Why it’s not a good idea to buy a rapidly growing asset and use highly leveraged debt. And under what conditions do most new users lose money because of Whales

Many cryptocurrency users believe that big investors, known as Whales. They use media hype and technical manipulation of cryptocurrency exchanges for their own profit. It is believed that the income received from such actions, Whales receive at the expense of losses of many smaller investors.

Crypto-Upvotes experts told us what schemes Whales use to manage prices in crypto markets. And how not to fall into a trap prepared by them.

Our experts tell us what manipulation schemes Whales use

Whales use the same schemes to manipulate the price of an asset. As do most famous investment funds or banks on the stock market. In exchange trading and speculation, psychological factors always matter. It is enough to leak FUD about problems of this or that crypto-platform. As their tokens begin to decline in price. Also our Crypto-Upvotes experts give an example of tweets of Elon Musk. After which the value of some “meme” cryptocurrencies quickly rises.

Another popular method of manipulation is through volume sales or purchases of assets. Selling can stimulate a decline in the value of BTC and other coins. Or be a signal that the price will start to fall. A large purchase of an asset by an institutional investor could be the result of insider information. And predict a rapid rise in price of coin.

There are quite a lot of opportunities to manipulate the price. Informedness of exchanges themselves allows Whales to create conditions for short-term price changes. Clients of some exchanges say that after making the first serious profit on margin accounts (futures contracts). They have problems with opening “sell stop” and “buy stop” orders. Which automatically and unnoticeably for trader change to other types of orders. For example when BTC quotes were balancing near $20,000. FTX clients began to complain about the inability to place buy orders below that level. Because their prices “are out of the range calculated by this platform”.

Another way to manipulate without direct sales. Is to create “walls” of buying or selling. By setting high volumes to sell at lower market limits. It forces those who want to sell to lower their prices quickly. After that price falls and the “wall” goes even lower. In fact, Whale is not even directly involved in trades in this scheme. But he provokes other traders to conduct transactions under much worse conditions for themselves.

How not to fall into trap prepared by Whale and not to lose your money

A huge number of bull and bear traps are created specifically to take money from new investors. Therefore, investors without experience are advised to engage in long-term investments.

Therefore, we should not be focused on actions of large investors. You have to follow their actions, but don’t try to repeat all their actions yourself. That way there is less chance that Whales will use you for their own goals. And forcing you to buy or sell something. Make your own decision, not influenced by tweets from Elon Musk.

There are several questions about cryptocurrencies and BTC that are popular among newcomers to cryptoindustry. We explain what’s wrong with them and why it’s better not to ask them.

Those wishing to start interacting with cryptocurrencies often ask the same questions on the topic of buying a particular cryptoasset. It is these questions that are practically taboo in many communities professionally dealing with cryptocurrencies.

Considering such uncomfortable questions, as in case of damaging advice, will help to better understand how to do right. And also improve your understanding of the basics of investing and trading cryptocurrencies.

The most popular question: Buy BTC for $20,000 or not ?

Whether to buy BTC at $20,000 or similar questions about other crypto assets is the most popular question. It is impossible for professionals working with blockchain assets to answer such a question in one word or even a few sentences. For a satirical analogy, a fictional situation could be made. In which a person would walk up to a doctor on a street and ask if they should take a cough syrup. Without having proper information about an individual’s situation and some analysis of all available data. This doctor would not be able to answer yes or no to such a question.

Exactly the same situation for crypto experts and traders sounds questions about whether, for example, to buy ETH at $1,000. To answer such a question, a specialist will need to know a lot of information regarding the situation of a “new investor”. Does this new investor already own cryptocurrencies. If so, at what prices he bought. And is he familiar with the basic principles of investing and money management. Does he know all the risks of any crypto investments. Whether this investor is planning a short-term position or an investment in a long-term position and many other questions.

