- A summary of a time when Safemoon was the golden goose for many crypto investors
- A look at the collapse and what anyone looking to invest in Safemoon should consider
So, are you thinking about investing in Safemoon. why wouldn’t you? I mean, it has the word “moon” in it, so it’s probably going to moon during the next bullish cycle, right? Well, that’s not always so obvious.
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Some due diligence would be ideal before investing in Safemoon. The latter is a DeFi project that exists for the same reason Bitcoin and Ethereum exist. To provide a decentralized financial DeFi option that eliminates third parties. It had a very strong start in 2021 probably thanks to good timing. Unfortunately, the success was short-lived.
SFM’s market cap peaked at $5.1 billion in May 2021 at the height of the previous bull run. This underlines the strong start of the project as it managed to secure heavy investments. It has since lost most of that market cap since the start of the crypto winter. Understanding why it has gained and lost such a large market cap can provide insight into whether investing in Safemoon is still a good move.
Source: Coinmarketcap
Part of Safemoon’s initial success was due to how it was marketed. What set it apart from most of the top cryptocurrencies is that the project claimed to implement measures that would discourage speculative trading and encourage long-term hodling. It aimed to do this through a 10% tax on every sale, so the incentive part.
The project aimed to share half of the 10% fee collected with Safemoon holders, while the rest of the money would be burned, reducing the circulating supply over time. This type of tokenomics was quite attractive to investors, hence the strong demand in the early days.
Speculative trading caused great volatility in the market. Buyers who profited during the 2021 rally saw Safemoon as an opportunity to capitalize on the long-term opportunity the project promised. Unfortunately, that hype was short-lived as the bear market took over.
A bumpy and failed rocket ride
The “what goes up must come down” idiom perfectly sums up Safemoon’s fate over the past 2 years. It had a hard time during the crypto winter, which resulted in significant outflows. The rocket that many hoped to ride to the moon crashed hard. This crash was fueled not only by the bear market, but also by the rise of legal concerns.
Cracks appeared in the Safemoon rocket as selling pressure wiped out most of the liquidity previously poured into the Safemoon project. There was also an exploit that further eroded investor confidence. In addition, many of the developers involved left during the demise, further eroding the moat of trust that previously surrounded the project. An FBI investigation was the icing on the cake.
The final nail on the coffin may have been provided by an investigation by the popular YouTuber Coffee. He described the project as a billion-dollar scam and provided compelling evidence to support his claim.
For perspective, SFM’s market cap fell from over $5 billion to just $2.66 million last December. However, it has since made a gradual comeback with a market cap that has risen to $3.8 million. This suggests that some confidence is returning to the project. In other words, there are still people investing in Safemoon despite the events of the past 2 years.
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Many cryptocurrencies are starting to see renewed interest, especially after the steep discounts they received during the crypto winter. But now the markets are recovering.
SFM has benefited slightly from renewed demand over the past 6 months. Spikes in volume and weighted sentiment even confirm that some investors still believe in the project.
Source: Sentiment
But what about the network? There was no developmental activity, except for a sudden spike in early April.
Despite this, the recent activity and slightly boosted price were not strong enough to warrant strong price volatility.
Source: Sentiment
The light market activity is proof that there are efforts to revive the project. In fact, the official Safemoon Twitter handle claims that the network is still under development, but on-chain analysis seems to reveal a different result.
#SAFETY FAMILY, we want to give a shout out to our awesome Blockchain Development Team! They’ve been working hard behind the scenes and we want to celebrate their fantastic progress by sharing their latest update with you. 🙌
Blockchain Development Updates:
☑️ Chain SOS… pic.twitter.com/Q65BEoIZUp
— SafeMoon (@safemoon) April 21, 2023
In short, there are still people investing in Safemoon. However, the project has gone through a massive shakeup and many investors who got into it in 2021 ended up with huge losses. The barely existing development, in combination with the contaminated history, does not necessarily inspire confidence.
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Safemoon is another classic example of a project that flew too close to the sun and ended up burning up. And not in the right way. Volumes driven by people investing in SFM were low, hence low investor confidence.
Only time will tell if it can even make a comeback.
