I’ve been wondering about it for quite some time, note that I know practically nothing how crypto market works.
Assuming you are jumping into a crypto project of a known scamer, like Mr. Logan. If you’re expecting it to be a rug pull, is there anything that stops you from pulling out AFTER other morons buy in and BEFORE the founders pull out crashing the value?
In: Technology
Generally people don’t do this because they don’t have the money to gamble on something they suspect to be a scam, they don’t have the time to learn how to trade and understand their tax obligation, and no one will know when someone is going to dump stock in an investment.
It is all more hassle than it is worth. And there’s a good chance the buyer who thinks they’re going to “be in on it” is going to be the sucker who buys this thing last just.
If you know when the “after” and “before” happen, then obviously — yes, you can. The problem is, that the guys who plan the whole thing don’t inform publicly, how long they plan to pump the asset before they pull the rug. You get the information that the pumping is going on at the same time ”other morons” get the same information. And you see the value of the asset going up just like “other morons”. So when exactly should you pull out? Maybe you will do it on time; maybe you will be counted among the “other morons”.
For one thing, it’s hard to know really when the rug will be pulled. If you time it too early, you may not really earn enough for the entire charade to be worth it. Too late, and you lose everything.
There’s a lot of added risk involved that normal people might not be comfortable making.
It’s all about timing and knowing when to bail before the rug gets pulled. Once the hype builds, founders bail, and value crashes, you’re left holding the bag. Timing is key!
You can make money on a rug-pull, and some people do – however it’s really foolish to join a scam hoping you get to join in on the scam
A lot of the time there are pre-minted coins held by the scammers group which they’ll start unloading when people start buying. This was the case with Logan, you’d have to get in right at the start and sell really quickly to not lose out in that situation
Lots of people have been burned thinking ‘I know it’s a scam, but if I’m quick I can still make some money’, so just don’t be tempted
I read an article that said most participants in these types of scams *know* it’s a scam. They just think they’re the smart one who will get out early.
It’s information arbitrage, meaning you have to magically know when the founders plan on pulling the rug. Obviously they don’t share that information outside of a few close associates. So, good luck.
FWIW, I watched the whole Luna debacle unfold in real time. I actually saw the signals about 2 days before it imploded thanks to an unhealthy amount of time on Twitter. Had I had the desire to gamble on that game, I would’ve won.
As long as you’re not an insider with knowledge of when the founders intend to pull the rug, you’re one of the “other morons” you’re attempting to swindle. Everyone buys in thinking this exact way, believing they are smarter then everyone else, but they simply aren’t.
What you’re referring to is the greater fool theory. You can make money off of something completely valueless so long as there is greater fool to buy it from you for more than you paid for it. Each generation of fools takes on less potential profit, and more risk.
The probem is in most cases, by the time you’ve heard of it, the risk to reward ratio is god awful and you’ll soon be parted with your money.
Aha see the “other morons” too are expecting it to be a rug pull.
Guess what the “other morons” too are looking to pull out AFTER the others buy in and BEFORE the founders pull out.
So there’s nothing stopping you from pushing the button but when when when do you push the button?
Rug pools can also happen where the token contract is setup so only whitelisted wallets can sell. That means you as a bag holder can never ever sell. You can only watch as others also keep buying, sending the price up, making it all look good.
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