Beware of Crypto scams- Rug PullsWith the crypto market on a strong run since October of last year and with many dreamers hoping for 100x or even 1000x returns, we must be extremely cautious of scammers.
In this article, I will explain one of the most common types of scams: Rug Pulls.
The term "rug pull" in the cryptocurrency industry refers to the moment when the founding team abruptly abandons the project and sells or removes all liquidity. The term originates from the phrase "pulling the rug out from under someone," meaning the unexpected withdrawal of support.
In 2021 alone, during the previous bull market, rug pulls were responsible for losses of approximately $2.8 billion, a figure close to historical highs and an 81% increase compared to 2020, according to a report by Chainalysis.
The cryptocurrency market is susceptible to such scams due to the lack of regulations from central authorities. Unlike traditional companies subject to strict government control, the decentralized nature of the crypto space allows for complete control by private entities. This makes it vulnerable to exploitation by these entities.
Types of rug pulls:
Liquidity Theft:
Liquidity theft is the most common type of rug pull. It involves a developer listing an altcoin on a decentralized exchange (DEX) where it can be traded with a top currency like Ethereum (ETH). To enable trading, the developer must create a liquidity pool.
The team generates hype around the new project and attracts investors. As more investors join the project, the coin's price rises, attracting others who believe the project is a viable opportunity. As the coin increases in value, the developer withdraws all ETH from the liquidity pool at some point, leaving investors in the pool with no way to exchange their now-worthless tokens.
Technical Manipulation:
Some developers intentionally design tokens with the aim of deceiving investors. Therefore, they will include specific lines of code to limit the ability of retail investors to sell, thereby controlling both demand and supply. Of course, they are the only ones capable of selling, and when the price has appreciated sufficiently, they will sell all the tokens they hold.
Dumping:
This means that developers or promoters who hold a large percentage of the total coins sell off their entire holdings. As new entities invest in the new cryptocurrency, they exchange their valuable cryptocurrencies such as BTC or ETH for the new cryptocurrency. As a result, when the price increases significantly, developers sell off all their tokens, causing the price of the cryptocurrency to plummet.
How to Protect Your Investments from Potential Rug Pulls?
Lack of a Website:
Not all projects start with a website, but many that intend to exist for a long time do. If the developers of the token you want to invest in don't have a personalized domain for their project, this is a clear warning to stay away. There are also fraudulent projects that have websites claiming to be under construction or launching soon.
Check the White Paper:
This is an excellent way to learn about the plans of the project you want to invest in. Check for the existence of such a document, as well as any discrepancies between the white paper and the website. ALSO, VERIFY IF THE TEAM IS AVAILABLE TO PROVIDE INFORMATION ON PLATFORMS SUCH AS REDDIT OR TELEGRAM. If a developer cannot answer basic questions about their project, this raises major red flags.
Anonymous Developers:
While the identity of Satoshi Nakamoto, the developer of Bitcoin, is not known for certain, the fact that a project you want to invest in has anonymous developers should raise concerns. If the developers of a cryptocurrency or DeFi project choose not to associate their names with it and remain in the shadows, they may have reasons for doing so, and it's best to avoid such a project.
Low Liquidity:
Low liquidity of a cryptocurrency means that it is difficult to convert it into fiat currency; therefore, the lower the liquidity, the easier it is for developers to manipulate the price. The best way to check the liquidity of a cryptocurrency is to analyze its trading volume over the past 24 hours. A general rule used by experienced investors is that the trading volume should be more than 10% of the coin's market capitalization.
Locked Liquidity:
To provide trust and enhance the public perception of their legitimacy, developers of serious projects will relinquish control over the liquidity pool by locking it in the blockchain often with a trusted third party. This process is called locked liquidity and prevents developers from trading with tokens from the pool, thereby making it impossible for them to steal or dramatically reduce liquidity. If liquidity is not locked, then nothing prevents developers from withdrawing their funds.
Low Total Locked Value (TLV):
TLV is another reliable measure to verify the legitimacy of a project. This term refers to the total amount invested in a particular project. Serious projects have a TLV of hundreds of millions or even billions of dollars, while newly emerging projects with only tens or hundreds of thousands of dollars in TLV should definitely be avoided.
Token Distribution:
Checking the token distribution of a project on Etherscan or Binance Smart Chain explorer will show who holds the largest amount of tokens and how they are distributed. If a single wallet or two hold more than 5% of the total available, there is a risk that the price may be manipulated.
