Although the market is generally stable recently, I have noticed some dangerous signals. Many retail investors, unaware of the risks, are blindly entering the market. As a seasoned crypto analyst, I must remind everyone: the risks in the crypto market are often hidden beneath a calm surface. When these 'death signals' appear, one must decisively exit, or else you may end up losing everything. Today, I will share these four 'death signals' with you to help you avoid fatal traps.
The first death signal: the project team is anonymous and information is not transparent. In the crypto market, the team is the core of the project. A reliable project should have team members whose information is publicly transparent, with clear background introductions and past experiences. Projects with anonymous teams and non-transparent information often carry significant risks and may be scams.
I once encountered a project where all team members were anonymous, leaving only an email address. The project’s white paper was filled with grand claims, asserting it would disrupt a certain industry. Many retail investors were attracted by the project's promotion and invested. Not long after, the project team absconded with the funds, and the token price plummeted to zero. Therefore, before investing in a project, you must verify the team members' information, see if they have relevant industry experience, and check if they have successful project cases. If team information is not transparent, no matter how good the project’s promotion is, do not invest.
The second death signal: token distribution is overly concentrated, with a high proportion held by whales. Token distribution is an important indicator of project risk. A healthy project should have a dispersed token distribution to avoid market manipulation by whales. If token distribution is too concentrated, a few whales holding large amounts of tokens can lead to a price crash if they decide to sell.
My judgment standard is: if the top 10 addresses hold more than 50% of the total token supply, it indicates that the token distribution is overly concentrated and the risk is significant. Before investing, you can check the distribution of holding addresses for the project on on-chain data platforms. Additionally, pay attention to the project’s unlocking plan; if a large number of tokens are about to be unlocked, you should also be cautious, as the selling pressure after unlocking can be substantial. I once invested in a project where the top 10 addresses held more than 70% of the total supply, and shortly after the project went live, whales started selling, leading to a price drop of over 80%.
The third death signal: the project has no real product and relies solely on a white paper and promotional hype. Many vaporware projects have no actual products; they only rely on a flashy white paper and extensive promotional hype to attract investors. The goal of these projects is to raise money, and once they gather enough, they will run away.
It's simple to determine whether a project has a real product: you can check the project's official website for product demonstration videos or test versions, or you can join the project's community and ask other users if they have used the project's product. If the project only has a white paper with no actual product implementation, or if the product is just a simple prototype with no real users or application scenarios, then do not invest. Remember: you are investing in the project's future, not its dreams.
The fourth death signal: market sentiment is extremely greedy, and the media is excessively promoting. When market sentiment is extremely greedy, it often signals that the market has peaked. At this time, the media reports extensively on cryptocurrencies, and various 'get rich quick' stories circulate, leading many newcomers to blindly enter the market, pushing asset prices to unreasonable highs.
You can refer to the Fear and Greed Index to gauge market sentiment; if the index exceeds 75, it indicates that the market is in an extremely greedy state. At this point, you must remain rational and not blindly chase high prices; instead, you should gradually sell to lock in profits. During the market peak in 2021, the Fear and Greed Index consistently exceeded 80, and the media was filled with reports on cryptocurrencies. Many newcomers entered the market at this time, resulting in a market crash and significant losses. Therefore, when market sentiment is extremely greedy, you must stay alert and not let the market's frenzy cloud your judgment.
Finally, I remind everyone: the risks in the crypto market are everywhere, so you must remain cautious. When any of the above four 'death signals' appear, you should decisively exit the market and not hold any false hopes. The first principle of investing is to protect your principal; only by surviving can you seize more opportunities in the market. I will continue to monitor market dynamics and will share any new risk signals promptly. Follow me@链上标哥 to avoid getting lost! I'll help you see through the risks and opportunities in the crypto market.
