Why do you suffer losses in the cryptocurrency market? In-depth analysis of several key factors:
Project quality and fraud risk: Many altcoin projects only stay at the PPT conception stage, and their core motivation is often to take advantage of the opportunity of listing on exchanges to reap investors' "leeks". Such projects lack substantial support, and long-term holding often means that the value of assets continues to shrink until it returns to zero.
Improper timing: Some investors may follow the trend and intervene in some projects that have passed the peak at a high point. When the market's heat and interest shift, these projects gradually fade out of the public eye. Not only are they difficult to gain attention again, they may even face the fate of being delisted from exchanges or token replacement, and investors' assets are therefore locked up.
Rapid rotation of market sectors: Hot spots in the cryptocurrency market such as blockchain games, NFTs, AI, inscriptions, second-layer protocols and the ton series frequently switch, and the market hypes concepts and popularity. Once the narrative heat of a sector fades, the trading volume shrinks sharply, and there is a lack of new funds involved. It becomes extremely difficult to make profits through trading, and those altcoins that have lost popularity become worthless.
New coin liquidity attraction: Newly launched tokens often attract investors with high circulation, high popularity and huge trading volume. Even if they also have the risk of cutting leeks, the high liquidity in the short term makes it relatively easy for large amounts of funds to enter and exit. In contrast, due to the sluggish trading volume, old altcoins face liquidity difficulties for large holders and are difficult to cash out quickly.
Value revaluation and market changes: Projects that are traditionally regarded as value coins or potential coins, such as MATIC renamed Polygon (POL), and even projects like CRV that were once popular, their founders may cash out through complex operations and leave the market, showing that even tokens that were once regarded as high-quality may lose their appeal as the market changes.
In summary, to avoid losses in the cryptocurrency market, you need to carefully select projects, accurately grasp the market rhythm, flexibly respond to sector rotation, and always be vigilant about the real motives and risks behind the projects. However, a few leading projects such as BNB, BTC, and ETH are often more suitable for long-term holding because of their solid market position and sufficient liquidity.