The Project lacks an Audit Report: The most notable projects will have independent audit reports in the fields of security and financial transparency, guaranteeing their authenticity. A project without an audit report is not necessarily fraudulent, but it means that you should research the project in detail before investing in it.
Losing investments through a rug pull is a common phenomenon; therefore, before investing in a project, it is wise to analyze the project, developers, liquidity, and also the developers' activity on social media platforms.
Additionally, you can opt to use online tools that can detect a potential rug pull. One of these tools is Token Sniffer. This site lists all the latest hacks and scam coins. Rug Doctor is another useful tool for detecting rug pulls. The site analyzes the code of crypto projects, attempting to identify the most common rug pull strategies.
Stay safe and good luck!
Mihai Iacob
Rugpull
BONK Tokens and SOL Phones: Why the Surge in Solana?The tl;dr of the recent surge in CRYPTOCAP:SOL and $BONK is the Solana Phone Rebate - the potential for buyers to make more money than the initial asking price of $599. Once the token drop of 30M that came with each purchase exceeded the cost of the phone itself, it created a frenzy that has driven the price of both coins at once.
The question is - will it last? Solana developers and core team members were airdropped enough tokens to make potentially millions if they manage to sell off at the right moment. This would be your classic rug-pull strategy, which the project is already known for due to past scandals. Or will things be different this time? Time will tell. 👀
MSFT: Double-Top, or Bull Flag Breakout?NASDAQ:MSFT is showing a mixture of bullish and bearish signals; however, the most concerning of which is an active rug pull event which kicked off on March 16, 2023 at $265.20 via the 2D timeframe:
This coincides with a large RSI divergence event occurring on the larger timeframes; highlighting the potential for a double-top:
That being said, there appears to also be a major bull flag forming on the larger timeframes:
If we dive a bit deeper into the smaller timeframes and analyze the bull flag, we see another active rug pull at $345. This signals a high likelihood NASDAQ:MSFT will hit $345 in the near future:
With a high degree of both bullish and bearish signals, it can be hard to discern where NASDAQ:MSFT might be headed next.
We are keeping a very close eye on the AVWAP derived from the March 16 event as a guiding factor. Should the price significantly break below this level, we expect further drawdown to $265 will occur.
SPY: Bounce to $430 then Dump to $400SPY appears to be barreling towards the completion of a rug-pull event that kicked off back in March of this year. The downside target for this event is $399.88.
Although we ultimately place SPY hitting $399 in the near future as a high probability, we do see yet another rug-pull event that has taken place at the $429 price target on a smaller timeframe:
This is confluent with a weak bullish divergence that is appearing on the Daily chart. This supports the thesis that a bounce to the $430 area will occur before we ultimately sell-off down to $400.
Ultimately we see many bearish factors as we enter what is traditionally a bullish time of the year. See our related idea that dives into what we can expect from the VIX in the coming weeks:
Disclaimer:
Any information contained within this post does not constitute any financial, investment, or trading advice. Trade or invest at your own risk.
AMD: Beware the trapNASDAQ:AMD had an amazing day launching higher after their earnings report.
That being said... a trap is forming.
We have detected a rug pull event on the 30 min. timeframe at the $97 price level. This brings a high probability that price action will drop back to $97 sometime in the near future.
See below for other examples of rug pulls on the NASDAQ:AMD 30 minute timeframe:
Of note, there are several dormant rug pull events in the $109-$111 price range on smaller timeframes, so we do expect price to continue to this range as a minimum upside target.
A substantial break of the AVWAP would indicate a reversal back to $97 has likely begun. This currently sits around $104.
Keeping an eye on this one...
VIX - A storm is brewingTVC:VIX may have reached a significant bottom during today's volatile trading session. As seen below, the recent rug pull shown on the 1D chart has finally concluded; almost to the exact penny.
When we step back and look at the weekly timeframe, VIX is currently bouncing higher off of a major bullish divergence that was built up over the past several months.
The RSI is also retesting the neutral line (50) and TVC:VIX itself has closed on a major support level.
If TVC:VIX continues its move higher next week, we could see a significant drop in the S&P500
Disclaimer:
Any information contained within this post does not constitute any financial, investment, or trading advice. Trade or invest at your own risk.
AMZN - too hot out of the gate?NASDAQ:AMZN is showing signs a reversal could be on the horizon.
