A small DeFi project $LIGHT was crazily depositing tokens into the exchange from the team wallet before the crash—$2.4 million on December 19, another $2.4 million on December 21, and finally a last wave of $6.4 million in the early hours of December 22. All the data is laid out on-chain, as transparent as it can be. And the result? Retail investors still rushed in, only to cut losses during the flash crash of 75%.

This is not a new thing; it happens every day in the crypto world. But the most terrifying part is not how sinister the methods of the manipulators are, but that retail investors clearly see the warning signs and choose to ignore them.

First, let's look at some data. This coin's trading volume reached 2.135 billion USD in 24 hours. What does that mean? It exceeded the 1.94 billion of a leading public chain and is close to a quarter of Bitcoin's 8 billion. How does a small project achieve this? It's not because of advanced technology, but because of a well-designed liquidity trap. The market makers manipulate FOMO emotions, causing retail investors to actively provide liquidity, and in the end, they catch them all.

The on-chain timeline is very clear: the first attempt to deposit, the second to prepare for layout, and the third to directly collect the net. The focus is not on the team's dumping itself (which is very normal in the coin circle), but on why retail investors can see through it yet still rush in.

Most people fall into three psychological traps. First, they always think they won't be the last one to be the bag holder. Watching the coin price rise, they think, "I'll sell after it rises a bit more," but the speed at which the market makers close their net is always faster than your reaction—what you think is a small profit could turn into a 50% loss in just ten minutes. Second, they have too much faith in technical analysis to escape the peak. Staring at candlesticks, drawing indicators, and believing they can see the signal of the top. Little do they know that in a situation controlled by market makers, the candlesticks are manipulated, and your indicators are just a joke in the eyes of the market makers. Finally, there is the herd mentality. When someone in the group shares a profit screenshot, they feel the opportunity has come. But those are likely to be shills, or the first batch of profit-taking orders released by the market makers, aimed at attracting more bag holders.

How to avoid pitfalls? It's actually quite simple. Don't touch new coins with exceptionally outrageous trading volumes; normal projects won't exceed the leading public chains, and this data itself is a trap signal. Learning to read on-chain data is not a difficult skill. If the team wallet is depositing tokens to the exchange? That's a signal to dump, and you don't need any advanced technical analysis for that. Finally, don't believe the nonsense of "I'll just make a little profit and run." The reaction speed of the manipulators is far beyond your imagination; that little profit you think you can make may have already turned into a loss.

Retail investors lose money not because of information asymmetry or lack of understanding. On the contrary, some people see the red lights on-chain but still choose to step in. Greed and luck are more terrifying than any market maker.