Many recent ICOs have taken the same approach as low quality “pink sheet” stocks and their promoters – a variation of the old pump and dump scheme in which new currencies are hyped up beyond their fundamentals (yes, cryptocurrencies have fundamentals) by spam e-mail campaigns and newsletters. And so, following one or more ICO rounds, many of these currencies will often rise exponentially, float for a brief moment, and crash hard.

In addition to fundamentals such as market capitalization and trade volume, consumer sentiment is a huge factor in the cryptocurrency market. Currencies with a smaller market capitalization have a high risk of exploitation through artificial inflation by these pseudo-speculators. While pump and dump schemes are illegal when perpetrated by the entity that is offering the stock (or currency in this case), a third party can swoop in on a new currency and manipulate the price for its own benefit – in this case, the benefits realized by the associates who invest and sell before the propped-up currency bombs as well as the added bonus of “being right” when the self-fulfilling prophecy comes true.

And so, dear readers and potential investors, be careful when evaluating ICOs. We are still in the early days of cryptocurrencies and the sheriff’s not in town. As a result, we must deal with the conditions of a REAL free market and adjust our strategies accordingly.