2.4.0. Hype Portfolio

2.4.0. Hype Portfolio

The Hype Portfolio should contain cryptos you will use to dramatically multiply your wealth in crypto investment.

Crypto hypes refer to massive outburst in trading activities of a crypto resulting in a sharp increase of the price of the crypto. These trading activities are usually purchases. The more there is buying of a crypto, the more the price of the crypto climbs up. On the contrary, the more there is selling of a crypto, the more its price will go down.

Thus, hypes around a crypto means there is an increase in buying of the crypto that will cause a surge in its price.

The hype cryptos are highly sentimental, and the sentiments around each of them can generate overnight wealth. For example, the hypes around Dogecoin in April 2021 produced overnight millions of dollars for holders of the coin.

About a month later, another hype around the Shiba Inu token pushed the price of the token to an all-time high, resulting in many holders of the token becoming instant millionaires. That is the power of hype cryptos.

2.4.1. Common Factors that Trigger Hypes

You may wonder what factors can generate strong sentiments that will trigger a hype around a crypto! The following are the common factors:

(a). Sudden massive reduction of circulating supply

Market Capitalisation of a crypto is a product of its market price and circulating supply.

Market Capitalisation = Market Price x Circulating Supply

This means that the Circulating Supply is inversely proportional to the Market Price.

Circulating Supply = Market Capitalisation / Market Price.

That is, the smaller the Circulating Supply, the higher the Market Price of the crypto, and vice versa. Thus, if there is a sudden massive reduction in the circulating supply of a crypto, its price will shoot to the moon.

This was the case with the Shiba Inu token. In May 2021, Vitalik Buterin, the Ethereum co-founder, was sent 500 trillion of Shiba Inu token (representing about 50% of the token maximum supply) by the token’s creators in what appeared to be a marketing stunt.

Vitalik decided to burn 90% of the Shiba Inu tokens that were sent to him, and donated the remaining 10% to charity to fight the COVID-19 pandemic in India.

The 90% burnt resulted in a sudden reduction in the circulating supply of Shiba inu. This generated a cascade of hyped activities that resulted in about 900% increase in the price of Shiba Inu, culminating in an all-time high in mid-May 2021. By this sudden price increase, many holders of Shiba Inu suddenly made millions of dollars!

(b). Introduction of new technology

The introduction of a new technology that improves the use case of a crypto will generate more attention for the crypto.

That was the case with Cardano. In August 2021, Charles Hoskinson, the founder of Cardano project that produced ADA coin announced the success of a smart contract inclusion to the Cardano blockchain. Within a week of the announcement, the price of ADA skyrocketed by more than 100%.

Although ADA is not a memecoin, such things (introduction of a new technology) can happen with a memecoin that will drive up its price.

(c). Influencers’ effect

There are a couple of influencers whose words can drive up the price of a crypto. A typical example is the influence of Elon Musk on Dogecoin that triggered a hype around Dogecoin. Musk, one of the richest billionaires and the CEO of Tesla, the pioneer company of electric cars in the world, started sending tweets about Dogecoin in the early part of 2021.

Each of Elon’s tweets caused a surge in the price of Dogecoin, resulting in about 12000% price increase within 4 months that culminated in an all-time high in May 2021.

Imagine if you had bought just 1 000 dollars’ worth of Dogecoin in early 2021, an increase of 12000% will yield 12 million dollars! That was how many millionaires and billionaires were born from Dogecoin in 2021.

This kind of opportunity is still present in the Crypto Market. All you need to do is to identify them early and ride the wave of hypes into financial fortune.

(d). Community Pumping

Communities like Wallstreetbets have been known to use their huge followership to pump and dump a crypto.

For instance, in July 2021, the buying activities of the huge Etherconnet communities were able to cause a price growth of EIFI token from about 0.1 dollar to an all-time high of 390 dollars within a month, and that is about 390000% increase! That is insane profit, showing the power of hype cryptos in driving for financial success.

