The investment risks in the cryptocurrency market are much higher than in traditional markets, and beginners can easily fall into traps. The core risks mainly focus on these categories, explained in simple terms + examples for clarity and to avoid pitfalls👇

1. Market volatility risk (most direct, fastest loss)

In the cryptocurrency market, there are no limits on price fluctuations; mainstream coins can fluctuate 20%-30% in a day, which is normal. Altcoins can double or drop to zero at any moment, completely disregarding common sense. For example, a certain popular coin recently rose by 50% in the morning and then dropped by 70% in the evening, causing those who bought at the peak to face liquidation that same day; there are also coins that plunge without warning, leaving no chance to cut losses, with principal suddenly shrinking by more than half.

2. Project-specific pitfalls (most hidden, hard to guard against)

Scam coins / worthless coins: Teams fabricate their backgrounds, plagiarize white papers, have no actual technology or applications, and rely entirely on pumping and dumping. For example, "XX Metaverse Chain" and "XXAI Coin" are promoted to have 10 times returns, and once retail investors get in, the price is dumped to zero, leaving the project team to run away with the money. Zombie coins / outdated coins: These have outdated technology, code that hasn't been updated for years, and communities that have died out. They can be delisted from exchanges at any time; once delisted, they basically go to zero, leaving no chance to sell. Infinite issuance coins: Project teams treat tokens like paper, and once the unlock period arrives, they start dumping wildly, with inflation even worse than fiat currency. For example, some coins drop from dozens of dollars to a few cents; the longer you hold, the more you lose.

3. Leverage / contract risk (easiest to face liquidation)

Many people think leverage can double their investments quickly, but forget that leverage is a "double-edged sword." A 5x or 10x leverage might not seem high, but even a slight market pullback can trigger liquidation, wiping out the principal. For example, with a 10x leverage on a 10,000 USDT account, a 10% drop means liquidation, and even if the direction is correct, a small fluctuation can force you out early, making all your efforts in vain.

4. Platform risk (the principal may be directly lost)

Exchange exit scams: Small exchanges lack regulation, and there are too many cases of money being run away with. For instance, a certain platform suddenly becomes inaccessible, and withdrawals are not possible. Users' coins are directly taken away, leaving them with nowhere to complain. Platform closures / hacks: Some exchanges go bankrupt due to mismanagement or are hacked, making it difficult for users to recover their assets. Additionally, some platforms manipulate operations, maliciously injecting prices or altering data, leading to innocent liquidations for users.