Newcomers lose 1 million as an experience!
Blind investment: FOMO mentality and All-in trap
The fantasy of 'getting rich overnight'
The cryptocurrency market is often
Rendered as a chance to get rich, but the actual loss rate is extremely high. Newcomers are easily lured by others' 'wealth stories', neglecting market volatility risks (e.g., Bitcoin can fluctuate over 20% in a single day). It is recommended to only invest up to 5% of total assets in spare money to avoid affecting daily life.
Following the trend to All-in on a single cryptocurrency
Blindly betting on altcoins or popular projects may lead to liquidity exhaustion or project collapse (e.g., some altcoins have lost over 77% of their market value). Diversify into mainstream coins (like BTC, ETH) and stablecoins to reduce risk.
Safety risks: improper management of exchanges and private keys
Choosing unregulated platforms
Small exchanges may run away or be hacked (like the Mt. Gox incident), prioritize using regulated platforms like Binance and Huobi, and enable two-factor authentication (2FA).
Private key leakage or loss
Private keys are the only proof of assets; if screenshots are stored on a mobile phone or shared with others, they may be stolen. It is recommended to use hardware wallets (like Ledger) for offline storage and back up recovery phrases on physical media.
Fraud projects: air coins and high-yield traps
Air coins and pyramid scheme coins
Projects without technical support often lure investors with 'hundredfold returns' and 'community fission', ultimately going to zero (like some MEME coins). It is necessary to review the project whitepaper, team background, and on-chain data.
False financial management and mining machine hosting
Projects promising annualized returns of 30%+ are mostly Ponzi schemes. In recent cases, some users were scammed out of 200,000 yuan due to 'mining farm hosting'.
Leverage and contracts: risk of liquidation increases sharply
High-leverage gambling-style trading
Newcomers are often attracted by high leverage (like 50x), but market fluctuations can easily lead to liquidation. Data shows that over 80% of recent liquidations were from leverage above 20x. It is recommended for newcomers to stay away from contracts or use low leverage below 5x and strictly set stop-losses.
'Pinning' market manipulation
Small cryptocurrencies can easily be manipulated by big players, harvesting leveraged users through short-term violent fluctuations (such as a flash crash of 50%).
Emotional trading: chasing highs and cutting losses with excessive confidence.
Driven by FOMO (Fear of Missing Out)
Blindly chasing prices when the coin value skyrockets and panic selling during crashes leads to 'buying high and selling low'. One must establish a trading plan to avoid mindset disruptions from watching the market.
Ignoring profit-taking and stop-loss
Being greedy during profits waiting for 'higher points', and hanging on during losses, ultimately amplifying losses. It is recommended to adopt a gradual profit-taking and moving stop-loss strategy.
Altcoin traps: liquidity risk and zero-risk
Low liquidity cryptocurrencies
Low market cap altcoins have large price spreads, making it difficult to sell during crashes, and even delisting from exchanges (e.g., some projects were delisted by Binance due to insufficient trading volume).
Project team selling and unlocking risks
Tokens held by teams or early investors may be sold off en masse after unlocking, leading to a sharp drop in coin prices (e.g., some GameFi project tokens fell by 90% after unlocking).
Regulatory and policy risks: legal gray areas
Regional policy changes
Some countries may suddenly prohibit trading or impose taxes (e.g., India once proposed heavy taxes on crypto assets), so it is necessary to pay attention to policy dynamics to avoid asset freeze risks.
Tax compliance issues
Bitcoin profits need to declare personal income tax; private trading or operations on overseas platforms may face tax audits.
Neglecting learning: blindly following trades and delayed information
Easily believing in 'experts' calls
So-called 'signal teachers' in the community may collude with big players to cut the leeks. One must learn technical analysis (like candlestick patterns, support and resistance levels) independently.
Not tracking industry dynamics
Ignoring technical upgrades (like Ethereum 2.0), regulatory policies, or black swan events (like exchange collapses) may lead to misjudging the market.
Summary of risk avoidance strategies for newcomers
Capital management: invest spare money, diversify allocation, avoid leverage.
Safety practices: choose major platforms, use hardware wallets for asset storage.
Fraud prevention principle: be wary of high yield promises and review the project's fundamentals.
Mindset building: make a plan, refuse emotional trading.
Continuous learning: pay attention to on-chain data, policies, and industry trends.
The cryptocurrency market is like a 'thorny rose', only by respecting risks and making rational decisions can one survive amidst volatility. Remember: 'Making money in a bull market relies on luck, surviving in a bear market relies on discipline.'
