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When you enter a casino, a few things likely catch your attention: the vibrant lights, the sound of the slot machines, chips clinking, and dice rolling. Though people visit casinos hoping to strike it big, the outcomes largely depend on luck. However, when it comes to crypto, a digital asset often compared to gambling, the market is much more advanced and requires a clear understanding of its complexities.

The Rush into Crypto

An investor isn’t leaving their desired outcome up to chance. But despite the knowledge needed to navigate digital markets, prospective investors often dive in without fully understanding the landscape. The rush to invest, along with hype and trends, can be more harmful than they realize. For instance, consider those who invested in LUNA before its crash in May 2022.

The Hype-Fueled Boom and Bust Cycle

The early days of crypto saw investment techniques that aimed for a decentralized financial system. However, “get-rich-quick” narratives overshadowed methodical decision-making needed for legitimacy.

In this volatile space, social media plays a crucial role, with outside commentators often providing misleading advice for personal gain. Elon Musk’s posts impact the market, and while he cannot be held accountable for scams, his influence raises volatility.

How to Avoid Scams

Crypto hasn’t resolved many of its user experience issues. During market peaks, FOMO can make novices jump in without understanding, leading to exposure to scams. Investing in crypto demands time to comprehend the technology and market dynamics.

Bitcoin (BTC) is still in its infancy, evolving with regulatory frameworks and security standards. Even with endorsements from public figures, what benefits the market may not translate into individual gain. Investors need to assess risks carefully.

The Bottom Line

As crypto gains popularity, careful research is essential. What appears to be a guaranteed win can become a costly mistake. The crypto space must avoid hype and focus on informed decisions to shield investors from volatility.

Yuriy Sorokin is the CEO and co-founder of 3Commas, providing automation tools for crypto trading. He has led the company to process over $450 billion in trades since 2017.