Looking at the gap-down on Sept. 21, we see the bulls have recently attempted to fill this gap but thus far have failed (as of the writing of this post).
This is occurring alongside an active rug pull event at $128.81 as well as an overbought RSI beginning to cool-off.
All signs showing this could begin heading back towards $128.81 as a minimum downside target. We are keeping an eye on how the technicals play out over the next couple of trading days to confirm this thesis.
DIS: Incoming "Magical" Bounce?NYSE:DIS has certainly seen better days as it has spent the better part of the last 2 years with price action slowly trickling downwards.
That being said, a magical opportunity appears to be presenting itself.
We see an active rug pull event has kicked off on the 2D chart with an upside target of $103. This represents an upside of approximately 20% from current levels.
In confluence with this, we see that price is currently contained within a downwards channel with the upper line of this channel conveniently at, you guessed it, $103.
Furthermore, price appears to be breaking out of a falling wedge within the aforementioned channel and price has bounced off of prior COVID lows.
As a cherry on top, there appears to be massive bullish divergence building on the monthly timeframe with a pending EMA crossover of the RSI.
All signs pointing to potential near-future bullish movements; however, long-term direction of NYSE:DIS remains cloudy.
Disclaimer:
Any information contained within this post does not constitute any financial, investment, or trading advice. Trade or invest at your own risk.
Potential Bull Trap Brewing?CME_MINI:NQ1! broke out of a textbook bull flag price structure over the weekend and has consolidated nicely throughout the trading day Tuesday.
We see two price targets of interest:
15600 - the price structure of the most recent high and the implied move of the bull flag
15063 - the approximate point of the bull flag break and currently the location of an active "rug pull"
It's too early to tell whether we hit 15600 or 15063 first, but we are keeping an eye on CME_MINI:NQ1! for any sign of reversal, with 15063 as a minimum downside target. Momentum is currently with the bulls and does not show signs of slowing down quite yet. An eventual break below the AVWAP (shown in orange) could indicate a reversal is underway.
PPI, CPI, and Fed minutes could bring larger volatility than usual this week.
Disclaimer:
Any information contained within this post does not constitute any financial, investment, or trading advice. Trade or invest at your own risk.
MONG/USDT 97% Down in 30 Days Important Crypto Investment Reminder
Be cautious of rug pulls!
Crypto investors, beware of recent incidents like the Mong Coin price drop of almost 97% in just 30 days!
It's crucial to diversify your investments and avoid allocating too much of your funds to a single coin.
Diversification is key!
By spreading your investments across multiple coins, you can reduce the impact of any individual coin's performance on your portfolio. Diversifying helps mitigate risks and provides a safety net against sudden price drops like the one experienced by Mong Coin.
Example Case:
On 6th May 2023, the price of $Mong was $0.00000038. If you had invested $1000 in #MONG/USDT at that time, your investment would now be worth approximately $35, resulting in a significant loss.
Stay systematic and informed!
To make smart investments, conduct thorough research, and consider the underlying fundamentals of a project before committing your funds. It's recommended to follow a systematic investment strategy and approach to minimize risks and increase the chances of achieving your financial goals.
Stay vigilant and happy investing!
PEPE Pepecoin Beware of a Rug Pull !!PEPE or Pepecoin is a meme crypto without any fundamentals that has a market cap of USD303 Million!
Beware of a Rug Pull!
A rug pull is a scam where a cryptocurrency developer and group of paid influencers hypes a project to attract investor money, only to suddenly shut down or disappear, taking investor assets with them.
The name comes from the idiom “to pull the rug out” from under someone, leaving the victim off-balance and scrambling.
SPY QQQ HYG Divergence again I’m not sure if SPX/HYG divergence is reliable moving forward, but this indicator has proven pretty effective last year. We are currently diverging again, last 3 major divergences created pull backs of -17%,-13%, -21%
Any thoughts from my fellow analysts?
Any other divergence indicators you can share with high probability?
Good luck to all
Short WavesI got waves going deep with its mess with usdn being depegged and the owner of this token basically another SBF. This is another LUNA type rugpull scam and if it survives I see the bottom at .44
APTOS Price - Bad News Are In Effect Hi
I am neutral on APTUSDT. I just want to post this chart. You can see that it could go up/down from here. Their found raising project was unsuccessful and there are negative news. There is a talk about a possible rugpull. I don't know if I can link to google news from here, but do some research if you are interested. Always use risk management when trading.
