They're called shitcoins for a reason.
Before we get started, let me differentiate between altcoins and shitcoins.
Altcoins used to be called shitcoins. Until altcoins started getting actual values and market caps.
So an altcoin is any coin that isn't Bitcoin. They usually have nice trading volumes(above 1 million dollars) and decently lower prices than Bitcoin. They are also controlled by Bitcoin's movements in that when Bitcoin moves up, they also move up and vice versa.
A shitcoin on the other hand is an altcoin that doesn't possess those characteristics. It's an altcoin that doesn't have a nice trading volume and surprisingly isn't controlled by Bitcoin's price movements.
These are usually scams, and I don't advice trading them, but I know a guy who once got 500% on a shitcoin. It's really tempting stuff, but I'll explain why you should steer clear of them.
Shitcoin scams are really everywhere. Someone on twitter builds a following and then ensures that they trust them. These people have previously created the shitcoin, and listed it on shady exchanges.
They then proceed to get their community to buy the coin and hold it in preparation for big returns. Obviously the community has been blinded by all these shenanigans the person has been telling them.
After a while, when the owner has seen enough if the coin has been purchased, the pump happens. The owner floods his large holding of crypto into the market which drives the price to obscene levels.
The community members who were obviously not expecting that kind of thing quickly but up the owners stash to see if they can ride the wave.
Once the owner has gotten his whole stash sold, the dump happens. The people who bought are all trying to sell to get those profits in and get that yellow lambo. But there's not enough buying power left to ensure that all the new sell orders get filled.
So sellers overpower buyers. And the price drops.
Many investors would be unlucky, although some people who had holdings before the pump may become rich off this. But the probability is quite low.
The creator of the coin gets rich. I mean, REALLY rich.
And that's how shitcoins work.
Stay away from them if you do t want to be the unlucky investor.
