Crypto Market Survival Guide: 15 Risk Avoidance Rules

During the last cycle of the crypto market, I made many mistakes due to a lack of experience. Although these mistakes were costly, they became valuable lessons that helped me avoid many traps that could lead to significant losses. Today, I would like to share the rules derived from these experiences. The purpose of these rules is not to make you rich but to help you survive in this high-risk market. Even in a bull market, risks still exist, and improper operations can also lead to serious losses.

The following rules are not absolute, but they can help you reduce risk in this uncertain market.

Rule 1: Avoid being among the first participants in popular blockchain events.

Highly publicized blockchain events often penalize early participants. For example, those who invested early in the Sushiswap and Otherside deeds projects suffered losses. The correct strategy is to patiently wait until market sentiment stabilizes, and panic or excessive speculation subsides, before reassessing risks and returns. If the entire crypto community is buzzing about something, early participation is usually unwise.

Rule 2: Use perpetual contracts with caution

Perpetual contracts are primarily suited for large investors, rather than ordinary retail traders. Most people should not trade perpetual contracts. This tool is usually used by big investors to supplement their positions or make low-leverage small investments. Leverage of 10 times or more is extremely dangerous and should be avoided. Perpetual contracts are the fastest way to deplete funds.

Rule 3: Stay vigilant and beware of others' malice.

The crypto market is like the "Wild West" of the financial world. There are no true friends here; even those who appear friendly are not exceptions. The market is rife with cases of betrayal, attacks, and even scams by trusted parties. One should assume that everyone could be a potential scammer and not trust anyone easily.

Rule 4: Do not blindly worship project founders

Founders are often the type of people who require the most vigilance. They may cause losses for investors and token holders. Do not view founders as heroes; maintain a skeptical attitude, as they are likely to betray your trust.

Rule 5: Maintain a questioning attitude towards suspicious behavior

If you find that a founder or a team's behavior is problematic, you should proactively voice your concerns about your assets. By raising questions, encourage more people to join the questioning ranks until the team abandons the suspicious behavior. Those who blindly support may lose everything, and you need to protect your own interests.

Rule 6: Avoid locking tokens

Locking tokens for months is a major mistake. Locked tokens may face the risk of smart contracts being hacked. In addition, when the team knows that investors' tokens are locked, they may act in ways that are detrimental to the investors. Maintain the liquidity of tokens to avoid becoming passive.

Rule 7: Stay away from projects and individuals with bad reputations

Some individuals or projects may have a bad record, such as large-scale rug pulls. Try to avoid these people and the projects they are involved in. Stay vigilant and take responsibility for your assets.

Rule 8: Avoid chasing prices

Do not chase assets that experience parabolic price surges. Although it may succeed occasionally, the probability of failure is much higher than that of success. Instead of taking risks, it is better to patiently wait for the market to adjust.

Rule 9: Focus on market capitalization rather than unit price.

Many people fall into the illusion of unit price, believing that certain tokens can reach unrealistic prices. The judgment should be based on whether the market capitalization is achievable, rather than simply focusing on the price.

Rule 10: Take profit at the right time

If the current earnings can improve your life, then it is wise to appropriately sell a portion of your assets. Market opportunities always exist, so do not miss the opportunity to improve your life in pursuit of higher returns. In the long run, this adjustment in mindset will greatly benefit you.

Rule 11: Be cautious when connecting new applications

Be cautious before using any new application, as this may lead to asset theft. It is recommended to test with a small amount of funds first, and only use main funds after ensuring safety.

Rule 12: Be skeptical of the "supercycle"

The so-called "super cycle" refers to the view that the market will continue to rise. Do not blindly believe this statement; maintain rational judgment.

Rule 13: Stay patient in a bear market

When the market enters a bear market, do not give up. In fact, the biggest gains often occur at the end of a bear market. During a bear market, one should focus on improving their abilities and preparing for the next bull market.

Rule 14: Exercise caution with special theme tokens

Tokens related to certain special topics may pose unexpected risks. Choose your investment targets carefully to avoid unnecessary troubles.

Rule 15: Stick to your beliefs

This is the most important rule and the only way to stay grounded and humble. Although we may not be able to fully achieve it, the effort to practice itself is a form of growth.