to substantial losses.
Example: HBAR which saw a partnership with Taurus to support AI and secure storage.
11. Conclusion: How to reduce risks in the crypto market?
Conclusion: The cryptocurrency market is not a safe market, but an investment environment open to risks. However, you can reduce these risks by:
Good market analysis using tools like Binance Research or TradingView.
Focus on reliable coins like BTC and ETH instead of unverified projects (Scams).
Continuous updates through following official news on X (Twitter) or trusted pages on Telegram.
Use external wallets (Cold Wallets) to secure your assets from hacking and fraud.
Avoid emotional trading or investing based on hype.
12. Start with measured steps in the crypto market!
If you are considering investing in cryptocurrencies, start with measured steps:
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