2.4.2. Three Main Challenges with Hype Cryptos

There are three main challenges with hype cryptos:

(1). The Hypes are not methodological

There is no standardised method to predict which and when a crypto will be hyped. Hence, it is more like gambling. Nonetheless, when the hypes start, you can multiply your income greatly within a short time.

However, the following three indicators can be of assistance to show which crypto will likely be hyped and when the hype might likely take place:

(a). When you see a huge community backing a crypto.

You can easily notice this by checking the explorer for the recent activities around the crypto. Crypto explorers have been discussed in Course 4.

(b) When you hear a lot of comments about a crypto in the Crypto Market

If you are following the Crypto Market, you will see the trend of events and can easily spot which crypto is generating much interest in the market.

(c). When you notice influencers coming into a crypto project

All through history, whether in the stock market, forex market, or any other market, influencers have been known to dramatically pull market sentiments. The influence of John D. Rockefeller, the petroleum global icon, on the stock market in the 20th century is a good example.

The Crypto Market is not an exception. Hence, if you are a smart investor, once you notice influencers entering into a crypto project, that is an indication of a possible hype and you should immediately start to position yourself appropriately.

(2). The Hypes are short-lived

Another challenge with crypto hypes is that if you do not get in before the hype starts, you will have missed most of the strong market movements around the crypto because the hypes are usually short-lived.

Hence, any subsequent investment in these hype cryptos will require waiting again for another hype, which may not come again that season or may never even come again.

The good thing is, if you understand the Crypto Market and follow the indicators above, you can partly predict which crypto will likely enjoy a hype, and you can as such buy some of the cryptos and wait for the hype.

(3). Hypes come with a lot of scams

Another challenge with hyped cryptos is that many of them are shitcoins or outright scams.

Going through the EDA School of Cryptocurrencies will equip you with the ability to forecast incoming hypes, and be able to detect shitcoins/scams from genuine ones.

2.4.3. Examples of 2021 Hype Cryptos:

The hype cryptos are mostly memecoins and nunfungicoins. Gamecoins are new in the Crypto Market and they are poised for hypes as well.

In the 2021 Crypto Bullrun, the following memecoins enjoyed hypes:

Dogecoin                   Safemoon                 BabyDogecoin

Shiba Inu                   Safemars                   Pandainu

2.4.4. Two Important Points to Note in Hype Cryptos

(a). Must you Avoid Hype Cryptos?

The question is: Because of its temperamental, unpredictable, more-or-less gambling nature, should you completely avoid hype cryptos as some people suggest?

Of course, NO. You shouldn’t avoid hypes cryptos. They can make you rich overnight by multiplying your wealth faster than you ever expected.

Many crypto celebrities have enjoyed and still invest in hypes cryptos. For instance, Elon Musk has a good amount of the memecoin Dogecoin.

Vitalik Buterin, the creator of Ethereum, invested 25 000 dollars in Dogecoin in 2016 and made more than 4 million dollars in profits in 2021, thanks to Elon Musk's tweets!

However, note that as much as it can dramatically fetch you financial fortunes, hypes can as well wipe off all your crypto gains. Therefore, the usual advise is only invest what you can afford to lose.

(b). Not a Primary Target for Crypto Portfolio building

The point here is that hype cryptos should not be your primary target if, indeed, you want to methodologically reach your financial goal.

In other words, do not focus primarily on hype cryptos to build a healthy Crypto Portfolio that will generate the financial dream you desire. If you do, you may be disappointed.

For instance, Vitalik Buterin did not buy Dogecoin as his main financial target. His target has been bluechip cryptos such as Ethereum.

If you want good results, then do what the rich do and you will get the same results.

You can buy marginal amounts of the hype cryptos for your Hype Portfolio to store them for another round of the market surge, if at all there will be another such surge. The good news is that as the Crypto Market advances, some of the memecoins are being built with some use cases that will make them competitive as long-term investment articles, hence, ensuring continuous growth.