What are exit liquidity traps — and how to detect them before it is too late

Key takeaways

• Exit liquidity traps occur when new investors unknowingly provide liquidity for insiders to cash out, leaving them with devalued assets.​

• FOMO drives impulsive trades, often leading to costly mistakes and becoming exit liquidity for early movers.

• Beware of projects with exaggerated claims, low liquidity, anonymous teams or sudden price surges.

• Investing in high-market-cap coins, avoiding hype-driven projects and using reputable exchanges reduce the risk.