Early morning reflection, recalling a trading decision from a year ago. At that time, I had $100K in active funds in my account when I suddenly saw a chart of a new emerging token, with a market cap labeled around 150M. At first glance, it seemed quite attractive. But upon closer inspection, I noticed the liquidity pool was only 200K, and this number instantly woke me up—the huge gap between market cap and liquidity is usually a warning sign.

Such disproportionate ratios often hide risks of exit scams or pump-and-dump schemes. The actual trading depth is severely lacking, and the seemingly ample liquidity market cap can be hard to realize. So I decisively closed that chart and turned to look for trading pairs with healthier fundamentals and more reasonable liquidity allocation. In the end, I focused my efforts on short-term swing trading.

This experience taught me: when evaluating projects, you can't just look at the market cap; the health of liquidity allocation is equally crucial.