CryptoCobain’s Poll Confirms AltCoins Are an Abyss for Users

Social media influencer, CryptoCobain in a poll on how most monies are lost in crypto investment points towards bad altcoin trades

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Altcoin Hazard

A poll by popular trader and analyst, the host of UpOnly.tv, CryptoCobain posted a poll on how most monies are lost in crypto trades attracted 30,304 votes. 41.6% of the votes cast identified bad altcoin trades as the reason for their loss.  https://cdn.embedly.com/widgets/media.html?type=text%2Fhtml&key=96f1f04c5f4143bcb0f2e68c87d65feb&schema=twitter&url=https%3A//twitter.com/cryptocobain/status/1465422198227808257&image=https%3A//abs.twimg.com/errors/logo46x38.png

Altcoins, unlike Bitcoin, are attractive investment choices because of their potential returns. Blinded by the promise of astronomical gains just like the trade that turned an $8,000 investment into a $5.7 billion fortune in less than a year are good narratives that drive the frenzy. Retail investors are likely to rush into altcoins compared to institutional investors. This is because institutions are risk-averse and operate within well-defined mandates.

Surprisingly, poll participants did not identify leverage trading as the main cause of loss. Leverage trades are dangerous because it increases the trader’s risk exponentially by using borrowed funds. Leverage trades have been identified as the reason for massive price swings as leveraged positions get liquidated when the market goes the opposite direction. 

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Hype vs Value

In 2017, the Initial Coin Offering (ICO) mania attracted many retail investors to participate in new altcoins offerings with a common narrative. The new asset will often be labeled as ‘the next Bitcoin’ or ‘the next Ethereum’ to ride on the popularity of established coins. Scams like BitConnect takes marketing to a new level by engaging social media influencers to sell a narrative and to create hype. 

However, not all investors are oblivious to the risks. Investors are becoming increasingly savvy as crypto-assets become mainstream. Different altcoins offer different value propositions. Memecoins are creating a unique niche that cannot be ignored. It imposes an increased risk to the investors but it would also be untrue to say that it serves no purpose. It is a meme and meme culture is a common thing on social media. 

NFTs and Rugpulls 

Non-Fungible Tokens (NFTs) are a relatively new concept. The hype created by NFT has also attracted a lot of retail interest but it does hold a value proposition that is identifiable to an existing niche. NFT has a significant role to play in the gaming and art industry. The use of NFT is expanding because of its unique feature. 

Rugpulls and scams are significantly reduced with better compliance standards. Projects will incorporate platform and security audits as part of their checklist prior to launch. This is an assurance that the entire platform is legitimate and risks are kept minimal. Investors are also more cautious when projects fail to make the proper disclosures or maintain some form of accountability.

Risk Management

It is important to remind ourselves that investments do carry a certain amount of risks. The risk must not be disproportionate to its real returns. Personal due diligence is the best guard against shitcoin, excessive leverage, scams, and rugpulls. 

Source : bsc.news