The cryptocurrency SafeMoon has recovered slightly from a large fall this week, as experts warn that its value is likely to continue to be volatile and that buyers should beware.
Not much is known about the cryptocurrency which was launched less than a month ago but already it has had considerable ups and downs. This week its value slumped by 50 percent within 24 hours, from $0.00000944 to $0.00000216.
But it has rallied and as of Saturday morning, its value had increased to $0.00000629, according to Coin Market Cap.
SafeMoon tweeted a positive message to its 378,000 followers which said: “We are so incredibly lucky to have the HOLDERS that have been with us day 1, we see you… we see your commitment… we see your patience.
“From the whole Safemoon team THANK YOU for coming on this journey and putting your trust in our hands.”
Those who want to purchase the currency, which like Bitcoin uses blockchain technology, have to buy a Binance Coin (BNB) first, and then essentially swap it for SafeMoon.
Users need to set up a crypto wallet where their coins can be kept, with the organization recommending either Trust and Metamask. SafeMoon rewards its users by issuing a 10 percent penalty fee on sellers and redistributing five percent of that to currency holders.
However, experts have said that this model of requiring more and more people to keep buying in order to drive up the price makes it a risky investment.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, told The Sun that much of the demand is based on “traders hoping to benefit from future price rises rather than using the coins or tokens as a means of exchange.”
“Predicting the point at which demand subsides and prices begin to fall is very difficult, if not impossible,” Streeter added. “People risk getting their fingers seriously burnt.”
SafeMoon’s Facebook page tells buyers that they are rewarded “by simply holding and not selling,” advising “remember getting to the moon takes time and the longer you hold the more tokens you pick up.”
But Laith Khalaf, a financial analyst at investment platform AJ Bell, told The Express that SafeMoon “doesn’t sound too different from a pyramid selling scheme”.
“You’re simply reliant on someone further down the line being willing to pay more than you did to turn a profit, which is a risky bet indeed,” he said, advising that investors “steer clear—at least until a bit more is known about SafeMoon.”
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