Hey guys, I’m hoping you all are doing well. Today, we’ll have a look at another meme coin named Shiba Inu which duped Indian Investors of lakhs of rupees due to a liquidity issue. Before we look into the exact incident, let’s understand what is this coin Shiba Inu all about and why people got so crazy to jump into a bubble-like this without even checking the global rates.
Shiba Inu coin has a ticker name of $SHIB, Shiba Inu is actually a breed of hunting dogs from Japan (as stated on Google). Looking at the total supply of the coin, it is 1,000,000,000,000,000 (1 quadrillion) and that’s massive. The current circulation is 394,796 Billion $SHIB tokens. This coin came out in August 2020 and was proclaimed as Dogecoin Killer.
Not sure if it killed Dogecoin exactly but people got rekt by falling into this trap. This coin currently operates on the Ethereum Blockchain and is based on proof-of-work consensus. Keeping aside all of that, in the last 24 hours, the coin has plunged 11.25% itself. This data was sourced from CoinMarketCap on 16th May 2021.
What happened in WazirX India.
After witnessing the initial rally as you can see above, Indian Investors started searching for ways to put in their money into this Shiba Inu coin hoping their investment to turn into a multibagger for them like some penny stock. What people didn’t knew was that in Crypto its all unregulated and pump & dump coins or rugpulls are a common day to day affair.
After the growing demand of Investors, WazirX India, Binance & some other exchanges listed the $SHIB token as fast as they could. If you ask me was that a necessary move? I’ll say no because fresh investors have zero knowledge of crypto and listing shit-coins in front of them is way too riskier as our Country is still framing laws on crypto and a potential rug-pull event could shatter all the Industry. From a business perspective, yes because exchanges make money when people trade. If people are willing to trade huge volumes in $SHIB token then why should exchanges act as gatekeepers telling them what’s right or wrong? Makes sense right?
Issue with Liquidity
On WazirX, as soon as the coin got listed, there weren’t enough $SHIB tokens available with the exchange compared to the number of buyers who were willing to buy it. As soon as it got listed, people started buying crazy volumes of these shit coins and the deposits/withdrawals were disabled because of the rapid listing initiative. This led to a liquidity crunch and the prices for this coin shot up to as high as INR 3, while the international prices were around INR 0.0013.
Some guys could grab a multi-bagger return while others got rekt because the prices were soon adjusted to the global market rates. I’ve attached some tweet links to make it even clear for the readers.
What to learn from this?
For people who are reading this piece of article, please remember that Crypto Market is not like the traditional Stock Market. There’s a huge risk out there if you are investing in Cryptocurrencies. The risk is because of the unregulated nature of the market. Before investing always check and compare the global rates for a coin and the fundamentals backing the coin. An excellent platform to do so is CoinMarketCap or CoinGecko. Have a look at the team and the idea.
Lastly, never put borrowed money into cryptocurrencies. Never means never. Only invest what you can afford to lose. Crypto isn’t a money-making machine with random investments. Research and learning is a crucial part of Investing in Crypto Markets. Always DYOR and then invest.
Thanks for Reading ??