Investors Should Be Careful While Investing in New Projects- A Lesson Learned from the SQUID Token.

Investors Should Be Careful While Investing in New Projects- A Lesson Learned from the SQUID Token.
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SQUID token drew the attention of many investors the previous week, soon after it began trading. It started selling at a price of one penny, and it soon surged around 2,30,000% within a week. On this Monday, the crypto token was tradable at approximately $38 on Pancakeswape.

Many investors have invested their money into this newly launched token, partly because of the hype of the Squid game, the Netflix series. The sudden drop in the price of SQUID tokens is a shock to many investors as millions of dollars vanished in a few minutes.

The price of the token was actually facing turbulence on Monday. It rose to around $2,856 before dropping to $0.0007. Currently, the market price of SQUID is $0.014, according to coinmarketcap.

Let’s understand what has exactly happened here:

The developers of the Squid Game restricted everyone from withdrawing their money. It led to an increase in the value of the SQUID coin. Later, the developers withdrew everything and just ran away with the investors' millions of dollars. It is estimated that the developers have made around $3.38 million.

The scam is commonly termed as a “rug pull” by the investors. This kind of scam includes the stoppage of trading activity after drawing in the buyers, and then the developer of the digital coin takes off with the money raised by selling the token.

You should be careful while investing in new projects:

The crypto space has been continuously booming since the growth of Bitcoin. We can see that many new tokens are launched almost every day, and some of them actually become the hype. But, as in the case of SQUID, many investors have lost their considerable money. So, it becomes really essential to understand the red flags to avoid losing your precious money.

Let us first try to understand the red flags in the case of the SQUID coin:

  • The very first thing to notice here is that the price of SQUID was swinging dangerously.
  • The token wasn't listed on the top-rated centralized exchanges.
  • The currency was leveraged as “play-to-earn” crypto, and it encouraged the users to buy the tokens for participating in the game.
  • The biggest of all red flags was the “anti-dumping technology”. The investors were not able to sell their tokens.

Keep in mind a few points before investing in any of the crypto projects:

Cryptocurrencies have a huge potential. Hence, these scams cannot limit their use, but, as an investor, we should understand a few things before investing in any new projects to prevent ourselves from such scams.

  • Avoid investing in projects with very high price swings.
  • Always access various factors before investing your money in any new projects, such as the community of developers behind that token, the technological superiority, the performance over time etc.
  • Make sure that you indulge in only those cryptocurrencies listed on the famous centralized crypto exchanges.
  • Always access its future use cases before investing in a crypto token.
  • The most crucial thing is that you should never make yourself a part of the hype and always do your research.

Closing thoughts

The incident of the SQUID token was really heartbreaking for those who have invested in the token. But, it doesn't mean that it will end the era of cryptocurrencies. The future use cases of cryptos will continue to grow, and hence, the cryptocurrencies themselves. The show must go on, and we should learn our lessons from this scam that we need to be careful enough before investing in any new project. And we shouldn’t sway ourselves with the hype in the crypto market.