Now first thing first,
Whales are manipulating the price
Let’s be honest with it, the crypto market is filled with whales or institutions like Microstrategy, El Salvador, Galaxy digital, etc. And they certainly manipulate the market by injecting money into the cryptocurrency and as the price changes; influencers advertise it more on social media, causing more people to buy.
The more people who buy, the higher the price rises, and when they are satisfied with their gains, they sell the desired quantity and cash out their profits.
It is no hidden fact, you have seen such things as when people like Elon speak about a coin, it disregards all technical and fundamental analysis and went through the roof. So, be careful and keep an eye on the market. The best way to protect yourself from market manipulation is to invest for the long term.
Now the second truth is which I have learned is there are many spectators but only a few users. And there is a reason for that.
Few actual users
To be honest, I started investing in some cryptos a few years ago not because I believe in their use case or because I intend to use them.
It's simply because I expect to get profit from them. And I am not alone. Many people believe the same way I do. They were only here to make money. And only a small percentage of people are true believers and users of cryptocurrency, which is not a good sign. As a result, we see a lot of coins being pumped and dumped on a daily basis.
Now if you get such a situation, the best way to protect yourself from a pump and dump is to avoid buying coins that are rocketing higher. Understanding that a pump and dump is happening and moving aside is the best thing you can do.
Now, on the brighter side, having too many money-minded people in the crypto space is not necessarily a bad thing, because a certain percentage of them can still be converted to actual users, and eventually, it will help the market.
So I'm optimistic about that.
Now truth that I have learned is,
Price does not reflect the value
Let’s take Shiba Inu for example.
Shiba Inu is a meme coin that was created in 2020 as a dogecoin killer, in fact, dogecoin is also a meme coin that was created in 2013. They both are meme coins which means they are only a joke. But as I am recording this video, they both are sitting among the top ten coins in terms of market capitalization.
And there are many good projects that have very good fundamentals, an awesome team, and a proper working model, and some of them are literally trying to solve the actual real-world problem of the world.
They are all still undervalued in terms of growth struggling to get their coins listed on the top exchanges.
What does it tell us? It tells us that price is dictated by market sentiments or by the law of supply and demand. And the value of a coin is only subjective and has no connection to its price.
Listing a coin in exchanges doesn’t make it legit
and let me tell you why.
But first, tell me how do crypto exchanges make money?
- By charging a fee on every trade,
- By withdrawal fees, and
- Sometimes by charging for listing a coin
An exchange can make money through these three paths, and if a coin is a meme coin with no use case and people still want to invest in it. What will exchange do, it will undoubtedly permit it. What does it tell us? It tells us that, as long as there are enough people to trade a coin and as long as they can make money. Exchanges don’t care what type of token you are listing on them or what the fundamentals of any crypto token or coin are.
They will gladly list them.
Now the last truth is
and it is a major one.
Now, If you've been paying attention to the news for the last few months, you know that there are few major hacks have already happened in the first three months of 2022,
Like the Qubit Bridge hack, which cost around $80 million, the Wormhole Bridge hack, which cost more than $320 million, or the Meter.io Bridge hack, which cost around $4.2 million and there are many more.
If you combine all these attacks, so far, investors have lost over 1.22 billion to hackers in the first three months of the year, and that is nearly eight times more than the 154 million lost in the first quarter of 2021.
Now one thing is clear, the crypto market is still suffering some security issues to a large extent and because of this, it is important for you to never put all your eggs into one basket. You need to spread out your investments as much as you can. Only then can you make sure your money lasts a while.
So these are some of the truths which you have to take in mind before going into the world of crypto.