In order to correctly assess the situation and allocate the right share in the portfolio to a new asset for this investor. It is also desirable for a crypto expert to know the total amount of already existing and potentially possible crypto portfolio.

As you can see from the nature of questions, a conversation like this definitely won’t fit into a few sentences. This kind of communication also implies a certain level of trust between people. Which should be based on a mutually beneficial contract, or a friendly or family relationship.

Next popular question: Which project will go to the moon?

The next category of questions is requests for evaluation of certain investment ideas. Unfortunately, a lot of users are often ready to invest all 100% of their deposits in one project. Most often it is a new project advertised by marketers. And they don’t have even one reliable sector in their crypto portfolio – BTC, ETH, BNB, ADA, SOL, DOT and others.

Can a crypto expert definitely answer questions about investment attractiveness of this or that project? He can, but a detailed answer will definitely take more time. Than a conversation over a cup of coffee and will be more like an audit service – due diligence. Which includes drawing up an objective vision of an object of investment. Assessment of investment risks, a complex study of project activities and a complex check of crypto-market.

All of above mentioned applies to classic investing as well. However, in addition to these points, blockchain due diligence will also include research into where best to store crypto assets. As well as studying the issues of passive income through stacking. Or other similar mechanisms, if a long-term investment is planned.

Let’s make a conclusion

Having considered the most popular questions, we can conclude. That in most cases, if a person asking a question has a serious intention to start investing in cryptocurrency. He will need to take enough time to educate himself in this matter. Or take advantage of a paid consultation from a crypto specialist. It is also worth noting that professionals working with digital assets like to get new information from any source. Therefore, they will treat any question better if they add some interesting fact to it. Or their own observations on the market situation, made on the basis of their own research.

Another reason why traders and analysts do not like to give advice. It is hidden in the fact that any advice must be able to be realized. A newcomer receiving even an accurate signal to buy can do otherwise. And a simple situation for an expert will be catastrophic for a newcomer. Because of excessive manipulation of leverage. Or due to incorrectly set stop-loss and take-profit.

So, recommendation to buy BTC or other crypto asset at a certain price can lead to a lot of negative consequences. And a newcomer will then start accusing his failure of advice provided by a crypto-expert. If price goes up, but just a little. Then newcomers will say that they have not gained enough money. If price goes up, but not immediately, they will say that they could have bought cheaper. Even more predictable will be the reaction of an unprepared cryptocurrency buyer to long-term price moves below entry point before the start of growth. By the time growth starts, new trader will already sell everything at a loss. Therefore, our Crypto-Upvotes experts recommend to study everything carefully by yourself. And contact only professional cryptocurrency traders.

Our experts told what marks should reach price of BTC to continue recovery.

Last weekend, bitcoin continued to grow and by Monday morning passed $22,300. And on July 18, BTC is trading at $22,200, up 3% on Monday. And for one week – by 8.7%.

Incomplete week from July 11 to July 15 was not easy. In the first half of the week the pair BTC/USDT declined to $18,900. The fall began on July 10 and intensified on Monday amid a sell-off in US stocks. Investors were withdrawing money before release of important inflation data and beginning of II quarter reporting season in USA. Also, fall was due to increased number of Covid-19 cases in China.

On Wednesday, the situation on crypto market stabilized after multidirectional fluctuations. Sharp fluctuations were caused by the report on inflation in the USA for June. Buyers were able to defend the $20,000 level and close a day at $20,234. US inflation data raised fears that Fed could raise key interest rates by 100 basis points this month.

After the statistics were released, S&P500 and Nasdaq indices declined, but recouped some of their losses. The market did not collapse as two Fed officials said they were in favor of a 75 basis point rate increase in July. This reduced chances of a more aggressive move on the latest inflation data. Market is ready for a 75 basis point increase.

On Thursday, BTC/USDT recovered to $20,900. On Friday, the price recovered to $21 thousand following US indices. During this day situation did not change.

