A couple weeks ago, anonymous developers launched a cryptocurrency called Squid Game (SQUID).
It was based on the hit Netflix (NFLX) program of the same name.
You may have seen the show… It’s about indebted Koreans who stake their lives on winning a big sum of money by playing childhood games with deadly twists.
You were supposed to need SQUID to play an online version. And winners of the game were supposed to win real money like in the show… minus the gruesome deaths.
But the whole thing was a giant scam. The game was never up and running… and buyers couldn’t sell their tokens because of a lockup clause.
SQUID shot up 310,000% in a week. At one point, CoinMarketCap had it at a $360 billion market cap. At that valuation, SQUID was worth more than Netflix, which has a $289 billion market cap.
Then the developers broke their own lockup clause and dumped their coins to cash in on the gains. And SQUID plunged to zero in a matter of seconds.
The scammers got away with a reported $3.3 million. Regular investors got gouged.
CNBC reports that one investor based in Shanghai put his life savings – about $28,000 worth – into the scam coin… and lost it all.
I (Chris Lowe) want to make sure you avoid this kind of fate. So today, I’m sharing with you three key lessons to take away from the SQUID con.
Then at the end of today’s dispatch, I’ll show you one legitimate way to profit from the ongoing crypto boom.
Ever wonder why tipping 20% is the norm in the U.S. but not in Europe?
Or why Americans and Europeans shake hands, but the Japanese bow to each other?
Or why red MAGA hats started appearing on millions of Americans’ heads circa 2016?
Humans are imitators. We copy what other people do all the time.
Investors are no different. We tend to buy what we see others buying.
The more investors we see piling into a crypto or a stock, the greater the attraction for other investors.
And conniving folks can use our natural attraction to memes to pump and dump investments.
In January, meme stock GameStop (GME) – a struggling video game retailer with an army of Reddit fans – rocketed as much as 1,790% over two weeks.
It then plunged as much as 69%.
And crypto can be even more meme-based than stocks.
We saw this recently with Shiba Inu (SHIB). It’s a dog-meme-based coin created as a competitor to the more famous dog-meme-based coin Dogecoin (DOGE).
The creator of SHIB is a developer known only as Ryoshi. It’s a play on the pseudonymous creator of bitcoin (BTC), Satoshi Nakamoto.
So SHIB is a meme built on top of memes.
And over the past two months, it’s rallied as much as 900% before plunging as much as 44%.
The SQUID scammers were meme masters, too…
Within four weeks of its release, Squid Game became the most popular Netflix original show ever – with 142 million households viewing it.
SQUID piggybacked off the show’s popularity. Only this time, it wasn’t just a meme coin… It was a meme coin con.
Even when you leave out meme coins, we’ve seen huge run-ups lately in legitimate cryptos.
Since the start of the year, Solana (SOL) is up 18,412%… Fantom (FTM) is up 19,242%… and Axie Infinity (AXS) is up 26,479%.
Seeing other folks rack up those kinds of gains has a profound psychological effect. We’re so keen not to miss out… we can throw caution to the wind.
Instead of doing the hard work… figuring out how much an investment is really worth… we start to play the game of “greater fool.”
We buy overvalued investments because we think there will always be a greater fool willing to pay an even higher price when we go to sell.
It’s a point our tech expert, Jeff Brown, drove home over at our Bleeding Edge e-letter on Friday. Jeff…
The important thing to keep in mind with meme coins – or meme stocks – is the gains are driven entirely by public sentiment. The growth is not driven by the fundamental value or potential of the asset. It’s a feeding frenzy born from a crowd mentality.
Unlike bitcoin and ether (ETH), Shiba Inu – and other so-called meme tokens – has little utility. There’s no use case for SHIB yet. And while it may develop one following the surge of interest, there’s no guarantee it will.
So I wouldn’t call buying SHIB “investing.” Rather, it’s taking a purely speculative position. Just as quickly as it has gone up, it could reverse course.
Sure, you can put a small amount into a meme coin as a “lottery ticket” trade. But you should never confuse that with crypto investing.
Crypto investing involves understanding the breakthrough blockchain technology that makes legitimate cryptos so valuable.
It entails sifting through the roughly 7,500 crypto projects out there for the ones with the most potential.
And it requires years of investing experience to understand how to avoid the pitfalls so many rookies fall into.
That’s why we have Jeff and world-renowned crypto expert Teeka Tiwari on the team.
Jeff is best known for his recommendations around 5G wireless networks, gene editing, and self-driving cars. But he’s also an expert in blockchain tech and digital assets.
He’s been a private investor in several crypto-related projects… including real-time global payment network Ripple (XRP) and one of the world’s largest crypto exchanges, Coinbase (COIN).
He’s also been to Capitol Hill to advise lawmakers on digital currencies as part of his work with the Chamber of Digital Commerce.
He’s even traveled to Israel on a U.S. Certified Trade Mission on blockchain and digital payments.
And Teeka is a former Wall Street VP and hedge fund manager who was the first guy in our industry to focus an advisory solely on crypto.
Since then, he’s given his readers the chance to make gains of 16,180%… 32,296%… 36,013%… 37,224%… and 49,578% on his recommendations.
These recommendations didn’t come easy… Before the pandemic hit, Teeka had already spent nearly 100 days of 2020 on the road hunting for new crypto opportunities. And the previous year, he flew more than 200,000 miles and spent 193 nights in hotels.
He’s been to Lisbon, Portugal… Davos, Switzerland… and even Moscow, Russia, to find life-changing opportunities for his readers.
Over all these research missions, he’s assembled an unparalleled network of contacts in the crypto industry.
They each put together hedge-fund-caliber research teams.
Between them, they employ about a dozen analysts to help find the crypto projects with the most potential… and then do due diligence on them.
So when they issue a recommendation, you can be sure experts have pored over, studied, and stress-tested it before you buy in.
Last week, for example, Teeka hosted a livestream about a new opportunity called “Tech Royalties.”
They also pay out fat streams of income… in crypto.
That means you get paid to hold them… while you wait for their values to rise.
And Teeka believes now is one of the best times to add Tech Royalties to your portfolio.
That’s because a catalyst he calls the “Second Phase”… which is programmed to happen in 2022… will trigger an explosion in value.
Over 31,000 of your fellow readers learned about the Second Phase from Teeka’s livestream. And Teeka gave them the name of his No. 1 Tech Royalty just for showing up.
So if you haven’t already, you can catch the free replay of his event here while it’s still online.
Until tomorrow,
Chris Lowe
November 8, 2021
Barcelona, Spain