Bitcoin Surpasses $100,000: What Are the Crypto Dangers You Need to Be Aware of?

Social media was ablaze with euphoria and joy on December 5 when Bitcoin surpassed $100,000 for the first time ever, buoyed by investors’ hopes for a pro-crypto Trump administration. As Bitcoin increased in value, other cryptocurrencies and tokens followed suit. Over the course of this week, Ripple’s Meme coins and tokens were also up sharply as Elon Musk’s DOGE (Department of Government Efficiency), along with the Dogecoin currency ticker, entered common lingo.

Several investors are now wondering whether to enter the booming crypto economy, while others are making their first crypto trades to capitalize on the rising prices. Such a market environment also carries many dangers.

Here are some potential pitfalls and risk factors that every crypto investor should be aware of.

Scams

There are countless ways to fool aspiring crypto investors who want to make a quick buck without bothering to educate themselves about the market.

Malicious actors often attempt to lure buyers with meme pieces based on popular cultural references. These tokens can experience skyrocketing prices within hours or days, prompting others to purchase huge volumes of tokens. Soon, many investors will realize that their tokens cannot be sold or returned, as the makers of these cryptocurrencies will abscond, leaving no trace of their digital footprint.

Alternatively, tokens may be sold as normal, but creators may hold large amounts of currency themselves; when prices are high enough, they quickly sell their assets and cash out. This causes the overall market capitalization of the token to collapse, leaving other investors with almost worthless assets.

Tips

Although cryptocurrency hacks remain an ever-present risk throughout the year, hackers and scammers have a particular incentive to try to deceive customers when cryptocurrency prices skyrocket. With Bitcoin surpassing $100,000, hackers know there will be a large number of new and curious traders looking to invest their money.

More advanced hackers, including those backed by enemy state regimes, can attack user wallets or even wallets managed by crypto exchanges.

At the other end of the spectrum, even amateur hackers can successfully target their victims using romantic manipulation (known as the pork butchery scam) on dating apps, fake airdrops in online, offers of help/technical advice on social networks or phishing emails containing malware.

Many AI chatbots have also simplified the process of generating malicious code or fake messages that can be used to trick crypto investors into giving up their credentials.

Failing Currencies

Even cryptocurrencies/tokens launched by trusted teams of expert technologists and traders can fail for no reason, erasing millions or even billions of dollars of value. Now consider that not all cryptocurrencies are managed by professionals. Crypto tokens on major blockchains can be created by almost anyone, including those who create such assets as a joke or for their own profit.

Although non-malicious actors such as influencers or celebrities may promote crypto tokens or participate in advertisements featuring them, be aware that the person’s fame does not necessarily guarantee the success of the cryptocurrency or token.

A good example is Haliey Welch’s HAWK meme, which references an explicit catchphrase popularized by the internet personality this year. Despite her viral fame, the influencer’s token crashed shortly after launch, with several investors considering taking legal action against her.

There are also several crypto tokens inspired by the viral Thai pygmy hippo Moo Deng; Many of them more or less completely crashed shortly after launch, according to blockchain statistics on CoinMarketCap.

For this reason, crypto investors should invest time in researching the assets they wish to obtain or trade, and study relevant metrics to assess their health.

FOMO (Fear of missing out)

As Bitcoin hits $100,000, a number of investors are likely to be bitten by the FOMO (fear of missing out) bug.

This means that, in an attempt to ride the wave of market euphoria while prices last, amateur traders are likely to make sudden or reckless trading decisions that they would not have made otherwise. These investors may buy more than initially planned, hoping that prices will rise.

This is a risky strategy because it could lead to inexperienced investors entering the market without having the information they need. Others might end up buying/selling cryptocurrencies based on emotions, headlines, or peer pressure. Some may go way beyond their means and invest such enormous sums of money that they can no longer meet their daily expenses or those of their family.

More experienced traders would be able to invest their funds effectively and make short- and long-term crypto trades using a carefully calculated plan that fits their goals and financial situation.

Lack of knowledge

As crypto adoption grows, many new investors entering the market may be unaware of essential facts such as the blockchain technology underpinning crypto, Indian crypto tax regulations, and the legal status of existing crypto exchanges and lending platforms. This puts them in both financial and legal danger.

Additionally, many traders do not conduct their own research before purchasing assets, but instead wholeheartedly follow so-called analysts, financial influencers or content creators who may receive payments for promoting very popular cryptocurrencies. unstable, even fraudulent.

New investors may also choose the services of a particular crypto exchange simply because it is popular and based in their own country, instead of choosing an institution tailored to their needs.

Many crypto investors also lack basic market skills, such as reading candlestick charts, using trading indicators to understand currency movements, analyzing and estimating possible price movements, identifying potential fraudulent coins , set up automatic orders, etc., which are used to maximize profits and reduce losses. .

Non-technical traders who are new to crypto may also not understand fundamental categories, such as the difference between a coin and a token, the difference between Ether and Ethereum, the difference between Bitcoin and a meme coin, etc. Others who wrongly believe that crypto investments can be equated with traditional financial instruments – such as fixed deposits – invest their savings or family members’ pension funds without realizing how quickly these assets can be lost or frozen by their largely unregulated custodians.