CZ's advice to retail investors: Don't put all your assets in; small funds for trial and error is the right way.

CZ at the World Economic Forum in Davos gave a clear piece of advice to retail investors participating in crypto trading: learn, manage risk, start with small funds. The Binance founder used a vivid metaphor: “If you can’t swim, don’t jump into deep water,” directly pointing out a common problem among retail investors—going all in on unfamiliar fields and ending up getting badly hurt.

Three Key Points for Retail Participation in Crypto Trading

The learning process cannot be skipped

CZ emphasizes that retail investors need a learning phase. The crypto market is not traditional finance; trading rules, risk characteristics, and technical principles are all different. Many retail investors enter without understanding these aspects, simply following trends or stories. Such participation is extremely risky because you have no idea what you’re doing.

Risk management is the line between life and death

“Don’t invest all your money that you care about into trading”—this is CZ’s core advice. Why is this so important? Looking at recent data from Binance makes it clear. During the crypto market crash in December 2023, Binance faced a daily withdrawal pressure of $7 billion, with a weekly total of $14 billion in withdrawal requests, yet remained safe. What does this show? It indicates that even large institutions must always be prepared for extreme situations. Retail investors have smaller funds and weaker risk resistance, so strict risk management is even more necessary.

Starting small to test and learn is the right approach

CZ’s advice is “start with a small amount of funds.” This doesn’t mean avoid participation but to proceed gradually. Use small funds to understand market rules, trading processes, and risk features. Once you gain experience and judgment, gradually increase your investment. This way, even if you make mistakes, the losses are manageable and you won’t be wiped out all at once.

Why emphasize this now

Recently, there has been a lot of chaos and misinformation in the industry. CZ’s views on Meme coins were taken out of context; his original point was “most Meme coins won’t go far, but those with cultural value can exist long-term,” but it was misinterpreted as “dissing Meme coins,” causing panic. Binance CEO He Yi responded with sarcasm: “Rumors, hatred, and conspiracy theories always tend to sway public sentiment more. Investors who follow such emotions without verification often end up repeatedly losing money.”

This highlights a problem: retail investors need to learn not only risk management but also how to discern information and avoid being driven by emotions. Blindly following trends and rumors is itself the biggest risk.

What should retail investors do

• Do homework before entering, understand basic concepts and risk features
• Set risk tolerance and determine the maximum loss you can accept
• Start with small funds to test and verify your judgment
• Increase investment gradually, not all at once
• Learn to identify information, avoid being driven by emotions and rumors
• Regularly review and learn from successes and failures

Summary

The core message from CZ is: Respect the market and participate cautiously. Opportunities do exist in crypto, but so do real risks. Retail investors have the advantage of flexibility but are limited in information and capital scale. Recognizing this, learning with small funds, and gradually building your trading system is the right way to participate. Those dreaming of getting rich overnight are often the biggest victims in the end.