Market is controlled by sellers. BTC hashrate fell 27% to 159.41 EH/s due to the shutdown of miners in Texas. For miners and market, this is a bearish signal. Investors still fear a collapse of BTC to $10, 000-$13,000 range.

Our Crypto-Upvotes experts made a technical analysis to beat a bear market after reaching price of $22,000. Buyers need to pass a level of $23,500. Than faster it will be passed, the more probability of recovery to $26,500 is higher.

Now there are many blockchain-based Do-to-Earn platforms offering earnings for activity. Experts at “Crypto-Upvotes” told what prospects such startups have. And what risks for investors exist.

Do-to-Earn projects are becoming popular they allow you to earn from some action, from participating in a game to walking and swimming. Play-to-Earn projects are blockchain-based games where users get tokens for completing tasks. Upgrade their characters or breed pets.

There are projects that pay for singing (Sing-to-Earn), working with documents (Write-to-Earn), and even sleeping (Sleep-to-Earn). Learn-to-Earn platforms offer users to earn money by learning a foreign language.

Interest in such applications, fueled by marketers, is growing every day. Experts from Crypto-Upvotes discussed the prospects of this industry. And he discussed about risks that an investor may face when working with tokens of such projects.

Easy money or good marketing work that hides high risks

Every year people fall for the promises of big profits that such projects offer. Do-to-earn projects came from the gaming space. People bought items in games for status or utility in a game world, our expert told us.

The very phenomenon of Do-to-earn captures gamblers and lovers of easy money. This explains the variety of subspecies of decentralized games. Some projects due to the great hype of their project allow investors and players to stay in profit. When the whole cryptocurrency market has been in a bearish trend for several months. And the number of such projects and their various subspecies is growing very fast. But among newcomers in market, a significant part of startups are inherently unprofitable or even scam.And yet our experts are confident that success of these projects has short-term potential. And it is related only as long as a project has good marketing.

Is it possible to profit from Do-to-Earn, opinion of our Crypto Upvotes experts

The collapse of such projects is inevitable?

In 2021, this segment moved to a new stage – the promise of tokens for physical activity. For example, the most popular project is STEPN (an app where gameplay is built around digital sneakers in NFT form). Our expert asked some simple questions. “Why would a project pay for your physical activity? Why would it spend millions of dollars on advertising? Are project creators working at a loss to themselves. And dreaming that everyone in the world would improve their health?”.

The answers to these questions are very simple. As long as the project remains popular, users buy sneakers and tokens. And thousands of new people around the world pour their savings into the pyramid. But the collapse of such a project cannot be avoided. And whoever doesn’t manage to sell tokens at the right time will be at a huge loss.

Nevertheless, our expert thinks that you can make money on such a project and come out with a profit; the main thing is to sell in time. This is possible because millions of dollars are invested in the project, both retail investors and large players.

But the long-term perspective of such projects is doubtful. In his opinion, the profitability of such games is directly related to the liquidity of game tokens. Which, in turn, depends on adding new players to the project. Do-to-earn projects are very similar to classic “Ponzi schemes”. Although their profit distribution principle is different.

Such games continue to be profitable only as long as there is hype and media activity around them. They provide a sufficient influx of new users. But as soon as ATH is reached, a project can go down and never come back up again.

Crypto projects often hold Airdrop promotions to give away their own tokens. What to pay attention to when choosing a project in which you want to participate.

Free token distribution or AirDrop – is one of options to get initial capital in cryptocurrency. But it can hardly be considered a stable way to earn money. In fact, no one guarantees that received free tokens will bring profit.

Most of free coins from new Airdrop projects can only be profitable in the short term. Free coins from famous projects can be used in a long term perspective. However, experience with Airdrop can be a source of insight into how cryptocurrency markets work.

What is AirDrop

AirDrop is a promotion for giving away coins for free after completing necessary conditions. A crypto project holds AirDrop cryptocurrencies to raise awareness and attract new potential investors. Most Airdrop launches are new startups or large companies that promote their new products.

