Does the rise and fall of the cryptocurrency market really scare people to death?

Yes, let's take the most classic example of Luna. You have 10,000 Luna, and when you went to sleep yesterday, it was worth 1 million USD. When you woke up, it had turned into 700,000 USD. You thought, I've been in this market for so long, a mere 30% drawdown, and UST only depegged by 10%. I trust Do Kwon, so I went to sleep confidently again. The next day, when you wake up, it has turned into 10,000 USD. At this point, you think it has dropped by 99%, it should have nowhere left to fall, right? If I buy the dip and it goes back up to 10 USD, that's ten times my investment, how wonderful! So you sold everything you could and raised 200,000 USD to buy 200,000 Luna. At this point, you couldn't sleep; you kept a close watch, hoping it would rise again, but you could only watch helplessly as the price fell from 1 to 0.1 all the way to 0.000001, and finally it got delisted. In just three days, your 1.2 million USD in assets shrank to the price of a breakfast. You completely broke down.

Besides Luna, there are many differences between the cryptocurrency market and traditional financial markets.

1. Open 24/7 without rest.

2. No price limits on rises and falls.

3. Extremely low entry threshold.

4. A huge number of people misuse leverage.

5. The volatility of altcoins is limitless.

Especially the combination of points three, four, and five makes it quite normal to get rich one night and face liquidation the next. Be cautious with leverage, everyone! You think that 5x leverage is already very low, but you don't realize that there are days when volatility exceeds 20% every year. Because of leverage, the more it falls, the harder it is to stop the decline, ultimately leading to a chain of liquidations. Why did ETH drop to over 800 during that bear market? Isn't it because the liquidation price on-chain was very clear, and there was capital to pick up cheap corpses?

Additionally, a friend of mine bought a coin called CDC Consumption Chain at 0.4 USD, investing 40,000 USD. Then it fell to 0.3 USD, and he started to average down.

When it fell to 0.2 USD, he averaged down again.

When it fell to 0.1 USD, he averaged down again.

When it fell to 0.05 USD, he averaged down again.

When it fell to 0.0005 USD, he averaged down again.

When it fell to 0.000005 USD, he averaged down again.

The team behind this coin has long run away, and now he is the largest holder of this coin.