We got to go down and test the low at least right?Its a 50/50 trade, I just think there is a higher chance we are going to visit somewhere down atleast at $30. I see the probabilities of a V reversal not very high so I shorted it. Flush it now.
The Pump and the Dumper - Luna Terra 🧟 Zombie Coin Terra. Latin, literally ‘earth’.
Luna means 'moon' in Latin
Terra Luna, an epic Earth-Moon-Earth route, with millions of victims around the world.
Some of you have talked to me about buying it now, hoping for an Epic rebound which we all know will never happen.
After all, Luna 2.0 is coming in 10 days : www.businesstoday.in
This has been a classic Rug-Pull example. Yes, all crypto has high volatility but this case is really a 'Masterpiece of Pumping and Dumping'. Perfection of an evil mind, especially the Little Pump before the BIG Dump, after it faked a rebound on support.
Sorry guys but it looks awful, I wouldn't trust them for nothing.
For those still 'hoping' (they are new buyers/speculators, betting that a corpse can come back like a zombie) here is our technical analysis:
Price will need to x5,500 times to go to 1$. We added a 4,94$ resistance for you all to hope because that is technically the case.
But we all know it's not going to happen..
After all, we said 'RIP' for a reason:
No Love for Pump and Dump and shame on the 'Masterminds' behind Do Kwon.
Our condolences to the victims, that's the right word for it.
No Love for Rug Pulls,
the FXPROFESSOR
LUNA: GREATEST RUGPULL OF 2022! BEST BUYING ZONE??Hello everyone, if you like the idea, do not forget to support with a like and follow.
Welcome to this LUNA/USDT update. LUNA is dumping very hard. Almost 100% dump in few days. It is a biggest rug pull of 2022. Many people asking is it a good time to buy LUNA. So here's is my take on this.
According to the TA, we have a strong support zone at $4-$6 for LUNA. Here I don't see any support and it is continuously falling. As of now I would recommend to stay away from it. When it reached to our support zone and if taking a good support there then I'm buying a bag on spot. Till then I'm out of it.
Entry zone:- $4-$6
SL:- If any weekly candle closes below $4 then exit.
If you like this idea then do support it with like and follow.
Also, share your views in the comment section.
Thank You!
Crypto Regulation & Retail Protection Continuing FarceWhile the Securities & Exchange Commission continues litigation against Ripple $XRP and Library $LBRY, retail gets REKT by "influencers" peddling their wares.
$VPAD & $KASTA were developed/introduced by some of the most well known YouTube & Crypto influencers in the market.
Each having dumped on the influencers' followers and the Crypto market.
18,800+ "cryptocurrencies" and climbing.
Regulatory agencies like the SEC & CFTC are way behind the power curve and will continue to fall behind the remainder of the year as the administration looks to have "policy recommendations" in 12-18 months.
BTC watchparty: sub 40K?All eyes on Tokyo and Hong Kong tonight! Will they throw the final punch by dropping Bitcoin below 40K? New York has set up the move, exactly like I described in my latest idea on the crypto market makers and the wyckoff scheme on the total crypto cap; a short squeeze and a fast drop right at the start of the Asian session.
Right now we are still in the chop zone and as said we will have to wait for Tokyo and Hong Kong to possibly set up a stop hunt rise and a continuation or we'll see a chop into Friday's EU session. A drop towards the rekt zone will be devastating for the whole market and I expect heavy capitulation there - especially if the traditional markets keep correcting - which I have warned for - has only just started. I don't expect much support in the 30 - 40K zone and I won't be surprised to see a sub 30K bitcoin this year...
On a side note, I checked the crypto news which was irrationally bullish (bad sign) and Michael Saylor's face in an interview today. I saw someone who pulled his poker face, sitting in an oversized desk chair at a fancy desk with some gold ornaments in a picture that should have represented "wealth and strength" - I rather saw a man with sweaty hands, bluffing his way out his problems. Funnily enough I talked about him in my analysis earlier today and what I assumed there is what I saw today; a man with stress, a man with drying up margins like morning snow on a sunny spring day.
But yes indeed, we (not all) will make it and will be ready to shoot at the bottom. Happy 2022!
IMPORTANT: this is not financial advice, trade or invest based on your own risk and research.
BTC GONNA RUG SOON... TETHER UPHS1 OR HS2 scenario, same outcome, tiny bit more out of a rise from the cockeyed HS scenario
TETHER UP
BTC ppl learn how to swing trade