Cryptocurrency is credited directly to users’ wallets if they meet certain conditions. Conditions can be different, such as registration, subscription, recruiting friends, and other simple tasks.

Why crypto projects hold Airdrop

Basically, AirDrop is conducted as a marketing campaign to attract attention to the project. Cryptoprojects use giveaways as a way to increase the number of holders.

Another option for AirDrop is to give away control tokens. In addition to their monetary value, these coins give their owners a say in decisions regarding the project. The project community makes decisions by voting. And the number of votes is proportional to the number of shares each token holder has.

How not to fall victim to scammers

A distinctive feature of AirDrop is that the distribution of coins is free. If the developers of a project make participation a condition of any financial investment. Then such an offer can be a scam. Participating in a giveaway may only require a financial investment if it is a DeFi project. Which work on such a blockchain, where you have to pay a commission to a network for transactions itself.

Scammers may ask you to pay a fee to “unlock” free coins you receive. Or make them buy a small number of these tokens first. In order to get more of them in next Airdrop giveaway.

Sometimes the user is asked for credentials to log in to a scam site when registering for a program. Or cryptocurrency keys or other personal data. Having received such information, scammers immediately use it to steal funds. Using this scheme, scammers use many different excuses to obtain confidential information.

Another variant of scam is requests to download “special” software. Or providing links that, when clicked, install malware. Most often such messages come after registering on fake sites of famous projects announcing AirDrop.

Scammers also use coins with names similar to famous tokens. In such cases, user receives a large number of coins to their wallet. In fact, it turns out that in order to get these coins you need to go to a scam site and connect your wallet. But you can’t do that because as soon as you connect your wallet you lose all your money.

If a crypto project offers you a very large amount of money for doing simple tasks. Then you should also be suspicious about such a project. In any case, having decided to participate in AirDrop. You need to carefully check all information about crypto project and conditions of participation in giveaway.

Where to find information about actual AirDrop

A lot of information and advertising channels in messengers and social networks publish announcements about free token giveaways. However, it is not always possible to trust such sources of information.

The best way to learn about AirDrop may be to visit the official websites of famous cryptoprojects. Or their verified social media accounts. Our Crypto-Upvotes experts recommend you to be careful and always study projects before deciding to participate in Airdrop.

Even experienced investors sometimes find it hard to know which of the many young crypto projects is worth investing in. Our experts explain what kind of returns startup coins can bring. What is IDO and where their liquidity collections take place.

Raising capital for companies from a wide range of investors is a critical mechanism for creting new businesses in today’s economy. Crypto assets market is no exception and has its own formats similar to IPO model.

Almost everyone who has encountered cryptocurrencies knows what an ICO is and what happened to this market in 2018. In fact, ICO market is dead after the 2018 bubble, subsequently SEC severely restricted them. Statistics say that about 90% of all ICO ended up failing.

But having gone through a crypto winter, crypto market did not get rid of the natural need for liquidity inflows to nascent projects, which is where the new era of IDO and launchpad started.

To participate in IDO of a project, you will need, as in case of IPO, to get an allocation to buy tokens at a low price before their release on exchange. This is where the main investor profit is hidden. Launchpad already has quite a few – more than 70 platforms. As of today, almost $1 billion has been raised through them. And the average increase in investment was X25. It looks very good for investors, but there are big risks hidden here as well.

Analysis of IDO profits on several major launchpads

We decided to check some of major launchpads (Polkastarter and DAO Maker). And analyze their data based on Cryptorank data. Despite popularity of these platforms, we can immediately notice that each of them individually does not raise hundreds of millions of dollars. On average by platform, each project raises about $261,000. The average profitability on 2 platforms was 5%. In fact, this is the yield since the listing of project. In this material, we provide figures as of early June. When bitcoin was trading above $30,000 and cryptocurrency market was not at bottom as it is today.

