Cryptocurrency investors have lost close to $100 million in the past year alone due to exit fraudsters using numerous initiatives to advertise their shitcoins. Some shitcoins do, however, manage to provide incredible short-term profits. The most well-known example may be memecoins like Dogecoin, a shitcoin that gained over 12,000% in value in only one year thanks to Twitter. This article will cover shitcoins, how to recognize them, and whether or not you should invest in shitcoins.

What is Shitcoin? 

Shitcoins are technically altcoins, but as a result of their fundamentally poor design, they lose value over time. The coins are of little to no value and have no clear purpose. They heavily rely on misleading marketing, mostly through a network of micro-influencers on social media.

Is it worth investing in Shitcoins?

The premise that when risk is elevated, the possibility of a potential return likewise rises is known as the “risk-return tradeoff.” Shitcoin investing is a high-risk/high-reward endeavor. You might quickly make a significant profit or lose a sizeable sum of money.

Dogecoin and Shiba Inu are two examples of shitcoin enterprises that generated returns of over 12,000% in a short period of time, but other token completely lost their worth a week after their excessively enthusiastic introduction. Despite the fact that there is always a risk, there might be significant advantages.

One thing all of the shitcoins in the ecosystem have in common is that their underpinnings are broken. So, it doesn’t really matter what the underlying technology or tokenomics are. To determine buy and sell signals, you must rely heavily on technical analysis, which makes use of a variety of indicators. Because the shitcoin market is so unpredictable, many users turn to bots, which can execute a large number of deals in a matter of seconds. Along with a sound technical analysis, the community is an important factor that you should consider.

Projects using shitcoin that are successful in making a profit are supported by the underlying community. This speaks of supporters, celebrities, and influencers who raise the value. It is quite difficult for those shitcoin initiatives that are still relatively fresh to establish a solid community. When it comes to establishing a feeling of community, older businesses with a history or a heritage have an edge. As a consequence, they could be worthwhile to investigate.

How to identify good shitcoins to buy?  

The tactics used by scammers and shitcoiners are continually evolving. These coins could closely resemble actual currencies to convince investors. Here are some traits you might look for to identify a shitcoin:

Project Background

The team behind a cryptocurrency is what most distinguishes it from a shitcoin and a legitimate coin. Before making an investment in any project, you should research the team’s members’ educational and professional credentials. Shitcoin initiatives frequently include dubious team members with no prior employment history and maybe fraudulent social media accounts made just for the project.

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In contrast to legitimate currencies, shitcoin ventures lack the necessary paperwork (like white paper). Legitimate currency ventures prioritize documentation above token pricing and avoid talking about token values. Instead, they focus on the underlying technology and how they intend to develop it in the future to increase public acceptance of their products. Shitcoins don’t just concentrate on token price; they also have very minimal documentation.

Make sure to check with the Community

Every genuine coin has a thriving and involved community. While the owners of terrible shitcoins don’t put much effort into their community development, substantial shitcoins like DOGE are also supported by a community. There is always a potential that they will try to con investors as quickly as they can in order to acquire their money.

The Final Thought

The passion for shitcoins isn’t going to abate any time soon. Make sure to do your thorough due diligence to separate the good players from the bad ones before investing in a shitcoin enterprise. Even if some shitcoins are made as a joke, they could nonetheless want to develop a vibrant community. Others are made with the goal of taking money from investors.

Investing intelligently can help you avoid losing a significant amount of your hard-earned money since shitcoins have a very high risk/return ratio.

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