Buying a coin on the first day of listing is quite risky and my personal experiences will reveal why I think so. Cases of rug pulls have occurred in the past with the most recent being the squid game coin. Asides cases of rug pulls, buying a coin on the day of listing is a no for me because of some of the reasons I’ll be sharing in this article.
REASONS WHY I NEVER BUY A COIN ON THE FIRST DAY OF LISTING
Some of my past experiences have thought me that buying a coin on the first day of listing especially on centralized exchanges like Binance and Kucoin is quite risky. This may sound weird but if I am not fortunate enough to get into a project’s presale, I never buy on the first day of launch. Some of the reasons why I never buy a coin on the first day of listing are;
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- MARKET MAKING: This refers to a process where project owners try to manipulate the price of their coin so as to drive FOMO. Most times, when investors see the price of a particular coin mooning, they tend to ape in and buy more. In many cases, it doesn’t turn out well because previous buyers and sometimes project developers get greedy and dump the price of the token. Market making is very much common in the crypto space especially on the first day of launch as project teams see it as a way to attract more investors into buying their coin. Manipulating the price of a coin most times only benefits the project team because it helps enrich the liquidity pool. A project should be allowed to grow slowly and steadily instead of pumping massively in a short frame of time. Personally, I never buy a coin on the first day of launch anymore because of my past pump and dump experiences.
- USE OF BOTS: Bots refer to written computer programs that run automated tasks over the internet. The use of these kind of bots is most common in decentralized exchanges but is sometimes also used in centralized exchanges. Some investors who are quite techy develop bots and point them toward a particular contract address. Since bots are faster than humans, they tend to buy and sell within a matter of seconds. When bots buy, it drives FOMO because the price of the coin pumps. As the price pumps, the bots sell off thereby dumping the price of the coin. For this reason, many developers have gathered a list of known bot addresses and have found a way to blacklist them. I have had an experience with bots in the past and for this reason also, I never buy a coin on the first day of listing.
- PRESALE WEAK HANDS: Most times projects run presale or private sales before listing their token publicly for trading. People jump into presales because the tokens are sold at a cheaper price and it will definitely generate profit on launch. On so many occasions, investors who bought during the presales tend to dump the price of the coin by selling off. This in fact is not wrong because the crypto market is very unpredictable and I would advise anyone to take profit whenever possible. Buying a coin on the first day of listing will leave you at the mercy of the presale investors who will definitely dump if the token price goes up. If you do not get into the presale, it is best to wait for all the dump to occur before buying. This way you mitigate your losses.
- RUG PULLS: Rug pulls have become very common and will continue to occur so long as anyone can launch a token on the blockchain. For this reason alone, it is very important to DYOR before investing in any project. Rug pulls may involve project developers dumping on investors or even pulling out liquidity and doing away with investors funds. I had been a victim of many rug pulls before I learnt to research properly before investing in projects. If you are not satisfied with your research, do not invest in a project. Rug pulls are a major reason why I never buy a coin on the first day of listing.
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MY FINAL THOUGHTS
Investing in projects early enough is cool and of course the best way to make good profits but if you are not fortunate enough to buy during the presale, never buy on the first day of launch. This may sound weird but making just little profits is better than losing your entire capital. It is better to wait for all the pump and dump to occur before finally buying a particular crypto coin. On most occasions, investors who let FOMO drive their investment decisions end up losing. FOMO should not be the principal drive for any investment you make. Instead, do a proper research to see if a project has all it takes to strive in the market.