AOFEX digital asset exchange is known for traditional-bank level technology and risk control management. AOFEX released risk warning to their community that some random altcoin might cause enormous loss to investors, and related investment decisions should carefully be made to avoid losses.
Altcoins with a small market value such as SHE, TRIO, BBGC, MXS and etc. are constantly hovering around the original issue price. Surprisingly, the value of those altcoins has increased ten to fifty times recently.
After analyzing the patterns and tracks of those altcoins, it is discovered that the growth is suspicions.
In the risk warning from AOFEX, there are some common characters of those altcoins: First of all, they have very limited circulation supply capitalization, and the ranking of it is either at the end of the list or no ranking at all.
Furthermore, The prices of those altcoins are low, which is barely above the original issue price; In addition, they are frequently recognized as no substantial or intrinsic value; Moreover, the prices of those altcoins can be manipulated by individuals at a certain time [such as GMT+8, 0 — 1 o’clock]. Prices of altcoins increase ridiculously. For instance, some of the value increases 5 times in 10 minutes. By the time newly entered investors purchase the altcoin, prices of the altcoin fall down to 90%.
Most importantly, they are attracting investors by the pyramid scheme business model, which has high profit and high rebate.
Project initiators try to captivate investors buy in their altcoins in digital currency exchange platforms. By investing in the platform of the initiator, the high-interest rate is earned regularly.
In the meantime, project initiators set encouraging rebate rules, so that users attempt other users invest for profitable yield. Price ridiculously increased by taking advantage of the slight increase for higher expectations to attract more investors.
Yet there’s no constitutive or intrinsic value within excessive altcoin price change, but humongous bubbles.
Isn’t it similar to the pyramid model of Ponzi scheme?
The project initiators are the ones on top of the pyramid. Early-stage investors are right below them, on the high levels. They constantly attempt other investors and lock their funds up with high rebate and high interest. After rapid development, individuals at the bottom of the pyramid are captive investors. Most investors are fully aware of the risks, however, with the possibility of earning high returns, most investors do not believe they are the latest entry.
Meanwhile, altcoins are appealing for hot money, resulted in an altcoin price increase. When the price of altcoin increased to a certain level, they sell it immediately, so that the bubbles are getting larger and soon to vanish. Tremendous loss occurs by the time that new investors couldn’t even realize.
Reaped by project initiator and hot money, it is really difficult for individual investors to survive nowadays, unless not entering the market at all.
AOFEX suggested individual investors pay extra attention to those altcoins in their risk warning. It is irrational to make moves by seeing a huge raise. AOFEX also recommended investors complying with the investing disciplines to avoid loss.
AOFEX highly recommended other digital asset exchange and trading platforms to ban those altcoins, because the cause of the huge damage to the market and ecosystem and interests of investors are irretrievable.
AOFEX rigorously pick digital currencies among the mainstream with public blockchain in different fields, and no inferior crypto will appear on AOFEX at all.
In order to help investors hedge risks of dramatic change in cryptocurrency, AOFEX now has a new derivative-Non-Standardized Option with Manageable risks, aware of potential profit in advance. More detailed information will be disclosed in the official launch on 25th April, London.