Stellar pump concerns

The market continued to make crazy moves over the weekend, especially Ripple, NEM and Stellar, the latter at one point hitting +250% 24-hour growth yesterday.

While it is easy to sit back, look at margin growth and be happy, I am now feeling more cautious than ever.

While the growth of Stellar has been impressive, it does possess the classic characteristics of a pump and dump. A pump and dump being where large investors, known as whales, will pump the price of a coin with some large, quick buys. As FOMO buyers jump in, the whales move out, and the price drops back. It is very easy to lose money during a pump and dump, especially if you are a new investor.

As a rule, I never invest in a pump, unless there is significant news to support it, even then I am cautious as by the time you have invested, the news might already be priced in. The only recent time I have joined a pump was with the Litecoin activation of Segwit, and this was because there were still rumours of Coinbase coming and Lightning Network. This proved to be a good call as the price has since doubled.

With Stellar, my initial investment was small, but growth this week has been huge, without any real news to support it. As a strategic and sensible investor, this concerns me; I do not mind a pump on a top 5 market cap coin because institutional investors can easily support this. For a coin such as Stellar to pump as much as it has, without news, then it is time to take a closer look.

When researching Stellar, the only discussion points I could find is that one of the original devs was involved in Ripple and has a shady record of sticking to projects, was kicked off Ripple and was involved in MT Gox, which was hacked for hundreds of millions of Bitcoins.

Red flags everywhere!

I closed my entire position on Stellar this morning, for two primary reasons:

  1. The growth is ridiculous without news; I believe this is, therefore, a pump and dump.
  2. I am in to make money, I don't worry too much about what could have been. Trying to sell at the top and buy at the bottom is impossible and will send you mad.

+1,100% profit is a good trade. I am happy. If it goes up further then so be it. "What if" trading is emotional and hindsight is a beautiful thing. If you are making a profit, be happy, don't get greedy based on "What if" decisions, you may start making emotional gambles and lose money when the market turns against you.

While it may continue to rise you can always look back and regret it, equally if it drops you can always look back and think you are a genius. For me, the long-term goal is to make a profit. For coins such as Bitcoin and Ethereum, I am happy to buy and hold for years because they are stable long term projects, I am not happy to do this with something like Stellar, as such I sold my entire position to flip into Ethereum.