With 1394 cryptocurrencies on the market, it’s tough to decide which altcoin to invest in. Some investors new to the crypto space, are just looking for the digital coin that will bring them the most profit, within the shortest amount of time. Unfortunately, not many look into the projects behind each of these coins and get behind them strictly from hype or a facebook post they’ve read in a crypto group. My recommendation, to anyone investing in any cryptocurrency, is never invest more than you are able to lose and always do your research and get behind the project you invest in.
However, with so many coins in rotation, many of these altcoins seem to all do the exact same thing and it’s hard to figure out what makes them stand out from the rest. Look at the founder or co-founders of the coin and what accomplishments they might have had in their career, as well as the other founding members of the project, such as the developers. What unfortunately has happened as of late, is founders of these projects have begun taking advantage of new cryptocurrency investors and have begun scamming them, in order to make quick money.
PUMP AND DUMP
Many of the top cryptocurrencies’ on the market have shot up in price in the past due to news breaking of new updates to its underlying technology, large partnerships that add more credibility to the project, big time financial analysts backing the currency or a big exchange adding the currency to its system. Many cryptocurrency enthusiasts follow various Facebook (NASDAQ:FB) groups and Twitter (NASDAQ:TWTR) profiles to get an edge on the latest news and trending coin. However, this is where a large majority of these schemers do most of their work, aiming specifically at the uneducated investors.
These individuals own a substantial amount of these altcoins and promote these coins heavily within these groups, in hopes that it will incentivize investors to buy in. The marketing of a coin isn’t the issue, it’s what follows that is the unfortunate part. Once the coin hits a certain price point, the lead majority coin holder sells the coin after making a quick profit and causes the coin to plummet in price. Vcash (XVC) has been the latest to be called the biggest pump and dump, among many cryptocurrency analysts.
It may be extremely tricky to differentiate between a pump and dump but its website is a great place to start. If the website is extremely vague and doesn’t display what it does or aims at doing and only displays its price and where to buy it, beware. Now, I’m not saying if it does not have its original whitepaper somewhere on the site don’t invest but if the website gives you no reading material on what the project does, I would be extremely cautious.
PACCoin’s (PAC) website, is extremely vague and even its “about” section lacks any sort of details as to what the project does. The most robust information in the drop-down is its “brand guideline” that goes over the colors they’ve chosen and looks like a teenager put the PDF together. Again, not a good sign.
Now, let’s take a look at its chart on CoinMarketCap.
The chart above is a pretty clear indicator of a pump and dump. However, many dips in price can come from exchange outages but there are two very substantial dips within a short amount of time, which indicates to me foul play. Those large dips indicate a coin sell off and a flood of coins entering back into the market.
In order to avoid a potentially fraudulent situation where you can be taken advantage of, do your research. All of the digital currencies are HIGHLY volatile and a high-risk investment, along with being entirely unregulated. Again, never invest more than you are able to afford to lose and may the odds be ever in your favor.
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