What is a Shitcoin and how to profit from it. - Crypto Academy / S5W8 - Homework post for nane15
introduction
Seasons greetings steem community as the year is starting I wish all those who are reading this a very beautiful 2022 and answers to their private
intention, most especially I pray for my prof @nane15 thank you so much, for all you have done for us last year. The reward of a teacher can never be paid nor compensated for.
The topic of this weeks lesson is very fascinating, because its something we are all familiar with. Most, if not all of us have engaged in one or two Shitcoin investment.
From this week lecture I have gotten a better understanding of what shit coins are and as proof I would be attempting the following questions.
1. Explain your understanding of what a Shitcoin is.
answer
In my understanding the term shitcoins are given to projects with no real logic and function behind them. They are so many shit coins in existence, this is because the process of making coins are so easy that anyone with a little bit of computer knowledge and time can make a crypto token and what this leads to is the mass creation of coins by literally anyone, this coins are then giving enticing names to attract investors. Often times the also claim to have solved the block chain trielma .
Since the creation of Bitcoin in 2009 we have seen almost 200 new coins being released each month. These coins come out with exciting new claims about the block chain trielma and having solved it. But in actual fact most of these coins coming out everyday are shit coins and can be identified from the following characteristics
Characteristics of shit coins
Low volume
Unlike popular coins such as btc with trading volume of around ~$2.6billion per day .
Shits coins have low trading volumes of around $1-$10k per day. This is because they do not have a strong support base and not many people make use of it.
The trading volumes of a coin can be identified using coingecko we should be watchful for those tokens with low trading volume as they are most likely shit coin.
Management
They do not have a strong management team behind them most times they are created by amateurs who do this just for fun or to scam innocent victims. In identifying a shit coin always check to see if it has an official website and also if it has a phase of actions.
Satire
They made in satire to real coins which serve real purpose. When doge was created it was in comparison to btc and when shib coin was created it was in comparison of doge coin, from this we can see a trend you notice they are lot of coins in the market with dog avarters this is because it's been noticed that people tend to warm up to dogs.
Worth
The easiest way to identify a shit coin is looking at its worth.
shit coins can be recognized by their worth.
They do not have real monetary value amd they are priced at < $1 with just a little amount you can own million of the coin, isn't that fascinating.
2. Do you think it is possible to profit from investing in Shitcoins?
answer
Yes
Trading in shit coins can be very profitable
Shit coins generally move in an eratic pattern .
Investing in shitcoins can see an investor make an astronomical amount of money in the short term. The volatility in the shitcoin market makes it very easy to double ones money on the short run, that is if your on the right side of the trend this is because shit coins can move as high 100% of their entire value in a single day. It is also very possible for a shit coin making a 300% increase in a day.
Hence in my opinion shit coins is a very profitable investments but we should apply caution and discipline while investing in such assets, this is so because of the volatility of the market, in as much as we can make so money from shit coins the possibility of losing it all is always present hence investing in shit coins should be seen as short short investment for making quick money (in and out) it is not a long term investment where we would want to hold on to
Reasons why shit coins can be profitable
Low trading value
With the volume of trading so low any major buying pressure can see price skyrocket to the upside. Hence it makes it easy for price to increase astronomical and allowing us to make profit.
Little capital
With Little money, you own millions of shit coins and when the price increase you stand the chance to make alot of money.
3. List advantages and disadvantages of investing in Shitcoins.
answer
We know that shit coin can be a form of investment which is very profitable and with investments come the risk of losing money hence shits coins have their advantages and their disadvantages which we would be discussing below.
Advantages
1.Cheap
Investing in shit coin doesn't require one to be a millionaire or very rich in fact we can invest in shit coins with as little as a $10
This is so because shitcoins are generally very low in price because they aren't pegged to any fait currency.
Depending on this shit coin you choose to invest in $10 could give you a million of the said token wouldn't that be amazing saying I have a million.
2.easy to invest
To invest in shit coins one doesn't have to be a rocket scientist it just requires basic knowledge and understanding of charts patterns.
The process has been made so easy that buying a shit coin can be done within 10 minutes.
Unlike stock investment which requires you setting up an account and providing an array of documents, shitcoins require none of this are they can be easily bought on various decentralized excahges such as pancake swap, uni-swap e.t.c.
3.high returns
The returns on shit coins are very high, this is so because their movements erratic when they go up they go all the way up there is no retracement period during upward swings in shit coins. This is because the movement are fuelled by crowd mentality. When people hear a shit coin is going up they come and buy, adding to the trading volume causing price to go up.
Hence with shit coins there is a very high chance of you making 100% returns on investment in a very short time.
4.unique movement pattern
Shit coins are very unique in the sense that giving during a strong crypto bearish market you still see some shit coins making 500% gains in a day they do not really follow the crowd behavior that most coins follow that being said you can invest in a shit coin at any point even during a bearish market and see profit.
screen shot from binanace
From the image above we can see an example of a coin making highs even admist the bearish market.
