Can spot trading in the cryptocurrency market be profitable?

The profitability of spot trading in the cryptocurrency market fundamentally depends on the rationality of the strategy, risk awareness, cycle grasping, and execution ability. The following summarizes the core points from the aspects of feasibility, risk, and strategy:

1. The three underlying logics of profitability 1. Long-term value investment: Capturing industry growth dividends The cryptocurrency market has significant cyclical wealth creation effects:

Bitcoin rose from a low of $3,800 in 2020 to a high of $69,000 in 2021, an increase of over 18 times; Ethereum soared from $100 to $4,800 in the same period, an increase of 48 times.

Strategy: Select top assets with genuine demand (such as BTC, ETH, DeFi leaders), hold them for the long term through bull and bear markets, and share in the industry growth dividends. 2. Swing trading: Arbitraging the market using high volatility The annual average volatility reached 92% (2018-2023), providing trending opportunities:

Bull market corrections (such as a 30%-50% correction in mainstream coins in Q2 2021), bear market oversold (such as quality assets rebounding 100%-300% after the FTX collapse in 2022).

Key ability: Combine technical analysis (MA moving averages, MACD) with sentiment indicators (fear and greed index) to determine bull and bear turning points. 3. Precise coin selection: Focus on leading sectors Sector rotation creates excess returns:

In 2021, DeFi leader UNI and AAVE increased by over 10 times; in 2023, the BRC-20 leader ORDI skyrocketed 50 times in three months.

In the early stages of hotspots, layout the top three market cap targets in segmented tracks to profit from cognitive differences.

2. Three major fatal risks and loss traps 1. Extreme volatility and zero-risk Bitcoin has experienced more than 20% single-day drops 47 times in history, and LUNA dropped from $119 to zero in 2022, causing over 400,000 people to be liquidated.

Fatal misconceptions: Full margin betting, no stop-loss, blindly bottom-fishing “halved coins” (most zero-value coins eventually drop over 99%). 2. Cognitive bias and information asymmetry 99% of shitcoins dropped over 90% in market value within three months; project parties use good news (such as listing on big exchanges) to pump and dump, a typical case: a certain AI coin plummeted 70% after listing.

The essence of the trap: FOMO sentiment buying, lack of fundamental analysis. 3. Policy compliance risk China’s “9.4” policy caused ICO tokens to plummet by 95%, and in 2023 the SEC classified BUSD and others as “securities,” resulting in a 30% crash. Sudden regulatory policy changes could directly lead to asset zeroing out.