The virtual currency that followed Squid Game rose 230,000% and then collapsed to almost 0

The virtual currency that followed the Squid Game rose 230,000% and then collapsed to almost 0

Lately, many investors with fantasies of high returns have fallen into the cryptocurrency craze, especially since Bitcoin has risen more than 80 times in the last 5 years.

However, investors don’t always make big profits, especially in an unregulated and highly speculative market like virtual currency. And breakout momentum is often fleeting. For example, the virtual currency SQUID – which follows the Squid Game phenomenon – has become a memecoin that has recently caught the attention of investors.

According to CoinMarketCap, the Squid coin rose more than 230,000% to $ 2,861.80 in the past week, but then “vaporized” almost 100% on November 1st to just 0.5 US cents.

“Betting on the right cryptocurrency can make you incredibly rich,” said Antoni Trenchev, co-founder of Nexo, in an email on October 31. “The problem is that anything that goes up vertically often goes down again quickly. Many Memecoin investors don’t care about losses. You want to ride the rising wave. However, once the sell-off begins, investors will run away. “

A number of cryptocurrencies are experiencing dizzying momentum as the bull market from Bitcoin and Ethereum spreads to tokens and decentralized finance projects (DeFi) as well as technical assets. Dogecoin – which was founded as a joke in 2013 – is up 10,000% in the past 12 months, according to CoinGecko. Shiba Inu – just launched in 2020 – saw a staggering 90,000,000% increase. In October alone, Shiba Inu rose 800%.

* The virtual currency market last week: The rise of the virtual currency derivative

The rapid rise and fall of the SQUID coin shows the dark side of the virtual currency craze: the possibility that demand will “evaporate” quickly, or worse, developers will abandon the project and steal capital from investors. . It is still unclear what happened to the SQUID. But just before the sudden slump on November 1st, many investors began to notice irregularities in trading activity. CoinMarketCap warned that it had received “many reports” that users could not sell SQUID tokens on PancakeSwap, a decentralized exchange.

“Please double-check and be as careful as possible,” warned CoinMarketCap of the SQUID coin.

It’s unclear why some users can’t sell the SQUIDs they hold, but the white paper describing the coin mentions anti-dumping technology that prevents investors from selling if they don’t meet the requirements.

“It is true that very few retail investors take the time to read this white paper or try to understand the governance framework or how these memecoins work,” said Henri Arslanian, Head of Virtual Currency at Bitcoinist. “Of course there is a risk involved.”

In fact, knowing what investors are investing in is difficult as crypto market opportunists are creating tokens with names similar to those that have skyrocketed in price. On CoinGecko, search for the phrase “Floki” (Elon Musk’s dog name) and you will find the tokens Floki Inu, Floki Musk, Shiba Floki, Baby Moon Floki, FlokiSwap and FlokiMooni.

The dynamism of these assets is due solely to investor confidence and enthusiasm, but has nothing to do with the fundamental analysis common to traditional investments.

Investment history is full of examples of sudden ups and downs. While it is not known where the current craze will lead, individuals who have invested money in that craze may have bitter lessons to learn later, just like investors in SQUID.

Vu Hao (according to Bloomberg)