Cognitive shortcomings, money earned by luck will ultimately be lost through skill.
"Look at that person, they made 80 million in the cryptocurrency world last year!" Stories like this are endless in the community. On social media, mysterious bloggers post screenshots of single trades making over one million dollars, with returns as high as 230%, attracting countless comments like 'Please take me along.'
But the truth is, on just one day, December 7th last year, the Bitcoin crash caused nearly 100,000 people to be liquidated, with a total liquidation amount reaching $111 million. I have witnessed too many people enjoying the pleasure of paper wealth one moment, and facing the despair of going to zero the next.
As an analyst immersed in the cryptocurrency industry for many years, today I want to candidly share my true views on the 'overnight wealth' in the cryptocurrency world.
The truth behind the wealth creation myth: survivor bias and the 'harvesting leeks' game
The cryptocurrency world has indeed created wealth miracles, but the proportion is extremely low. Those who can truly achieve wealth leaps are mainly three types of people: early investors (who bought Bitcoin and Ethereum at low prices and held for a long time), project parties and market makers (who raise funds through ICOs, IDOs, etc., and sell tokens at high prices), as well as exchanges and miners.
For ordinary retail investors, the situation is completely different.
Those who promote the miracle of 'a token rising from $0.001 to $1' often overlook the most crucial point: market capitalization. Even if a token's price is low, if its total issuance is astronomical, its total market capitalization may already be very large, with extremely limited upward potential.
Essentially, this is a 'harvesting leeks' game: project parties create FOMO (fear of missing out) emotions, inflate prices to attract retail investors, and then sell at high prices. The result is that early entrants harvest later buyers, and ordinary investors often become the 'last stick' of the buying party.
Why I don't believe in 'overnight wealth'
I always believe that pursuing 'overnight wealth' in the cryptocurrency world is dangerous for the following reasons:
First, high volatility is a double-edged sword. Bitcoin once surged to over $37,000 in early 2021, only to plummet to around $28,000 a few days later, with daily liquidation amounts reaching 9.8 billion yuan. Under such extreme volatility, investors trying to amplify returns using high leverage often become victims of liquidation.
Secondly, the market is full of information asymmetry and manipulation. Analysis indicates that behind Bitcoin's rise, there are risks of disguised money laundering, fundraising fraud, and other illegal activities. The enticing content on social platforms that promises 'guaranteed profits' and 'getting rich by copying trades' is often a trap set by bad institutions to harvest retail investors.
Third, the uncertainty of regulatory policies. Relevant authorities in our country have clearly warned about the risks of virtual currency trading and speculation, stating that virtual currency-related activities are illegal financial activities. Policy risk is always a sword of Damocles hanging over the cryptocurrency world.
My survival strategy: Long-term thinking and risk management
After these years of ups and downs, I have formed my own investment principles:
1. Only invest disposable income
I will never use necessary living funds or borrow to invest in cryptocurrencies. The high volatility of the cryptocurrency market means that any investment should not affect the basic quality of life. This is my bottom line for risk management.
2. Value investing is better than short-term speculation
I pay more attention to projects that have actual technical support, active communities, and clear development paths, rather than blindly chasing popular altcoins. Investing is essentially a prediction of the future, requiring a deep understanding of the industry.
3. Diversify asset allocation
My strategy is to diversify investments: allocate a portion of funds to mainstream coins like Bitcoin and Ethereum, a portion for stablecoin wealth management, and reserve a certain cash position. This way, even if a part of the assets experiences significant volatility, the overall investment portfolio can remain relatively stable.
4. Continuous learning and staying vigilant
The cryptocurrency market is constantly changing, with new projects and rules emerging one after another. I spend time every day researching market dynamics and understanding new technological developments. At the same time, I remain highly vigilant about projects that promise 'capital preservation and returns.'
A heartfelt suggestion for ordinary investors
If you are considering entering the cryptocurrency world, I would like to share the following points:
Learn the basics: Understand the fundamental principles of blockchain and the operation mechanism of cryptocurrencies to avoid blind investment.
Beware of high-yield promises: Be cautious of projects that claim 'the value of coins only goes up' and 'short investment cycles with high returns and low risks.'
Choose compliant channels: Our country's financial management departments have clearly indicated that virtual currencies cannot be used as currency within our borders, and the public should choose legal and compliant investment channels and products.
Maintain independent thinking: Do not blindly follow the advice of so-called 'big V's' or 'experts'. In the cryptocurrency world, everyone's investment goals and risk tolerance are different, so you need to form your own judgment.
The cryptocurrency world is not a paradise where one can easily get rich, but a high-risk investment field. The real 'wealth creation myth' is often backed by deep knowledge accumulation, strict risk control, and long-term persistence, rather than mere luck.
In my view, investing is a marathon, not a sprint. In the extreme market of cryptocurrency, the competition is about who can survive longer, not who can make the most in the short term. True wisdom lies in recognizing one's cognitive boundaries and not engaging in speculation beyond one's capacity.
The essence of wealth accumulation is the realization of knowledge. When we see those seemingly overnight success stories, we should understand the accumulation and patterns behind them. After all, the market is always there, and opportunities will always come again, but the premise is that your principal and confidence are still intact.
Have you also experienced dramatic ups and downs in the cryptocurrency market? Feel free to share your stories and thoughts. Follow Ake, let me guide you to understand more first-hand information and cryptocurrency knowledge with precision, becoming your navigator in the cryptocurrency world; learning is your greatest wealth!#巨鲸动向 #加密市场观察 $ETH
