Telegram Trading Bots: The Hottest Trend Right Now
Disclaimer:
Please note that this is not financial advice; we do not offer any. The following information is simply meant to be entertaining, interesting, and useful.
What are Telegram trading bots?
Telegram bots are user-programmed applications on the messaging platform Telegram that can help automate tasks such as trading and price checking.
Is it the real deal?
Currently, Telegram bots are experiencing a lot of hype. The total market cap of Telegram bots (not just limited to trading but also DEX-related) has grown from $5 million to over $139 million. This represents an increase of almost 30 times, but the reason behind this rally is not clear. Many new projects have been launched, but is this a genuine long-term trend or just a random pump? Let's discuss it further.
Why does the trend make sense?
Using Telegram bots is faster and more technically efficient than executing trades manually. All you need to do is copy and paste the contract address of the token and send it as a chat to buy the token. Additionally, it opens access to a wide range of strategies, such as copy trading. So, if you're an average crypto trader, you are likely to be less efficient and sophisticated than a Unobot, for example, but that doesn’t mean you’ll be less profitable.
Disadvantages
Using bots may require granting them access to your wallet as they execute trades on your behalf. Therefore, if you choose to use bots, it's recommended to connect a separate wallet and only transfer an amount that you are comfortable with them using.
Copy trading can be a good option, as long as the person you’re copying makes profitable trades. However, keep in mind that you’re relying on someone else’s knowledge and skills, and there’s always a risk that they will lose on trades, which will affect your profits. It’s important to remember that in trading, over 90% of traders tend to lose money rather than make it.
Native Tokens
The main utility of native tokens is quite simple: if you hold them, you pay fewer fees and gain access to features that are not available to the public. However, whether this is enough to justify their value is subjective.
Conclusion
Every trend goes through several phases. The first phase is the preparation phase, where the trend is just starting, and you might notice a growing narrative, as well as an increase in mentions, media coverage, and Key Opinion Leaders talking about it. During this stage, it may make sense to place some small bets on the trend and invest in multiple assets to see if they grow. However, the chances of losing money are also high.
The second phase is the hype phase when the trend is pumped up and growing rapidly. This is not the best time to make investments because when there is unstoppable growth, a correction is likely to happen soon. Buying at this stage has a high risk/reward ratio and is more like gambling than investing.
The third phase is a correction, where the price goes down and explores support levels. It's best not to touch the investment until a confirmed support level is reached. Afterward, if the trend is genuine, you may see a rebound and continuation of price discovery. If it's not, the trend is more likely to keep falling or stagnating. The trick is that we never know how long this phase might last.
Based on the current situation, we are clearly in the second phase. However, it is uncertain how high the price will go before a correction or whether it will continue to rise. From a VC perspective, the risk/reward ratio does not appear to be healthy.
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Have a great day.
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