The crypto industry is known for its hype cycles, and while this offers an opportunity for investors to make quick profits, it can also be a breeding ground for potential rug pulls and scams. To ensure that you protect yourself when investing during these hype cycles, here are some tips to follow:
Tip #1 – Do Your Own Research
Don’t just take an influencer’s or publication’s word for it, do your own research before investing. Try to get an understanding of the technology behind the project, who is involved in developing it, and what other investors are saying about it. By thinking for yourself and doing the deep dive, you’ll be able to avoid getting scammed.
Tip #2 – Verify Any Crowdsale Information
Before investing in an ICO or other crowdfunded project, always verify the information that is being advertised. Double-check security protocols, whitepapers, and any additional materials that are provided. Additionally, take the time to read through the terms and conditions of any agreement.
Tip #3 – Avoid Ponzi Schemes
Ponzi schemes are designed to take advantage of new investors, so be sure to avoid them. Be wary of any project that makes outlandish claims or promises extremely high returns with little risk. Also, watch out for projects that offer bonuses for referring new investors.
Tip #4 – Steer Clear of Pump and Dumps
Pump and dump scams are designed to create artificial hype to drive up prices, and then dump the token once the price is high. To avoid them, look for signs of market manipulation such as sudden increases in volume and dramatic price swings.
Tip #4 – Look Out For Red Flags
Be aware of any red flags that may appear when looking into a project. This can include anonymous teams, a lack of transparency, a dubious business model, or unrealistic tokenomics. All of these are signs that you should proceed with caution before investing.
Tip #5 – Stick to Established Exchanges
Always make sure you are trading on an established exchange with good security protocols, and always pay attention to withdrawal limits. This will ensure that your funds are safe, you won’t get scammed, and you won’t be subject to market manipulation.
Final Thoughts
These five tips should help you to avoid getting scammed or rug-pulled during hype cycles. It’s also important to stay away from projects that claim they can offer customer support but first require private keys or any sensitive information.
Using a free crypto portfolio tracker like Moonrig.io not only helps you get instant crypto alerts, but it also does not require any private information or keys. By being able to manage crypto assets for free and securely, you can make informed decisions to minimize the risk of getting scammed.
Overall, knowing what to look out for in crypto projects is an essential step for anyone looking to successfully navigate the crypto space. Be mindful and only invest what you can comfortably afford to lose.
