Reddit "rugged" its community recently by stopping support for its community reward tokens. Among those, MOON is the most notable. The coin now runs on Arbitrum Nova (an ETH L2) and was given out to users who posted valuable content. Below is a chart of the returns after Reddit made its announcement (data source).
In brief, the coin crashed 80% in value. It has now recovered and is trading at a 70% decline from what it was before Reddit crashed everything.
Presently, the community is working on proposals to make the coin viable by, among other proposals, onboarding advertisers who must buy the coin to be considered for AMA sessions. Even after a recent pull-back, it's up about 100% on the week (see below).
In the wake of SBF's recent trial, the crypto market is taking a breather and this might make for a good entry point. To be clear, at stake is a speculative turnaround play.
If the proposals prove successful, then the coin could make close to a full recovery near its pre-crash prices, which would bag you 350%+ from prices.
- Current Price: $0.0715
- Pre-Crash Price: $0.251
- Possible Return: 351%
The key variable at play turns on Reddit's control of the MOON contract. Unless they relinquish that, they could print an indefinite number of moons, making the value of your position trend, at the limit, toward 0.
The possible downside is total a loss.
The present trade thus represents better than a 3 to 1 Reward to Risk ratio.
To limit downside returns, it might make sense to put a (or perhaps several) stop loss on your position. This is likely to avert some of the worst downside returns.
The fate of the MOONs contract is currently in discussion and we might get an answer within a week. If the news is positive, I’d expect another quick doubling in price with a longer path to pre-crash levels. This is the very definition of a high risk, high reward trade, but I find it interesting all the same.
Happy Trading!
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Note
The author published an earlier draft of this article on Quora here: https://www.quora.com/What-are-Reddit-Moons/answer/Sebastian-Purcell-PhD-1
