I don’t know if you have noticed that most of the new coins on Binance have a very obvious trend. They fall for a few days after listing and then quickly rise. After that, they soon enter an infinite decline mode. In fact, this is a very typical way of selling new coins (especially wintermute).
Step 1: In the first week after going online, let the retail investors who received the airdrop by staking bnb sell out first. Basically, those who are collecting staking income and do not plan to hold the coins for a long time will have sold out within a week. At this stage, the market makers will not support the market.
The second step is for market makers to sell their stocks. However, in the current market, spot prices do not have enough liquidity (that is, there are not enough retail investors to take over), so market makers need to rely on contracts to sell their stocks. A typical approach is to quickly pull up a big wave through spot prices, usually a sudden increase of half or double in one or two days, but the price usually will not exceed the previous high, and even if it exceeds, it will not exceed by much, and the first batch of people who take over at the opening will not be given the opportunity to leave. A lot of funds are needed to leverage this wave of increases, and retail investors do not have many chips in their hands, and the increase time is also very fast. After the increase, you will find that the open interest of the token contract suddenly soars, and then the contract rate begins to become negative. This phenomenon basically means that the market maker has started to short the contract. The third step is for the market maker to continuously sell spot stocks. Although they cannot cash out much from the spot, the contract gamblers provide the market makers with enough exit liquidity.
Of these three steps, the only thing you can do as a retail investor is to go short with the market maker in the third step (split warehouse and low multiples). At other times, your short position may be suddenly blown up in one day, and choosing to go long will directly become the exit liquidity of the project party. You must be relatively sharp to seize such opportunities. Market makers will not maintain high prices for more than two or three days. If a coin suddenly rises by dozens of points in one day, go to Coinglass to keep an eye on the open interest and fee rate of the contract. When the open interest soars and the fee rate starts to decline or even turns negative, it means that the market maker is building a short order. Look at aevo, banana, io, and tensor. They all follow this path. So I hope that next time you see a newly launched coin suddenly rise in one or two days, please first think that the market maker is going to start shipping. Don't think about whether the dealer is going to pull the market or whether you should go all in to chase the rise.
