Squid Crypto Crash Should Serve as Warning, Experts Say
The recent crash of the cryptocurrency Squid illustrates the need for investors to exercise caution when considering new altcoins, industry analysts said Tuesday.
Squid, inspired by the Netflix series “Squid Game”, began trading early last week at a price of just one penny per token, according to a New York Times report.
The cryptocurrency’s value skyrocketed from $628.33 to $2,856.65 before plummeting a short time later and trading at $0.0007. More than 40,000 people still held the token after the crash.
“It’s somewhat ironic that SquidCoin, an altcoin based on a show about dystopian capitalism, proved to scam crypto speculators out of several millions of dollars,” said Christopher Vecchio, senior strategist at DailyFx. “After all, cryptocurrencies have been perhaps the single best innovation for wealth creation over the past decade.”
The latest rug pull is unfortunate but predictable, Vecchio added “and underscores the reality that market participants should avoid speculating in new altcoins without a legitimate use case, particularly those that you can only buy and never sell – which was an obvious red flag from the start.”
Louis Schoeman, managing director of Forex Suggest, warned that “while new coins appear every day, people should always be wary of buying a token with no history and never invest money you can’t afford to lose.”
“While new coins can have all the bells and whistles and promise huge returns, if it sounds too good to be true, it most likely is,” he said. “Scammers know how to appeal to people. They take trusted, recognizable names, like Squid Game, to piggyback off its global success and lure people into investing. They dupe people into believing there’s some kind of affiliation with real credentials, when really it is all a scam.”
To avoid being the victim of a crypto scam, Schoeman advised investors to look at the finer details and take their time to assess the token.
“Thoroughly read over the whitepaper to check for spelling and grammatical errors – does it look professional or quickly thrown together?” he said. “If you copy and paste a chunk of the text and run it through a search engine you can easily see if it has been taken from another coin’s page which is a quick giveaway that something isn’t right.”
Never send your money or cryptocurrency to a platform you don’t completely trust and only use an exchange you trust which doesn’t charge astronomical fees, Schoeman added.
“If alarm bells start ringing then listen to your instinct and hold off,” he said. “It can be easy to see lots of people jumping on a new coin and want to get involved too, but make sure it is the right investment for you.”