Shitcoin is often in demand by investors or traders new to the crypto market.
This is due to the benefits that this type of crypto can provide. However, choosing shitcoin cannot be arbitrary because the risk of loss is considerable.
Because of that, there are some red flags or things to avoid when choosing shitcoins. Among them are the following:
What is Shitcoin?
Shitcoin, is a term for crypto with poor fundamentals or still lacking clarity.
Generally, this type of crypto is exciting because it can experience a significant appreciation; it can even reach thousands of percent in just a few days.
This type of crypto is generally altcoins that have just been issued, which makes it uncertain, so it is high risk.
This is because some of these cryptocurrencies were fraudulent or vulnerable to hacking.
Despite its drawbacks, shitcoins are still in high demand due to their potential gains.
Most of these shitcoins can appreciate relatively high, even reaching thousands of percent in just 24 hours.
One example of this type of crypto that has experienced a significant appreciation in 24 hours is BitUp which, according to Coinmarketcap, has appreciated by 1097039.29%.
This movement is likely due to the small capitalization of the crypto market, so the action will be significant when it moves up or down.
Generally, the smaller the market capitalization of an asset, the greater its movement and volatility.
This small market capitalization reflects the small number of funds in the crypto asset. So it can be said that this type of crypto is not for everyone.
5 Red Flag Signs When Buying Shitcoin
Many avoid this type of crypto because the potential for losses is too significant.
But unfortunately, there are still many new investors who buy this type of crypto in large quantities without knowing this risk.
What’s more, many investors don’t know how to choose the right shitcoins to get substantial potential profits.
There are five things to avoid when choosing this shitcoin, to minimize the losses that come with it.
Limited Groups
The first step when you want to buy shitcoin is to check the community and social media.
The community has a vital role as a place for interaction between the project team and potential crypto investors.
Generally, this community uses Telegram because this application makes it easier for community communication through chat and voice.
One of the signs of a crypto project being avoided is the Telegram group being muted so outsiders cannot communicate.
Only the project party can speak, so that potential investors or external parties cannot ask questions or give their opinions.
This can signify a project’s lack of transparency or avoidance of questions, which creates a red flag.
Fake Community Members
This condition can indicate a falsehood due to making it seem like the project already has many enthusiasts.
This condition can be seen in the ratio between online members and all community members.
If the online to overall ratio seems too small, there’s a good chance there are many fake members and interest in the project isn’t as intense as it looks.
Poor Site Display and Promotion
Poor promotion is also a sign of concern for a new shitcoin or crypto.
Lousy promotion can be described as a promotion that is too excessive, such as promising too high profits and not focusing on the project.
In addition, the potential for poor promotion can also be seen in the inactivity of the project’s social media and the lack of updates related to the project.
This bad promotion is sometimes juxtaposed with poor website appearance and social media.
This bad appearance can be seen on sites that are formed without creativity or even unattractive to look.
In addition, a bad display can also be seen from content that is less informative or duplicated from other sites or sources.
There is a possibility that if these conditions occur, the project is only a fraud and not a simple task.
There is no objective evidence of a project.
There is some evidence to show of a new crypto project or even just a shitcoin.
The three main things are the application or tangible results of crypto usage, audit results, and development news from developers.
One of the red flags is when the project has no application or utility because there is the potential that the shitcoin or crypto will not have any benefits.
If there is no benefit, then there is a high possibility that the crypto will only be used for pump and dump.
The scheme is used to push prices up and then sell the crypto, benefiting small parties and harming others who buy in.
Furthermore, there is no audit result. The project is still classified as unsafe when no audit process is carried out.
When a project already has an audit result, the auditor generally gives some shortcomings to the project.
One of the auditing parties that is often trusted by the majority of senior investors is Certik Finance.
The last is from the evidence of the presence of developers, where developers who often “disappear” or “sleep” are considered a sign of danger.
This is because the developer is responsible for the technology used in the project.
So that only the developer knows when there is damage or disruption, especially during the initial sales process or pre-sale.
There is a possibility that the developer often “disappears”, especially when something goes wrong, and the project is just a scam.
Later, when the sale is complete, the project will likely run away with the money generated from the sale, commonly called a rug pull.
Large Presale Amounts and Suspicious Allocations
Last but not least is the number of significant sales that are too large and the allocation of the sales proceeds that are not evenly distributed to the market.
The number of pre-sales or initial sales that are too large with a short lock-in period can provoke a potential pump and dump scheme.
In addition, a large number of sales at the beginning can generate large profits for the team.
If the allocation is suspicious, there is a possibility that the team will take a large amount of the profits.
Generally, the proceeds from the initial sale will be allocated to two parties, namely, the liquidity of the coin or token and the team.
If it’s more prominent for the team, even though it’s named for promotion and ecosystem use, there’s a good chance that the benefits will be passed on to the team.
In essence, the greater the allocation for liquidity, the safer the project will be because the funds will be locked and will not be taken by the team.
There are a few other things to avoid, but these are the five most commonly seen to analyze before buying this “dangerous” type of crypto.
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