November crawled in the day after you invest in endowment insurance plan Malaysia and it turned out to be a miserable month for the world of cryptocurrencies. FTX’s bankruptcy crisis is proof that even when crypto is used to buy and sell services, especially Bitcoin since its early days when it was utilized in the deep web, it is still an investment not worth risking your neck into.
Your finger must be reaching for that buy button. Stubborn little bugger. No, there is nothing seriously wrong about flushing your money into crypto except losing your money. If or when one day, the value of every coin falls to the bottom of the barrel, what will you do with the coin in your hand?
If you value your money, crypto shouldn’t really be a good investment for you unless you know what you are doing, as those who actually profit from it do. If you are going to day trade, you are no different than a chronic gambler in Vegas.
Volatility
Cryptocurrencies are always volatile as bulls and bears come and go much faster than the traditional stocks that many people may be familiar with. Give your thanks for that unstable acid to the news, trends, and other economic factors. People are afraid of investing in crypto because they may know that the market is always unpredictable, and the volatility makes it more dangerous.
One day the value in your investment wallet increases and the next you are losing more than half of it because a rumor caused investors to panic sell, fearing that the longer they hold, the more they will lose because they believe that the coin will continue to tumble down the hill.
It might be a scam
This is for coins other than the big ones including Bitcoin, Ethereum, Litecoin, and BNB. Cryptocurrencies or even NFTs are targets for scammers due to their speculative nature. There are always people that are desperate or foolish enough to buy into a supposed promising crypto only to be duped.
If you watched The Wolf Of Wall Street before, you may be familiar with the pump-and-dump scheme. Otherwise, in crypto, the gist is that you invest in a mostly new coin, which you created yourself, and then turn up the hype by persuading as many people as you can to buy it.
You do anything to draw people in. Memes, promises, and coin updates are the things that you will pump out in social media. You will also list some places like CoinGecko or CoinMarketCap, expanding your audience. If you can pull it off, you may also get yourself into one of the big crypto exchanges like CoinBase or Binance.
Once the hype increases that coin’s value to a certain peak, then you sell all of your positions and bail out as many investors lose their money due to the significant drop.
SQUID, a coin based on the Korean show Squid Games, is a modern example of a pump and dump crypto scheme, where during the show’s popularity, the coin was hyped up until the developers found the timing to dump it all and left the investors bleeding, never to return.