The Accidental Pump?

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The last couple of weeks has seen some new and inexperienced people come into the world of crypto. This has meant that sudden pumps have started to take place more frequently as the naive and greedy are led astray by those who should know better...

Take for instance the problem of the DOGE pump by Elon Musk. Who knows what sort of game he is playing... probably just screwing with people because he is rich and doesn't need ever know about the lives that he screws up. But let's not ever kid ourselves, if someone is shilling something, it is more than likely that they have personal profit motive in mind and not the financial well-being of countless faceless internet citizens... including you! However, there is only so much that people can be told about the inflation problem of DOGE and how it has a long history of being the go-to coin for dumping on noobs, or that the concentation of the DOGE is in a few unknown wallets or that the development team is out of the game and not involved any longer.

All these things should be a red flag to the cautious... but BUY NOW, PROFIT!!!!! MOON!!!! WEN MOON?!?!??!!?... rekt.

Anyway... off topic...

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This morning, I woke to a crypto market that was mostly seeing red and retreat. Except for this weird weird ~500% jump in POL. I've seen these before, and they have usually been some sort of API or price reporting glitch (unfortunately...). But those glitches tend to send a crypto up to the multiple trillions of USD, but this wasn't that sort of unlimited overnight gain.

So, I decided to quickly log in to Kucoin to see if it was real or not. It turns out that it was real, but I was completely confused. POL is the Proof of Liquidity token that Pool-X (the staking part of Kucoin) issues. Basically, it allows users to pay to enter or exit into time locked staking contracts. There is a market for those wishing to exit matching those who wish to enter, and the POL token is used to bridge the demand for those wishing to access or lock liquidity.

It is a limited use case for Kucoin users only, despite being issued on the public TRON network. There had been no public annoucements for Pool-X and changes in the use case, and so there was no real reason for the spike in USD price. After all, since launching, the POL token has been pretty steady between 1-3 cents per token.

So, what would cause the token to suddenly spike up roughly 5 times it's regular worth? Well, the most obvious answer would be that some DESPERATELY wanted to exit or enter a locked staking contract. Ha, that would have to be seriously desperate to move the price THAT MUCH!

Or more likely... another token Polkastarter (POLS, issued on Ethereum) has been on a huge rocket ride recently. Currently trading at around 5 USD, it launched in September at around 2 cents. It is the token required to access and participate in the early private token sales (IDOs) listed on the Polkastarter project. In this bull market, lots of people have started to look at early access to tokens as a way of beating the market and looking for those 100x gems.

I suspect, but have no proof, that someone mistook the POL token on Kucoin or TRON to be the Polkastarter POLS ERC token and decided to go big on in... after all, the arbitrage would be 3 cents vs 5 dollars! Easy money... unless they were different tokens!

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It is really hard to state how big this jump was... only on a zoomed out TradingView chart can you actually see the top. In the Kucoin charts, they aren't even bothering to have the scale correct, other wise the rest of the history of the POL/USDT market would be a continuous flat line!

So, I did what anyone would do... sold some POL immediately on market, and set a spread sell orders to catch any other peaks. The Sell side of the market was incredibly weak, and so if a few more people jumped on the mistake, then the price would spike without too much effort.

Of course, I want to recover the POL when it comes back down as I want to have the access to liquidity in the locked contracts if I need it. So, the buy orders are already set for the regular price of POL.

Whenever a move like this takes place, I really try to think it through and see if it is a move backed by fundamentals or not. Sometimes I get it right, other times not so much... I guess the trick is not to go 100% one way or the other. Hope I got it right this time, because the POLS hype is real... but the POL token has no reason to pump!

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