Our Crypto-Upvotes experts decided to take a detailed study of one of most popular launch pads – Polkastarter.

The largest number of projects that raised funds on Polkastarter belong to the DeFi category. A total of 38 DeFi projects were placed on the platform. Of these, only 21% did not fall below listing price at end of day. Also of note are the indicators related to token price at historical highs (ATH). Indeed, if you held any new token placed on Polkastarter DeFi for an average of 21 days. You could hope for yields as high as 4,900%. But given the “survival rate” of projects, that would be a veritable casino with no chance of a fundamental prediction.

Most optimal IDO segment on Polkastarter turned out to be the projects serving the blockchain infrastructure. They showed lower returns on almost all metrics. However, with a more limited sample of 11 projects, 27% of projects traded above listing price as of early June, which is the best result across all segments of this platform.

Conclusion

It’s been 4 years since ICO bubble burst, 2 of which turned out to be very “depressing” for the crypto industry. On average, on the 2 largest launchpads, 73% of all projects today are trading below listing price. Thus, participating in project offerings on launchpads for long-term investors seems like a bad idea. Launchpads can be seen as part of a risky portfolio and sell project tokens for a very short period of time after they go to exchange. You should also be extremely careful when buying new project tokens. Once a project has been launched, you have little time to make a decision to sell. You run risks ending up with a token belonging to the same 73% of projects that are now selling below launch price.

Our Crypto Upvotes experts remind us of meme tokens and explain why they can show growth in medium term.

During Crypto Winter, there are many negative forecasts in market at the moment, high “fear” index of investors and tense situation on cryptomarket, we suggest to focus on tokens with high social resource and low fundamental component in mid-term planning. Assets that fit this category perfectly are “meme” tokens.

Disclaimers: Our company “Crypto-Upvotes” does not give investment advice, this material is published for introductory purposes only. Cryptocurrency is a volatile asset that can lead to financial losses.

What cryptocurrency to buy now during Crypto Winter, our experts offer an asset allocation scheme if you have a few extra dollars that you can risk:

• Dogecoin (DOGE) — 30%;
• Shiba Inu (SHIB) — 25%;
• Floki Inu (FLOKI) — 15%;
• Dogelon Mars (ELON) — 15%;
• Baby Doge Coin (BABYDOGE) — 10%;
• Saitama V2 (SAITAMA) — 5%.

Success of most “meme” projects is that they parasitize on Elon Musk brand. Tweets of this billionaire have repeatedly provoked the growth of traders’ interest in certain cryptocurrencies. And most often these were “meme” tokens. For example, Musk has repeatedly explicitly stated his support for Dogecoin. And his Shiba Inu puppy is named Floki, which developers of these projects successfully speculate on.

Among the negative aspects of such an investment portfolio are only its unpredictability. Because growth of token “memes” occurs suddenly and without reason. Such crypto assets are hardly suitable for long-term investments. But they can be interesting in periods of crypto winter.

We should also not forget about the DOGE-funded launch of a satellite to the moon, the exact date of which can be announced at any time, which is likely to cause a strong price increase.

Another project in our portfolio is Saitama. It is not directly related to Musk brand, but the number of mentions of this token in news has increased lately, which could have a positive effect.

Warnings about risks when investing in meme projects.

It is almost impossible to make accurate predictions about price of “meme” tokens. Their cost depends directly on the hype created by a certain group of investors. Therefore, it is difficult to predict their growth or decline with a high degree of probability. This forecast is based mainly on personal experiences of our experts and empirical data from past investment periods.

“Meme” tokens grow rapidly because retail investors buy them en masse, which raises their price through trivial technical market mechanisms. But as soon as these investors sell their tokens and move on to other assets, the price drops noticeably. In fact, “memes” are often accompanied by “Pump and Dump” schemes and less often the increase in activity yields long-term results. This should be taken into account when organizing a portfolio. You need to constantly monitor the actuality of its price, so as not to miss a good moment to exit.