Investing in Solana meme coins may be exciting, but it comes with its risks. One of the biggest fears of investors is the dreaded drawdown where your investment disappears in the blink of an eye. In this guide, weâll explore how to spot potential drawdowns and avoid falling victim to them.
Scams are a harsh reality in the exciting, but sometimes treacherous, world of cryptocurrencies. Malicious creators lure investors with promises of huge success, only to eventually pull the rug out from under them, leaving them with nothing but empty wallets and a bitter taste in their mouths.
But fear not, cryptocurrency adventurer! This guide will equip you with the knowledge you need to avoid this unfortunate fate. Weâll delve into the art of deception, teach you how to spot warning signs, and equip you with the tools to navigate the cryptocurrency world with confidence. So get ready to learn how to avoid financial ruin.
Discover the signs
Sudden Disappearance of Funds: You are closely monitoring your investment, and then suddenly, it is all gone. This is the hallmark of a sudden withdrawal, where 99% or even 100% of your funds disappear in a matter of seconds.
*Lack of liquidity: Sometimes, the price of a meme coin may appear high, but there is no liquidity. This means that when you try to sell, there are no buyers, and your money evaporates.
Common Carpet Pulling Techniques
1-Minable tokens: Some creators leave the option open to mint more tokens, which dilutes the value of existing tokens and causes your investment to lose value over time.
2- Manipulating the sales and purchase tax: Creators can adjust the sales and purchase tax percentage after a few minutes, turning it from a manageable fee to 99%, effectively draining your money.
3- High token holdings: If creators hold a large portion of tokens, they can put them on the market, causing panic selling and a rapid drop in value.
Misleading things in the terrifying scam
4-Pump and Dump: This scheme involves artificially inflating the price of the coin through coordinated buying.
5- Positive marketing. Once the price reaches its peak, the creators sell their holdings, causing the price to drop, leaving late investors to bear the burden (lose money).
6- Exit scam: Similar to a rug pull, but creators may develop a project that appears legitimate and slowly drain money over time through various means before disappearing.
Understanding these different tactics will help you spot the warning signs that point to potential trouble. In the next step, weâll equip you with the knowledge to spot these wolves in sheepâs clothing before they can snatch your hard-earned crypto.
*How to protect yourself from horrific withdrawals
1- Use tools: Websites like RugCheck or Birdeye allow you to paste in a meme coinâs contract address and analyze its risk factors. Look for signs like the mintâs continued empowerment, low liquidity, or a high number of individuals holding the token.
2- Check the top token holders: Look at the top token holders. If a small number of addresses hold a large percentage of the supply, this is a red flag for a potential token withdrawal.
3. Verify ownership is relinquished: Make sure the ownership of the token is relinquished, meaning that the creators no longer have control over the contract.
4. Look for social presence: Check if the meme coin has an active community on platforms like Telegram and Twitter. Check if the engagement is genuine and not artificially exaggerated.
5. Be careful: Even with thorough research, carpet sweeps can still happen. Limit your losses by setting stop-loss limits and being prepared to exit your investment if things start to look suspicious. Use a Telegram Bot like Trojan on Solana to quickly buy and sell your coins, reducing the chances of getting scammed.
REFERENCE LINKS:
https://medium.com/@crypto_hawk/how-to-avoid-meme-coinrug-pulls-daa5960f99ea
