Why do cryptocurrencies need to be locked for several months (unlocking after lock-up leads to bankruptcy)

08/16/2023 21:03 • NFT Newsflash • 114 views

Why do cryptocurrencies need to be locked for several months? Why does the price of cryptocurrencies rise during bull markets?

As we know, after Bitcoin reached a new high in December 2017, many investors started to worry that the price of this project would fall to a very low level. Many people think that the current trend is pessimistic and they believe such investment behavior is not worth it. So once you have bought this coin, there is no reason to buy it again. Therefore, in a bear market, people often have certain expectations for its price, but if they don’t plan ahead, it will cause a big problem: when can they break free from it?

For some well-known investment products like Ethereum and Litecoin, it is generally necessary to first deposit these assets in an exchange, and then sell them through various trading methods. Once there is a market surge or crash, many new entrants will enter the market, attracting more people to participate. As a result, new funds also flow into the exchange. Due to large market fluctuations and other reasons, many newcomers are often eliminated and forced to quit. Therefore, many people join a small circle to mitigate risks and hope that the small coins they hold can stabilize their mentality in a bear market. However, in reality, most people want to make money on this platform, but they don’t get the expected returns.

So why do cryptocurrencies need to be locked for such a long time? Let’s analyze it from three aspects:

1. What is the lock-up period for cryptocurrencies?

Why do cryptocurrencies need to be locked for four months?

Why do cryptocurrencies have lock-up cycles?

Currently, most cryptocurrencies in the market are issued within five months or 10 years, and only a few listed companies have launched a product like Ripple (XRP). This means that although Ripple has been listed for a while, it is not the only popular product because it is a global virtual currency with a value far higher than other tokens. In addition, the circulation of Ripple is constant, and with the development of the encryption world, Ripple may still have a long way to go.

2. Why do cryptocurrency wallets need to set cryptographic barriers?

Cryptocurrency wallets can provide different hardware devices, storage media, and corresponding technical support tools for different types of wallets, and can automatically customize corresponding applications and services according to users’ actual needs. Users can also flexibly adjust cryptographic parameters based on their own situations, making it easier for them to use cryptocurrency wallet applications more efficiently.

Unlocking after locking cryptocurrencies leads to bankruptcy

Unlocking cryptocurrencies after they have been locked leads to bankruptcy. Many people say that this is because they couldn’t get their principal back after the unlocking period, and the contracts they bought on platforms like Binance cannot be withdrawn. In reality, this can be understood as when the lock-up period ends, users will experience bankruptcy or financial losses, but many exchanges operate in this way.

For example, platforms like Huobi have launched a perpetual contract product called “futures” and have placed this product in contracts for trading. In the orders for this product, if someone wants to close their position, they need to be given a settlement date. (I am the author Huang Xuejiao, for blockchain project reports/exchanges, you can add me on WeChat: hxjiapg, please mention your position and reason.)

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Why do cryptocurrencies need to be locked for several months (unlocking after lock-up leads to bankruptcy)

Unlocking after locking cryptocurrencies leads to bankruptcy

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