How to spot shitcoins, according to Reddit

They’re flooding the cryptocurrency market and there’s serious money to be made – if you invest right, that is.

What is a shitcoin, memecoin or altcoin?

Basically, these terms refer to cryptocurrencies with little to no value, that have no immediate or discernible purpose. They’re often used to describe cryptocurrencies that were developed after bitcoins became popular, like Dogecoin or Shiba Inu coin. The catch, however, is that shitcoin currencies are often considered to be bad investments, because their prices are usually based on speculation. Think of them as penny-stock cryptocurrencies.

Luckily for us, Reddit has come to the rescue with a guide to spotting said shitcoins. Hazelvelvet, the user who compiled it, makes an important disclaimer: I trade small coins for a living. In the beginning, while learning, I fell for all the scams just like everyone else. But with every loss I learned something new and I’m now pretty good at it. Yes, I have losses like everyone else, but usually I get out with very small losses compared to my gains.”

The Jordan Belfort-esque tone of the post continues, as Hazelvelvet assures us that, while they hate shitcoins too, not every new coin falls into that category. Every coin has to start with 0 holders. Everyone has to start somewhere. And every solid project deserves a chance to grow.” So, according to Reddit, this is how you can separate the wheat from the chaff.

There are three golden rules. First of all, start trading on the Binance Smart Chain, don’t invest more than $5 per coin in the first 1 – 2 months and be prepared to lose between $150 – 200 on your quest.

Once you’ve found a brand new coin via BscScan, check how many holders it has. According to Hazelvelvet, a healthy new coin should have at least 200 – 300 holders. If it doesn’t, abort immediately.”

Then, check the liquidity pool (the backbone of many decentralised exchanges) and make sure it’s $30k or more. If it has a few hundred dollars or even only $5k or $7k, abort immediately.”

A good number of transactions for a new coin should be about 5 – 10 per minute, suggests Hazelvelvet. Don’t forget to make sure the coin is legit by checking whether it has an official website and Twitter account. As long as the coin’s logo isn’t a stock photo and it has a catchy name that makes it more likely to take off, you should be OK.

Finally, look for coins with a doxxed team. This is when team members publicly identify themselves via Instagram Live or YouTube videos. This hugely decreases investment risk, because their faces are publicly known. If they were running a scam, they would almost certainly end up in prison”.

Happy trading! You can check out the full guide here.

Read Next: How to spot a crypto scam

More like this

The best of THE FACE. Straight to your inbox. 

00:00 / 00:00