Paper Millionaires — that’s what the crypto scene should be called. You look at your wallet and see astronomical numbers. You open the exchange to sell. And then reality hits.

Many people don’t understand how the price really works. The exchange doesn’t buy from you nor do you sell directly to it. We, the market participants, are selling coins to each other. The exchange? It keeps the fees while everything happens. If you want to exit a position at $5, you need someone willing to buy at that price — and not just one person, but several believing it’s an opportunity.

Here’s the problem: at the top, no one can exit at the same time. Mathematically impossible. Even gold — if 80% of owners decided to sell, the price would plummet. With altcoins, especially small caps, it’s even more brutal. That’s why over 80% of altcoin investors lose almost everything and repeat the same mistake in the next cycle.

You’re not buying because the project is good. You’re betting there will be enough buyers paying more than you paid. It’s different. Very different.

In small and medium projects, this becomes even clearer. The chart goes up, your portfolio shows 100K. You click sell. But there isn’t enough buy order volume. Realistic scenario: you put in 10K, it reached 100K, but you can’t exit at the current price. The best serious bid is 30% below. Sometimes the token isn’t even liquid — you can’t sell even if you wanted to. You just watch the chart multiply 30x.

Bitconnect in 2018 is a classic example. People saw six, seven digits on the screen. When it collapsed, liquidity evaporated. Price dropped 99%. Paper wealth turned to nothing.

Terra and LUNA in 2022 were similar. Before spiraling down, many were paper millionaires. When the collapse started, the order book flooded with sell orders. There weren’t enough buyers to absorb all that selling.

Squid Game Token in 2021 exploded thousands of percent. But investors technically couldn’t sell — there was a limit in the smart contract. Liquidity was pulled. Millions were just screenshots.

Pre-listing tokens and private rounds also live off this. Many VC projects have people holding tokens valued at 10x, 50x above their investment. But the token isn’t listed yet, has vesting, no secondary market, or OTC is extremely thin. On paper, they’re millionaires. In reality? No liquidity at all.

PI Network is an interesting case to observe in this scene. For years, people mined tokens. At certain times, IOU versions of PI were traded on some exchanges at high prices. But the mainnet took a long time to open for free trading, the token wasn’t globally liquid, and supply was huge compared to actual demand. Many had tens of thousands, even “millions,” on paper based on the IOU price. But the real market with deep liquidity didn’t exist. Without a buyer, there’s no realization.

The harsh truth: price isn’t liquidity. Market cap isn’t money you can withdraw. Portfolio value isn’t realized profit. If 80% of owners try to sell, the price collapses. It even applies to gold. For small cap altcoins, it’s even worse.

You’re a millionaire when you lock in profits, transfer to stablecoin, or convert to fiat. The rest is just numbers on the screen.

Trading altcoins is a lonely war. It’s not a group chat on Telegram with 5K people. It’s not where you make “lifelong friends.” Most of the cycle, you go through it alone, thinking with your own head. That’s how you win.