Disadvantages
1.High risk
They risk involved in shit coins are very high
They are so mant factors in play when dealing with shit coins and often time this factors affect the price of the coin, dealing with shit coins the possibility of losing all our invested capital is always present.
2.Move eratic
The movement of shit coins goes against technical analysis as they are easily swayyed by the news and what is going on around the world. Hence as a trader investing in a shitcoin you might have done all the necessary analysis that a certain shit coin is going up and Elon musk says he doesn't like the shape of the token avatar you will notice that there would be an immediate sell of coin which would cause you to loose your money.
This makes the maket high unpredictable and eratic
3.Scams
It's not unheard of to see that alot of shit coins have been scams. The ease way which shit coins can be made and the sketchy figures which create them often serve as red flags indicating that such coins are scams.
They are various scams and rug pulls which have occured over the years such as squid game token, aumbis, safemoon e.t.c
4.Short term
Investing in shit coins are only good in the short term they aren't profitable when looked at on the long-term this is so because they move in pulses up-down-up-down going from all time highs to all time low back to all time high just anticipating the the pump and dump.
Hence investing in such a coin for long term would stack the chances against you making profit.
5.Pump and dumps
Shits coins are usually preys to pump and dumps this is so because of their low trading volume which makes it easy for a group of individuls connive amongst themselves to pump a coin so as to attract unsuspecting investors to invest in such projects. When this happens they pull a rug pull and the value of the coin declines astronomical leaving alot of investors caught off guard. We often hear of shit coins which went up 500% a day and the next day they are down 600%.
6.Not secured.
Shitcoins are not secured they are preys to hacker often than not you hear about a shit coin wich was hacked and huge amounts of the coin stolen.
Having discussed tbe various advantages and disadvantages of shit coins it is up to any one who wishes to invest in shit coins to make his own mind on whether to invest or not to
4. least 3 examples of Shitcoin that have been a scam, also explain what they consisted of.
answer
Scams in crypto coins are not a new thing they didn't start out today, they started as far back as the origin of the first crypto coin in 2009.
After the introduction of bitcoin and the eventual boom of bitcoin around 2017 many people cried and complained over the fact they missed the opportunity of a life time, this is so because at the time bitcoin came out it was sold for little over $.003 meaning that $10 investment would mean 33,333 btc right now which is worth over ~$2.1 billion at btc all time high.
Having this in mind I will briefly examine and explain to you some popular scams which have occurred recently and why this scams have continued to occur.
Omicron token
This token was launched on the ether blockchain early November 2021 with a finite amount in circulation at 10,000 and an initial price of ~$15.
This token was given the same name as the omicron covid 19 variant, too much of a coincidence you would wonder‽
The announcement of the new covid 19 variant which shared a similar name to this token saw the token gain popularity quickly, the price of the coin rose dramatically as everyone was interested in buying the coin it saw the price reach and all time high of ~$712 which was about 1000% increase in just matter of days but like all things that come fast goes fast, within just 4 hours of reaching an all time high the rug was pulled from underneath retail investors and the price began to fall astronomical from $712 to $412 in just 4 hours on the last day of the month the price fell to $210.
The price has been in a steady decline since then and presently trading at around $15 it is unlikely the price would ever go up again.
Omicron token was a great scam as it paid attention the current socio economic trend of the time the token didn't solve any problem, didnt have any real use and it was no way in associated with omicron variant. it was a name that was carefully orchestrated to mimic omicron which would lead people to invest based on impulse.
Santa coin
Like the name Santa coin it was developed in early November in anticipation for Christmas the coin served no real purpose and was a deflationary token meaning with as little as $1 you could get almost 400,000 token.
Since the creation the coin the value has been dropping and this is because it has no real use and was only dependent on catching on to the trend of the time which was Christmas season to get people want to buy into it.
I must admit I my self nearly bought into it, it was assumed that the value would rise astronomical on Christmas night buy sadly it didnt and Presently the coin is fading away
From the image above we can see that the 24 hours trading volume of this coin is just little above ~$2000 which is very low and also the price since it's introduction has been falling and in the last 60 days it has lost roughly 30% of it's value.
Anubis DAO
This is a dog term representation of a coin just like shib and doge coin. Like all scam token it served no real purpose it's primary goal was to leap onto the popularity of shib and doge coin, which it did. The coin was launch on a Wednesdays through an ieo on copper (centralized exchange) the ieo was to last for just one day, and in just one day they raised ~$60million this was due to two factors first being that shib was at an all time high and second being fomo (fear of missing out ) many investors who had missed out on investing in doge and shib felt anubis was the next big thing hence they quickly keyed in on the ieo
Now what follows next is still a mystery, after raising such huge amount of money in one day between the Thursday and friday the whole money was gone.
Now to understand what i mean by this and the implications
During ieo you give your money to an exchange in return for the token before it is released to the market the money is then transfered from the exchange to the token creators into the liquidity bootstrapping pool (LBP) from there the project can be financed. In the case of anubis what happened was that the LBP was allegedly hacked and the entire money which was generated was stolen. This saw an immediate tumble of the price to $0. Making the coin worthless everyone who bought into the coin lost thier money.
