From Casino to Investment: The Rational Path of the Crypto Assets Market

A few weeks ago, I wrote about the importance of sticking to investment principles, but the reality seems to be far from that—very few people truly have a clear investment strategy, and even worse, almost everyone is losing money. For first-time investors in Crypto Assets, this market indeed feels like a huge casino. If you try to go against the market, the result is often a heavy loss. Recent performances of some popular coins are the best examples, but that is just the tip of the iceberg.

I want to emphasize again: if you see the Crypto Assets market as a casino, then it will treat you like a gambler.

In traditional casinos, only about one in five players can profit from slot machines. This means that the vast majority of participants are at a loss— even the so-called "winners" find it difficult to consider themselves truly profitable when factoring in their investments before winning. Suppose you repeatedly bet on several popular tokens, facing defeat over and over again, only to unexpectedly achieve a big win in the end. What happens then? You might mistakenly believe that you've found a winning formula, thinking that you are different from others. But in reality, this kind of victory is often just a coincidence, and if you continue to participate, the final outcome is likely to be a loss.

The allure of the Crypto Assets market is akin to that of a casino. The latter attracts gamblers with free buffets and promises of financial freedom, while the former tempts investors with airdrops, astronomical returns, and luxury goods.

The casino sets the rules, allowing players to continue participating until it decides to end the game. Similarly, some market manipulators may inflate the prices of certain tokens and then sell them at the right moment, leaving ordinary investors to bear the losses.

When luck is not on your side, the casino will sell you the illusion of a "comeback." Some Crypto Assets projects employ similar strategies, but the probability of success may be even lower.

From a mathematical perspective, why might most people incur losses?

As a mathematics professional, I would like to explain the law of large numbers in simple terms.

This law indicates that as the number of attempts increases, the actual results will get closer and closer to the theoretical average. In gambling, this average often means a loss. Casinos and betting games are designed based on this principle. The more times you participate, the closer your individual results will approach the house edge.

You can understand it this way: if you flip a coin 10 times, you might get 7 heads and 3 tails - anomalies are likely to occur in small samples. However, if you flip it 1000 times, the result will be closer to a 50/50 ratio. This logic also applies to investing in popular tokens. You may be lucky to profit in one or two trades, but after a sufficient number of trades, the result usually returns to the mean. The reality is that market manipulators may become increasingly wealthy, while ordinary investors may suffer huge losses.

So, how can one become a winner?

1. Early entry - but the reality is that even the smartest investors find it difficult to accurately grasp the timing of exit, let alone enter in a timely manner.

2. Obtaining insider information - this is clearly an unethical and illegal act.

3. Becoming a market manipulator - also not advisable.

In short, for most people, this is more like a game of luck, unless you meet the above conditions, but the vast majority of people, including myself, do not meet these conditions.

Nevertheless, we need to change the negative perception of Crypto Assets. Highly speculative tokens rarely make people truly wealthy. If you really care about this field, you should study deeply and develop a practical investment strategy — a real investment philosophy.

The idea of gaining thousands of times returns in a short period is unrealistic. A reasonable expectation is to achieve 2-4 times returns within 2-5 years. If you can understand this, you have a chance to profit in this market (of course, this does not constitute investment advice). Do not be misled by short-term speculative behavior.

Will speculative tokens disappear? Unlikely.

Have their bubbles reached a peak? It is very likely, and this situation may continue.

But if you want to succeed in this complex world of Crypto Assets, you need to be well-prepared and have a deep understanding of the projects you are investing in.