As a long-term veteran in the cryptocurrency space, today I want to talk about a common pitfall when a new coin is launched!
1. New coin launch: Significant selling pressure from airdrops.
The launch of new coins is usually accompanied by a large number of airdrops and profit-making activities. At this time, there are often many retail investors and short-term speculative funds entering the market, trying to obtain free tokens through airdrops or selling through market operations. Although there may be some price fluctuations in the short term, the outflow of these funds puts pressure on the coin price, often resulting in a situation where the new coin opens high but falls low.
2. Overvalued market cap and investor exit.
Many new coins often experience a common situation of having a market capitalization that is too high shortly after their launch. You can compare with recently launched new coins; if they lack support from large institutions or well-known investors, most new coins have a market cap exceeding 100 million, which can generally be judged as overvalued. This is something we, as retail investors, need to be particularly cautious about.
Why is it said to be overvalued? Because after a new coin is launched, many private investors and early funds will take the opportunity to exit and cash out in the short term. These people usually enter at a low price at the beginning of the project, and when the coin price rises, they choose to sell off a portion of their holdings, putting selling pressure on the market. The result? The price naturally falls.
3. Historical experience tells us: Market panic after project cash-out.
I believe everyone has seen many stories of 'yacht babies': after a wave of pump market conditions, the project quickly cashes out through large-scale selling, while investors in the market start to panic and sell crazily. Historically, many new coins' price fluctuations are not driven by market demand but are influenced by the exit behavior of the project party, private investors, and early funds.
When these 'main players' exit, the coin price usually undergoes a period of sharp decline. Retail investors often panic and exit at this time, ultimately forming a vicious cycle of 'herd selling.'
4. Market enthusiasm and institutional support are key.
If a new coin can gain institutional funding support upon launch, or if the project itself possesses strong technical capabilities and long-term development plans, then market enthusiasm and confidence will be supported, and the coin price will remain relatively stable. However, in the absence of such endorsements, most new coins can only rely on short-term speculation and enthusiasm from the market, ultimately unable to escape the fate of price decline.
In summary: When a new coin is launched, stay calm and patient. We must always remain vigilant towards new coins.
A waiting period is essential to avoid being misled by airdrops and short-term speculation.
Compare the historical market capitalization of new coins and reasonably assess whether there is a risk of overvaluation.
Understand the background and funding support of the project party to avoid blindly entering during high price periods.
Wait for the market to stabilize before making decisions based on actual conditions.
Investing in the cryptocurrency space is a long-term process. Staying calm and avoiding impulsive trading driven by temporary enthusiasm and panic is key to ultimately achieving profitability.
I hope this article is helpful to everyone! If you are also paying attention to opportunities for new coin launches, it's worth remembering these investment strategies to avoid taking unnecessary detours.