The blame game has been going on for a while now from users -exchange who clam that the exchaged should have done more background test.
The exchange claiming they did do the necessary background test, the producers where popular figure on the difi world so they wouldn't have known.
Exchange - creators that thy pulled a rug pull and the creators stating they were hacked via a suspicious email.
summary
What is clear is that no one is ready to take the blame and that majority of the investors don't carry out thier own personal research on shit coins they are lead by herd mentality and the fear of missing out(fomo) this makes it easy for scammers to keep operating.
5. Explain at least two examples of Shitcoin that have been successful and are currently keeping it. (Other than Dogecoin or Shibainu).
answer
When we talk about successful shitcoin we are referring to coins which have been realseed into the market and are doing well and have some sort of relevance in the market which makes them to able to sustain thier prices and build a strong base of dedicated supports who truely belief in the project.
Unlike the coins above which have been obvious scammed they come, trend for a few months and then are gone into oblivion, this coins I will be talking about have been around from as far back as 2019 and are still active they having gone far above thier initial prices.
1.Troy
This is Global Prime Broker Specialized In Crypto Trading And Asset Management establshed on November 25th 2019 and founded by Xu Yingkai a Chinese man.
The troy token was launched in 2019 it underwent two phases othe first being the private auction which generated ~$8.4million for 12% of the total supply the next phases was the IEO which was conducted on binance this rasied ~$4million for 4% of the total supply. This two sales where done on August and November respectively
Key problems troy aims to solve
Localized brokerage services for different regulatory policies and user habits across geographies.
Diversified cryptocurrency baskets across exchanges also calls for cross-exchange settlement.
From the image above we can see that troy has made an increase of 230% in the last year and has a market cap of ~$17million and a 24hours trading volume of ~$2million.
2.Mana
This crypto token was established in the year 2019 one of reason why this coin has been a success since it's inception is due to the fact that it serves a purpose and it is limited in supply. Scarcity creates demand which creates value .
The total supply of mana token is pegged at 2 billion which means that after the 2billion quota is reach they coin wont be mined anymore also in addition to this the coin is also used on the virtual reality game (decentraland )to purchases land and other goods.
From the image above we can see that in that last 1year mana has made an increase of over 3000% and has a market cap of ~$4billion and a 24 hours trading volume of ~$2billion.
6. Perform a historical analysis of the prices of any of the cryptocurrencies that you chose for the previous question. (Use screenshots.)
answer
Historical anaylsis of mana/usdt
mana/usdt||trading view
This first image shows that mana is somewhere between the all time high and the all time low
This indiactes that so far the price of the coin is stable in the sense that it is not doing soo bad as it has managed to maintain a substanial amount of disbatce from the all time low. More impressive, when we consider the overall trend of the crypto market which is bearish about $700billion has been wiped off from the crypto market.
mana/usdt||trading view
This second image shows mana on the 4 hours time frame here we conduct our detailed anaylses.
Looking at the chart
From the beginning we find out chart was on a nice uptrend making consistent higher highs and higher lows this happened up until it got to the all time high of $5.1 from this point price started making lower lows and lower highs indicating that a downtrend has begone
This came to an end when the price got to the support region 1 of $3.1 which saw a break in structure, price made a higher high and the price ranged a bit around this region.
What happens next in this region would prove to determine if the price of mana would go up to the all time high or go below to the all time low.
For now we can see that both support 1 and support 2 have been holding excellently keeping price within this level admist the bearish overall market
7. Based on your previous analysis, what do you think will be the development of the price of the cryptocurrency for this year? Be creative when explaining.
answer
From my previous anaylsis I think the price will move in either or the following ways.
Presently we have seen that both support 1 and 2 have been very strong and the price hasn't been able to get a clean break away. Which is very interesting when you look at the present trend in the market. You see btc bnb,eth, etc all breaking key support regions and making lower low.
mana/usdt//binance
Today mana is one of the best performing coins which saw mana gain 18% this was as a result of the price getting to the support region 2.
From anaylses above In my opnion
The price of mana is going to go up and is going to break the all time high this year. Now as to when this break out might occur it could either occur right now at the support region 1 or later at the support region 2
I would favor the later cause the crypto market is in a bearish run and I don't see any big moves like subsistence higher highs coming.
mana/usdt//trading view
My potential trade set up for mana can be seen above:
Go in at $2.5 set my sl at $2.2 and ride this all the way to the all time high at $5.1 this would give me a 1:5 risk to reward ratio.
All screenshots are taken on my device
Conclusion
In the race to make money it's not everytime that we get to settle and understand all that is going on.
We see an opportunity that everyone is using and we take it.
I feel that is what we have been doing with the whole crypto currencies, not many are ready to settle down and anaylses what it is that they are investing their money into. We are guided and controlled by our greed and the promise of making it big fast.
I am in no small means grateful to prof @nane15 for taking your time to educate us about shit coins.
Thank you Prof I hope I have been able to answer all questions to your taste.
