The allure of getting in early on a promising new cryptocurrency can be powerful and various traders have been successful at doing so, but a recent incident involving the launch of a coin called $PUNDU highlights the significant dangers associated with impulsive buying on new listings.
On-chain analysis service Lookonchain has recently revealed that an investor lost a staggering 721 SOL, equivalent to roughly $138,000 at, within a mere 35 minutes of PUNDU’s trading debut after withdrawing 1,535 SOL from leading cryptocurrency exchange Binance before the cryptocurrency started trading.
The investor’s downfall stemmed as they were attempting to “snipe” the coin, a strategy where experienced traders aim to buy a new cryptocurrency at the absolute lowest price point immediately upon listing.
This often involves sophisticated tools and automation to outpace other buyers in a race for initial liquidity, and in the cryptocurrency space is often the subject of market manipulation by the project’s developers and/or marketing teams behind them.
The trader, according to Lookonchain, poured 1,485 SOL into the cryptocurrency as it opened for trading, and as the price of $PUNDU started dropping they quickly sold their entire stake to get back 764 SOL tokens.
This isn’t the first time a cryptocurrency trader loses while buying lesser-known digital assets. As reported, one trader managed a loss of $46,000 in just three minutes after the price of the token, Milady Wif Hat ($LADYF) plunged.
The incident highlights several key factors native to the cryptocurrency space, which include the volatility inherent to it that’s especially present in lesser-known and meme-inspired cryptocurrencies, and the liquidity issues that these newly launched tokens can have, forcing traders to suffer significant losses to slippage.
The trade comes at a time in which the memecoin scene on the Solana network has been surging, with several traders making extreme returns off of newly launched digital assets. In one case, a memecoin saw a dramatic price rise of over 3000% over a 24-hour period, and a cryptocurrency trader managed to take advantage by betting 50 $SOL, worth around $9,000, in the cryptocurrency. Its rise has seen them make a profit of over $123,000.
In another case, a cryptocurrency trader managed to make a profit of over $3 million trading a newly launched Solana-based memecoin within just 12 minutes after betting nearly $2 million on it right after it started trading.
In yet another incident, a trader, identified on-chain by the alias “sundayfunday.sol,”turn a $72,000 investment into a staggering $30 million within just three days trading a little-known cryptocurrency.
Various users on the microblogging platform X (formerly known as Twitter), have suggested that the traders making such high-risk investments in these newly launched cryptocurrencies are the developers behind them or marketers helping pump the cryptocurrency’s price up so they could later sell the tokens at a higher value.
Featured image via Unsplash.
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