THE value of SafeMoon has plunged by more than 50% over the past 24 hours following a recent rise.
At the time of writing, the cryptocurrency’s value has dived from $0.000008 yesterday to $0.00000578 this morning.
It comes as SafeMoon, which launched last month, recorded a 99% rise on Sunday after Bitcoin had its biggest single day drop for months.
It then hit its highest level ever on April 20, when its value reached $0,000013, according to CoinMarketCap.
SafeMoon technically isn’t a cryptocurrency but a decentralised finance (DeFi) token, according to its website.
They are very complex but essentially aim to disrupt the finance world to enable people to follow and lend in peer-to-peer networks, without needing a bank.
What is SafeMoon?
NOT a huge amount is known about Safe Moon and whether it’s legit, meaning the risk to your investment is very high.
SafeMoon technically isn’t a cryptocurrency but a DeFi token, which stands for decentralised finance token.
They are very complex but essentially aim to disrupt the finance world to enable people to follow and lend in peer-to-peer networks, without needing a bank.
Like Bitcoin they use a complicated method called blockchain technology.
SafeMoon claims it will reward people who buy and hold onto the cryptocurrency.
For those who sell the currency on will be slapped with a penalty.
SafeMoon charges sellers a fee worth 10% of the amount of the cryptocurrency they are flogging to buyers.
It then claims to reward investors that hold onto their purchases by redistributing 5% of the cash gained from the penalty charge among those who already have the currency.
Very little is known about the new crypto so far, so it’s difficult to say why its value is now going down.
However, the value of any investment typically falls if large numbers of investors begin to sell off.
Just like cryptocurrencies, SafeMoon’s value is highly volatile and experts say it’s similar to a pyramid selling scheme.
Laith Khalaf, financial analyst at investment platform AJ Bell, told The Sun: “You’re simply reliant on someone further down the line being willing to pay more than you did to turn a profit, which is a risky bet indeed.”
While Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “Much of the demand has come from traders hoping to benefit from future price rises rather than using the coins or tokens as a means of exchange.
“Predicting the point at which demand subsides and prices begin to fall is very difficult, if not impossible, and people risk getting their fingers seriously burnt.”
5 risks of crypto investments
THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
She added that SafeMoon’s name alone should also “ring alarm bells”.
Ms Streeter said: “Its name appears to be a play on the words ‘Safely to the Moon’, which has been one of the calls to action employed by Reddit traders in an attempt to push up the price of rival Dogecoin.”
Dogecoin’s price increased 91% in 24 hours last week after Elon Musk tweeted about it – and it has increased 20,000% from this time last year.
Buying cryptocurrencies and decentralised finance tokens are a risky business.
Investing is not a guaranteed way to make money, so you need to make sure you know the risks and can afford to lose the money.
Cryptocurrencies and decentralised finance tokens are also extremely volatile, so your cash can go down as well as up in the blink of an eye.
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In January, the Financial Conduct Authority warned that Brits risk losing ALL of their money if they invest in cryptocurrencies.
Meanwhile, an advert for a bitcoin exchange Coinfloor was banned last month for telling savers cryptocurrencies are a safe investment.
People considering investing in Bitcoin or shares and stocks have also been warned over “risky” tips being shared on TikTok.
What is the new cryptocurrency SafeMoon?
