A Half Glass of Crypto: Gifto (GTO)’s metrics don’t stack up.

Buying emerging altcoins without understanding what’s behind them might leave you high and dry.

2018 has seen a number of emerging or little-known cryptocurrencies value suddenly explode. Below are a few examples. Between 1/1/2018 and 1/16/2018 the following altcoins saw some eye-catching price movements:

0x (ZRX):

0x’s current peak was on January 13th, 2018 – which saw it up over 169% relative to USD and up 161% relative to BTC since the beginning of the year.

Stellar or Lumens (XLM):

Stellar’s current peak was on January 4th, 2018 – which saw it up over 156% relative to USD and up over 140% relative to BTC since the beginning of the year.

Gifto (GTO):

Gifto hit its peak for 2018 on January 4th, 2018. Gifto was up over 235% relative to USD and up over 252% relative to BTC since the beginning of the year.

So all in all, fairly impressive increases in value for these coins in 2018. Let’s say you did due diligence and bought into a number of these crypto’s right before the jump in value. Congrats!

But before any of that is done. Ask yourself: do I even know what is going on with these cryptos? Am I mistakenly in a pump and dump? Are any of these actually backed by anything?

Flipside Crypto’s Github Crypto Health Index may be able to answer some of these questions.

First off, as we’ve pointed out before, taking crypto development activity into account is important to gain insight into price movements and show the history behind a crypto beyond price, volume, and market cap information. So let’s take a closer look at the cryptos mentioned above:

This chart shows the historical health of the three coins, measuring from their creation until mid-january:

Right away we can see that Stellar and 0x have had a steady health indicator. However, what’s going on with Gifto?

Flipside’s Github Health Index is telling us something very important: as of now, almost no one is developing on the Gifto project.

  • There has never been any issue activity.
  • There has been all of one pull activity.
  • The amount of push activity is essentially nothing compared to many other cryptos seeing similar price increases.

All Github activity for Gifto follows quite a downward trend:

More information on Github activity can be found here.

Also, note the very little amount of time between the project’s inception on November 7th and it’s ICO on December 14th. While different types of crypto’s have varying development cycles, typically we see the time between ICO and project inception is longer. For example, 0x’s ICO was on 12 Aug – 16 Aug 2017, and the project started in April.

So what gives? Gifto was the fastest selling Asian ICO ever, selling out in one minute. The following price increases might reflect greater market trends, post-ICO hype, or maybe even a pump and dump. Either way, it’s hard to argue a crypto can hold its value without developers supporting it.

If you look at the recent news surrounding the three coins, the stories are very different. For 0x, you see a healthy combination of companies announcing they will build on the platform and news around price movement. For Stellar, you see a number significant ICO’s moving to the platform. For Gifto? A few articles about the price hike and not much about the underlying technology.

While diversification is important, buying an arbitrary coin because of price movement is not a reliable strategy. Without a sound technological backing you can expect the price to remain volatile or suddenly plummet. Take a deeper look into the cryptocurrencies in your portfolio or ones you plan to add. Some might be smoke and mirrors.

Learn more about Flipside’s Investment Clubs and Data Solutions

The above references an opinion that is for information purposes only; is not intended to be an offer for sale and it is not intended to be investment advice. Seek a duly licensed professional for investment advice.