I just realized something that many people may still not fully understand about this market—that is, the concept of a crypto bubble and why it is so dangerous.

A crypto bubble is like a hot water balloon. It gradually inflates, gets bigger and bigger, and then finally bursts. The value of a coin or project skyrockets in a short period, but then drops sharply back down. Simply put, the market demand for certain cryptocurrencies nowadays has exceeded their actual value. People see prices rising and get excited, without doing any research, and rush to buy, causing the bubble to grow even larger.

Why does this happen? I see three main reasons. First is FOMO—fear of missing out. When you see others making profits, you’re afraid of missing out too, so you buy quickly without understanding much. Second is excessive excitement. People only see the rising prices and don’t care about the technology or real-world applications of the project. Third is the influence from social media and influencers. Phrases like "this will increase a lot, you’ll make huge profits" from Telegram groups or social media KOLs make people easily misled and buy in.

Looking back at history, there have been two major crypto bubbles. In 2017, when ICOs became popular, many new projects issued tokens to raise funds. Bitcoin also surged at that time, drawing attention to the crypto world and prompting investments in projects with no guarantees. Most of those projects eventually disappeared, and investors suffered losses. Later, DeFi and NFTs became very hot after 2020. NFT PFPs like Bored Ape Yacht Club and CryptoPunks reached prices in the millions of USD. People spent hundreds of millions on small artworks, thinking the future would be better, but the market collapsed and most NFTs lost value.

Is there a way to recognize when a crypto bubble is forming? If the price of a crypto suddenly surges in a short time, you should be cautious. A project with no real technology or practical application that only increases in price is a warning sign. If media or influencers say, "buy this, the price will go up a lot," you should also be alert.

So, how can you protect yourself from a crypto bubble? Regardless of which project you invest in, do your own thorough research. Who is behind the organization, how does the technology work, what problem does it solve? Study carefully before putting your money in. I see many people buy when prices are rising and then quickly sell again—this approach makes you vulnerable to getting caught in a crypto bubble. Think long-term, only invest in projects you truly trust.

One very important thing is not to put all your money into a single crypto. Diversify your portfolio and invest across different sectors sensibly. When prices go up, take out some profits to ensure you still keep your initial capital. That way, even if the market drops later, you won’t lose your principal.

In summary, now you understand what a crypto bubble is. Be cautious of market excitement, make investment decisions systematically and wisely. Do thorough research before making any moves.