The incredible rally and the price collapse of 70% and what lessons investors should take in cryptos. The importance of research, the mistakes of "experts" and manipulation phenomena.

Cryptos. For others, the subject of dreams and other causes of nightmares. For sure, cryptocurrencies, especially altcoins, aren't for everyone. It concerns those investors who seek to multiply their money knowing that they risk losing most. Nowhere else will we find such sharp fluctuations in stock market. It is a ride on the "train of terror", providing alternations from enthusiastic climbers to scary screams of fall.

A recent example is Matic (MATIC). The import price was $ 0.0026, this April. Indeed, because there was a great deal of interest in the public offering, they were drawn by drawing lots, as there was a $ 300 limit on how much each investor could earn. Within a month of the price reached 0.046. It almost 20x!

Within two weeks it rose from $ 0.014 to $ 0.43. It tripled before it crashed by 70% in one hour. Matic's biggest fall since it began trading publicly. But the adventure didn't end there. The next day his price almost doubled. The train of terror we said earlier.

 Is this an isolated incident? Of course not. What has happened to Matic has happened again and, most importantly, it can happen to any crypto currency. It may be extremely unlikely to see it in larger capitalized cryptocurrencies, but not at all difficult in small ones.

The sad thing is that even today, crypto scams constitute a significant proportion of overall activity. What will be the solution to protecting us? One and only: proper information and serious research. Asking your cousin's opinion because he learned of a cryptocurrency whose existence was ignored a few hours ago is not a wise move. The degree of affinity is not a reliability criterion.

When we say information and research, we do not mean just one source, even if it is a mainstream media. Forbes, for example, posted an article titled "Bitcoin Competitor Crashed 70% in One Hour" for this incident! When one claims that Matic is a competitor to Bitcoin, it is as if he considers the neighborhood grocery store is a competitor of Walmart. Craze!

Fear of losing the ascent train makes you in a hurry. Expected. This is a behavior that we constantly see in stock markets. Expected but not understandable. It's really important to prevent a trend in its early stages, but will you be blind? No matter how you hurry, has anyone crossed your street a pedestrian without first looking left and right if cars come? In investing why do you find it right to move with your eyes closed?

Matic (MATIC) has a specificity. It is one of the Initial Exchange Offerings (IEOs) of Binance's largest exchange today. What are IEOs? Rather than targeting investors directly as ordinary ICOs do, they assign traders to act as contractors. They undertake to promote them to their customers, offering an advantage: they "guarantee" their own credibility. They assure prospective investors that they have checked out the business plan, executives and generally all they need to assure that it is worth investing in them.

Also an advantage is that economies of scale are created. A startup does not need to spend time, resources and energy to get financing. The specialist exchange undertakes the job. However, some were skeptical from the beginning. They felt that the compulsory use of a single spare part made the project suspect.

This is why unhappy investors have been complaining, even harassing Twitter. The spirits had sharpened, so Binance's CEO Changpeng Zhao took over. The CZ, like Zhao's aide, claimed that the Matic team was not responsible for the fall. Just some traders who had a large amount of coins for some reason panicked and wanted to sell, so the offer could not be easily absorbed.

Bad languages ​​say that there was no reason for the fall, but there was no reason for the rise! It was a classic case of pump and dump. This expression is about trying to raise the price of a stock market through rumors, often misleading. The culprits already have a sufficient amount of this value and thus aim to sell it at a higher price. The drop is called dump.

In other words, there is widespread suspicion that the rise was the result of manipulation, with CZ and his people being the first reasonably suspected. The suspicions are heightened if we consider that it was not only Matic that has made a significant correction in recent days. Other Binance IEOs behaved similarly: Celer Network (CELR), Fetch.ai (FET) and Hormony (ONE).

Why did it happen? Is it a coincidence that their course was parallel? Are small cryptos opaque and why are such unpleasant situations happening? Paradoxically, much of the data that should sound an alarm is published. For example, the 100 largest token holders held 99.08% of the total.

If that doesn't put us in doubt, I don't know what it can do to us! What can this mean? That one of the main holders is responsible for the draft. Lack of liquidity and low dispersion are disadvantages. The "bad moment" is not to blame.

It was almost never a good idea to run behind a stock when the owners own 99% of the shares. Why is cryptocurrency an exception?