I just remembered an interesting thing about the crypto market. Have you ever seen a coin suddenly increase in value by 10 times within a few weeks, everyone talking about it, and then completely crash afterward? That’s a coin bubble — a phenomenon I see repeated in crypto.

Actually, coin bubbles work like soap bubbles. The value skyrockets in a short time, people get excited, rush to buy without thinking, and then it bursts. Market demand at this point far exceeds its real value.

I remember in 2017, the ICO boom—you probably heard about it. Bitcoin was surging, everyone was interested in crypto, and a bunch of new projects issued tokens to raise capital. Everyone invested, but most of those projects later disappeared. Then in 2020-2021, NFTs and DeFi suddenly became trends. NFT images like Bored Ape Yacht Club, CryptoPunks reached prices of millions of USD. People spent hundreds of millions on small pictures, thinking the future would be better, but the market crashed and the value of most NFTs plummeted. That was also a coin bubble.

The main cause is FOMO — the fear of missing out. When you see others making profits, you get swept in before you have time to research. Additionally, people often only see the rising prices without considering the technology or practical applications. The influence of social media and influencers also plays a big role — they promote that “this will increase a lot, you will make profits,” and people believe and buy in.

How to quickly recognize a coin bubble? If a crypto surges sharply in a short time, with no real technology or practical application, just price increase, that’s a sign. If you hear from social media or influencers “buy this, the price will go up,” you should also be cautious.

How to protect yourself from a coin bubble? Regardless of which project you invest in, do your own thorough research. Who is involved in that organization, how does the technology work, what problem does it solve? Don’t buy when the price is skyrocketing and then quickly sell. Think long-term and only invest in projects you truly trust. Most importantly, don’t put all your money into a single coin. Diversify your portfolio, invest in different sectors reasonably. When prices go up, take some profit to preserve your initial capital. That way, even if the market drops later, you won’t lose your principal.

You might be tracking some coins on Gate or other exchanges. The best way is always to research carefully before making decisions. Don’t let FOMO or market excitement influence your choices. Be wise when investing in crypto.