NEW TOKEN LISTING: A Double-Edged Sword for Investors💡 The cryptocurrency market is a realm of endless opportunities, where prices can fluctuate wildly, shooting up 5-10% in a single day in either direction. This volatility can be both exhilarating and intimidating, as it can either wipe out investors or leave them with a quick windfall. However, not everyone is suited to navigate this fast-paced landscape. For those seeking more conservative returns, there are other options available.
On the other hand, there are those who are willing to take greater risks in pursuit of substantial profits. One such strategy is to buy coins during the pre-sale period and sell them at their initial listing on the exchange. This approach can be lucrative, as savvy investors can capitalize on the initial hype and sell their coins at a significant markup.
To generate buzz and attract attention, many new projects offer their coins for free in exchange for performing simple tasks or purchasing them at a discounted rate. When these coins are listed on the exchange, their value tends to plummet due to oversupply and subsequent sales. However, for those who manage to get in early and sell their coins before the price drops, the potential for significant returns – even 100% or more – is very real.
📍 PRE-LISTING INVESTMENT
Recently, a new earning opportunity emerged in the online space, with BINANCE:NOTUSDT being the center of attention. The project's developers cleverly leveraged their marketing expertise to create a buzz around the coin. As a result, it gained widespread visibility, with numerous media outlets and cryptocurrency channels promoting the project. The idea was to generate revenue by simply tapping on your smartphone screen, with active users potentially earning around $300-$400. However, as soon as the coin listed on Binance, its price took a drastic dip. The price recovered after a few weeks, though.
In a recent analysis of cryptocurrency tokens listed on Binance, it was found that a staggering 80% of new tokens have lost significant value over the past six months. The notable exceptions to this trend are a few meme coins, including BINANCE:MEMEUSDT and BINANCE:WIFUSDT , as well as tokens associated with the Solana protocol.
📍 THE STUDY HIGHLIGHTS THE FOLLOWING KEY REASONS
1️⃣ Firstly, developers often artificially inflate the cost of their tokens by issuing them at an undervalued price, which creates a surge in demand. Simultaneously, they sell their own share of the tokens, reaping the benefits.
2️⃣ Moreover, many coins lack a genuine long-term investor base and a strong community backing. This lack of support can be a red flag, indicating that these coins may be pre-destined to fail as a potential scam.
3️⃣ Furthermore, listed coins often lack growth potential, failing to meet the criteria for a sound investment instrument. Instead, they tend to attract attention from insiders and retail buyers who are willing to take risks and gamble on their investment.
A portfolio comprising newly listed coins suffered an 18% decline in value over the past six months, while the market's blue-chip coins enjoyed significant gains during the same period. This stark contrast has led analysts to sound the alarm, warning that such a phenomenon can have far-reaching implications for the market's integrity.
When investors, serving as the primary source of liquidity, inject their funds into poorly performing projects, they become disillusioned with the entire market. As a result, their money migrates towards established coins, leaving new initiatives struggling to secure funding and ultimately forcing them to shut down. Even innovative ideas with great potential are stifled by a lack of interest and resources.
The solution to this problem lies in stricter regulation by cryptocurrency exchanges, which currently allow unscrupulous projects to exploit the market. However, exchanges are driven by profit, so this issue remains unresolved for now.
📍 CONCLUSION
Identifying a token with potential for significant profit after listing can be a challenging and high-risk endeavor. The key factor in determining success is the interest of investors. If a coin is solely speculative, it is likely to experience a decline in value after listing. Conversely, if a token is backed by developers and has inherent value, it may have a chance to grow. However, with the vast majority of new tokens being scams, the risk of loss is significantly higher than the potential gain from a successful investment. From a risk perspective, this investment model appears unreasonable compared to long-term investments in established coins like BINANCE:BTCUSDT or top-tier cryptocurrencies.
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