Investing in the cryptocurrency space entails extremely high risks. Here are some important pieces of advice that must be taken seriously:
1. The risks far exceed imagination; beware of the "get-rich-quick" trap.
Cryptocurrency prices are highly volatile, sometimes plummeting by over 90% in a short period (as seen in cases like LUNA's collapse and the FTX exchange crash). The market lacks regulation, making it susceptible to manipulation and hype; behind the "get-rich" myth often lies the risk of "losing everything."
2. Do not invest in currencies you "do not understand"; stay away from air coins.
Many altcoins (air coins) have no practical application value and rely purely on conceptual hype (such as "metaverse coins" and "animal coins"). The project teams may abscond with the funds ("going to zero" or "running away" is common). Prioritize understanding the underlying logic of mainstream currencies like Bitcoin and Ethereum, but even mainstream currencies do not guarantee "safety."
3. Do not use leverage; refuse to "borrow money to invest."
Leverage (margin trading) can amplify losses, and even slight market fluctuations can lead to liquidation (losing all principal), or even owing the platform money. Historically, extreme market conditions have led to massive liquidations of investors, leaving them deeply in debt.
4. Regulatory policies are unclear, and legal risks are high.
Most countries globally have strict regulations on cryptocurrencies. China explicitly prohibits token issuance financing and trading speculation in cryptocurrencies. Engaging in related transactions may expose you to risks such as irretrievable assets and legal penalties.
5. Protect asset safety; be wary of scams.
• Platform risks: Choose compliant platforms (but even large platforms can collapse, as seen with FTX). Avoid storing assets in exchanges for long periods; it is advisable to use personal wallets for storage (ensure proper management of private keys, as losing them means they cannot be recovered).
6. View "consensus" rationally; do not be manipulated by emotions.
The "value" of cryptocurrencies is largely derived from market consensus, which can collapse instantly (due to negative news or policy crackdowns). Do not follow the crowd during market surges, and do not panic sell during downturns; blindly following trends is one of the main reasons for losses.
7. Be mentally prepared for the possibility of "losing all principal."
If you must participate, invest spare money that "won't affect your life if lost," and ensure it does not exceed 10% of your total assets. Do not harbor a "recoup losses" mentality; the more you lose and invest, the deeper you will fall.