Will the fluctuations in the crypto world scare you?
Let's take the classic example of Luna: you have 10,000 Luna, and while you were sleeping last night, it was worth $1 million. When you woke up, it had turned into $700,000. You thought, after being in the crypto world for so long, a mere 30% pullback is nothing. UST only de-pegged by 10%, and you believed in DoKwon, so you went back to sleep with ease. The next day, you woke up to find it had dropped to $10,000. At this point, you thought, it has already fallen by 99%, it should be at its lowest, right? If I buy the dip now, it will rise to $10, and I will make ten times my investment, feeling great about it. So, you sold everything you had and raised $200,000 to buy 200,000 Luna at the bottom. Now, you couldn't sleep; you were constantly watching it, hoping it would rise again, but you could only watch helplessly as the price fell from $1 to $0.1, all the way down to $0.000001, until it was finally delisted. In just three days, your $1.2 million asset shrunk to just enough for a breakfast. You completely broke down.
Besides Luna, there are many differences between the crypto world and traditional financial markets. First, it's open 24/7. Second, there are no price limits. Third, the entry barrier is extremely low. Fourth, there are many people abusing leverage. Fifth, the fluctuations of altcoins are limitless. Especially when points three, four, and five come together, it’s not uncommon to get rich one night and go bankrupt the next. Be cautious with leverage, everyone. You might think that 5x leverage is already low, but little do you know that there are days with over 20% volatility every year. Because of leverage, the more it falls, the harder it is to stop the decline, ultimately leading to a chain of liquidations. Why can ETH drop to over $800 in this bear market? It’s simply because the liquidation price on-chain is crystal clear.
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