The Crypto Wild West: Danger All Around You

Many of us first got into cryptocurrency to hopefully make a lot of money.  We all have our sights set on obtaining financial freedom.  Finally pulling ourselves out of debt, and no longer needing to worry about money.  Giving us a real chance to retire much sooner than we ever thought possible.  That is what brought us to Bitcoin, Ethereum, and cryptocurrency.  This market is often considered the final frontier of financial markets, or the wild west.  The last market that is still free and mostly uncontrolled by regulations and governments.  While that means that anyone could enter the market and even become rich overnight.  That also means that you need to be on the outlook for your own safety.  In the Wild West, there are dangers lurking all around you.  In this case, the dangers are wanting to take advantage of you and take your money. Left and right there are hacks all around you.  People are participating in pump-and-dump schemes that they were told would make them rich.  The end result is that other people are getting rich, while you get caught holding the bags.  If you aren't being careful, you could lose everything.  In the Wild Crypto West, one thing is certain. You are the exit liquidity.

The first rule that you need to learn when you are entering the crypto market is that no one can be trusted.  You shouldn't be trusting YouTubers or influencers that you are seeing talk about their new favorite coin that will skyrocket in value. You shouldn't be trusting hedge funds or venture capitalists who are cut-throat and will do anything to make money. You definitely shouldn't be trusting those people who are on Twitter claiming that they will know what will happen to the market in the future.  You shouldn't even be trusting me.  The point is that it seems that nearly everyone in the crypto market has ulterior motives, that you currently don't know.  But just know that it usually will end up not in your favor.

Internet Computer (ICP)

  The first prime suspect of the dangers that are waiting in the shadows for you is the crypto, Internet Computer (ICP).  If you are not familiar with this chain, it launched during the absolute peak of the previous cycle.  While Bitcoin was still around $60k, and Ethereum was at $4k. Out of nowhere Internet computer launched was instantly in the top 5 in terms of market cap, with a price soaring over $400 per coin. For a short time, it was the talk of the market. It was touted as the Ethereum killer and the true next generation of crypto. That should have been your first hint that this was a blockchain that you needed to be careful of falling into the hype trap of.

The second hint was that on Day 1, ICP was simultaneously launched on all of the largest crypto exchanges.  Once you have been investing in crypto for quite a while, you will learn the trends of how listings usually take place.  When all of the biggest exchanges list a certain cryptocurrency at the same time on day one, that usually means one thing. That a majority of these exchanges were investors in these projects, or that there is big money behind them.  A huge red flag.

Finally, your third red flag should have been the hype around the launch of this crypto.  Definity, the company behind ICP, had a launch party video and talks that seemed way over the top and corporate.  Being eerily similar to Ted Talks.  At least for me, when I watched those videos, I came away with a feeling that something just wasn't right.  In retrospect, these signs are all easy to see.  Especially when insiders and early investors dumped their coins on new users on day one.  The price has fallen from $400 per coin to $6, a drop of 99%.

Sweatcoin (SWEAT)

If you were able to avoid the Internet Computer hype, there are still other dangers that were lurking in the shadows.  Recently, one of the most hyped crypto launches was Sweatcoin.  A fitness app that rewards you with crypto for being active.  This was seen as a direct rival to STEPN, which took off last year.  Unlike STEPN, Sweatcoin had a fitness app for years that was very successful.  On this app, you would earn tokens that could be spent on prizes within the app.  But, now the app was exchanging all of those tokens for crypto.  Something that had many users very excited.

In September, SWEAT launched and spiked up to nearly 7 cents.  Social influencers around the market were hyping this token as the next big crypto that was going to pump.  Perhaps they were heavy investors, or perhaps they were being paid to talk about this token.  Whatever the case is, in a single month the value of SWEAT has dropped by 80% and more pain could be on the way. Perhaps you are already beginning to be able to see the trend.

New projects that are launching that have been heavily hyped seem to always dump dramatically after being launched.  The reason for this is that there are VCs, investors, and developers who have either had their money locked up in this project for years or have been working on it for an extended time.  This is their chance to finally get a return on their investment or to finally get paid.  The more hyped up these projects are, the more careful that you need to be. As big investors obviously prefer to shill their own investments.  During the last market cycle, the darlings of the space and also the most hyped projects were Layer 1 smart contract blockchains that were supposed to compete against Ethereum.  Such as Solana, Luna, Avalanche, Fantom, Near, and the list goes on. As the market momentum halted, these were some of the chains that saw the biggest drops in value.  Perhaps you could say the reason was the Luna/UST De-peg, or because we are in a bear market.  But, perhaps the reason is that large money has been dumping on retail investors.  The names that you needed to be careful of during the last cycle were 3AC, a16z, Galaxy Digital, and the list goes on.

APTOS - Be Wary

That brings us to the latest crypto that was destined to take your money, Aptos.  The launch of Aptos was eerily similar to the launch of Internet Computer.  The coin launched day 1 on all of the biggest crypto exchanges.  It was hyped up and touted as the Solana killer.  Faster, cheaper, and more reliable.  Due to his innovative MOVE programming language, and being built by Facebook developers.  The project was claiming that the blockchain would be able to process at least 130,000 TPS.  But, this is where things began to move south. Upon launch, Aptos was nowhere near that kind of performance. In fact, it was only doing 4 TPS, similar to Bitcoin.  There were other red flags as well.  The team behind Aptos had not finalized or shared the blockchain's tokenomics until the launch of the chain had almost arrived.  The wording in the tokennomics was weird and we found out that insiders and developers had a majority of the coins. If you have been catching onto the trend, then you will already know what I'm about to say.  When new cryptos are launched that are incredibly hyped and insiders have most of the coins.  That is a clear sign that you need to be very careful about investing in that project.  It is likely that you are the exit liquidity.  When Aptos launched on exchanges, the coin instantly pumped up to nearly $60 per coin and since has come down to $7.  Insiders made a lot of money, and retail users were punished.

The cryptocurrency market can be a very dangerous place, and you very well could lose all of your money.  While there is a lot of money that can be made by taking risks and investing in the lower market cap or new coins.  One thing is certain, don't get caught up in the FOMO.  The launch of new coins can be very exciting.  Our greed is our own weakness.  We are all looking for that next opportunity to make a lot of money. But in many instances, we are the exit liquidity for someone else to make that money.  This is why I prefer to invest in the blue chips of crypto, such as Bitcoin and Ethereum.  While they might not pump as much as the newer coins on the market.  They are much safer and still have incredible potential.  Sometimes we get caught up in trying to earn as much money as possible and forget about the importance of protecting our wealth as well.

How about you? What dangers have you encountered in the Crypto Wild West?

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As always, thank you for reading!