The cryptocurrency market has attracted countless investors with its high volatility and the myth of getting rich quickly, but the real cryptocurrency circle is more like a cruel "survivor game."
After losing 40 million RMB in just ten days, a KOL named "Xiao Yi" chose to quit the circle and admitted: "The cryptocurrency circle is gambling."
Similar stories are not uncommon - college students lost all their money overnight due to leveraged investments, investors lost all their money due to blindly following the trend, and some people even went from making tens of millions in profits to being heavily in debt.
These cases reveal a core problem: money in the cryptocurrency world seems to be within reach, but it is actually extremely difficult to earn.
1. Huge profits and zero return: the "Song of Ice and Fire" in the cryptocurrency world
The extreme volatility of the cryptocurrency market is its biggest feature and also the source of risk. For example, the price of Trumpcoin plummeted from $70 to $16.2 in 20 days, a drop of 79%.
This caused many leveraged investors to lose all their savings within half an hour. This volatility could create the miracle of "doubling in 1 hour" but could also wipe out the account within a few minutes.
The deeper contradiction is that the combination of high leverage and human greed often leads to disaster. For example, some investors use 100 times leverage to try to "risk a lot with a small investment", but eventually their positions are liquidated due to price fluctuations; others make initial profits but continue to increase their bets due to "FOMO (fear of missing out)", which accelerates their losses.
2. Four “fatal traps” that make it difficult to make money in the cryptocurrency world
1. Information asymmetry and market manipulation
The cryptocurrency world is full of “air coins” and fraudulent projects, and it is difficult for ordinary investors to distinguish the real from the fake. For example, a KOL made tens of millions of dollars by hyping meme coins in the early days, but lost all of it due to subsequent investment in local dog projects (high-risk tokens) and contract transactions. In addition, large investors (“whales”) can manipulate the market through large transactions, and retail investors are easily harvested.
2. Technical barriers and cognitive limitations
Complex concepts such as blockchain, smart contracts, and DeFi pose a barrier to novices. Many people lose money due to operational errors (such as loss of private keys) or lack of basic analytical ability for projects.
3. Lack of supervision and policy risks
The cryptocurrency market lacks unified regulation, and policy uncertainty in various countries often causes market volatility. China has repeatedly introduced restrictive policies, forcing investors to leave the market.
4. Emotional trading and lack of discipline
The “herd effect” in the cryptocurrency world is significant, and retail investors are easily swept away by market sentiment. For example, some investors rush to buy high prices when the market soars, and panic sell when the market plummets, eventually falling into a vicious cycle of "losing more and gambling more".
3. Ways to break the impasse: Improving cognition and building a trading system
To survive in the cryptocurrency world for a long time, one must overcome the "gambler mentality" and build a systematic trading system;
1. Reject leverage and focus on spot trading
Leveraged trading is the main reason for most people to lose money. The number of contract liquidations far exceeds that of spot investors, and even experienced investors have debts of tens to millions due to leverage. Therefore, novices should give priority to spot trading to avoid magnifying risks.
2. Focus on the mainstream and diversify risks
Investments should be concentrated on potential mainstream currencies to avoid high volatility risks of small currencies.
3. Continue to learn and build a trading system
The cryptocurrency industry requires multi-dimensional knowledge of technology, market, and psychology. For example, it is necessary to learn on-chain data analysis to identify project value and study macroeconomics to predict policy impact. Blind followers who lack research (such as investors who hold a large amount of altcoins) often become the "fuel" of the market.
4. Create a trading note and build a trading system
Avoid emotional decision-making. A KOL who lost 40 million yuan reflected that he should "find his own trading method and end his gambling career." In addition, we must be wary of the "quick money" mentality. Many people who have contract liquidations and are in debt are the result of the mismatch between greed and cognition.
The cryptocurrency world is the ultimate test of human nature
Behind the myth of getting rich quickly in the cryptocurrency circle is the silent cost of countless zeroed accounts. It is not impossible to make money, but the ones who make money are always the few "cognitive strong" strategists who have professional knowledge, strict discipline and a calm mind.
Only by viewing investment as a long-term learning process can you protect your wealth and even achieve a counterattack amid the turbulent waves of the cryptocurrency world.