An anonymous cryptocurrency trader turned an initial $368 purchase into $2 million in unrealized profits in just three days. X commentators have speculated about possible insider trading activity, although nothing has been confirmed.
Specifically, the trade occurred with the HIPPO meme coin on the Sui network against its native SUI token. According to Lookonchain As reported on October 2, the “guy” earned approximately $2 million in three days.
First, on September 28, an anonymous trader spent 198 SUI worth $368 to buy 253.5 million HIPPO. The “guy” then sold 119.6 million HIPPO for $325,000 for 175,000 SUI, realizing part of his profit.
At the time of the original post, the meme coin was trading at $0.012, with 133.9 million HIPPO behind it, worth approximately $1.7 million. However, the HIPPO/SUI pair on the Cetus decentralized exchange has already risen, touching price resistance at almost $0.014.
Concerns about Sui’s tokenomics
Sui recently reached 20th place in market capitalization with a market capitalization of $5 billion. However, its fully diluted value (FDV) is much higher considering that only 27.6% of SUI’s total supply is outstanding.
Thus, the cryptocurrency faces an inflation rate of 72.4%, which will inevitably reach the market, creating significant selling pressure.
Interestingly, most of these yet-to-be-released tokens are in vesting contracts overseen by Mysten Labs or private investors. SUI released more than $100 million in October, which sparked concern and criticism, Finbold said.
Justin Bones classified SUI tokenomics as the result of “pure greed,” as we published in May.
“SUI has a great design, except for the token economy: SUI claims to have a limited supply of 10 billion, with 52% “unallocated” until 2030. The problem is that there is over 8 billion SUI at stake right now! More than 84% of the shares supplied belong to the founders. To say that this is disgusting is to say nothing. The sheer greed of SUI distributors is simply mind-boggling.”
— Justin Bones
Some market participants have noted that the upcoming unlock explains why influencers and crypto media have suddenly started “promoting” SUI.
It’s an eye opener. Now I understand why KOL and many media outlets have been actively promoting $SUI for two weeks now.
Every time. https://t.co/Eqa7kkebUI
— Gourmet (@cardano_gourmet) September 29, 2024
Moreover, cryptocurrency trader and investor Wazz warned of Sui’s model, in which these whales with locked tokens can still bid and profit from the not-yet-circulating tokens promised to them.
If you have a coin that can be staked with locked tokens, you are being scammed.
You think you’re being smart by buying before you unlock the vest, but in reality, seed investors are dumping bet rewards non-stop at 100x valuation https://t.co/hR9eegJZCZ
— Wazz (@WazzCrypto) October 2, 2024
Meme Coin Traders and the Greater Fool Theory
Cryptocurrencies are inherently unstable and pose significant risks to traders, investors and users, even when there are reliable and useful projects. However, trading meme coins adds another layer of risk, especially related to liquidity.
Additionally, this asset class has characteristics reminiscent of financial bubbles, which can lead to a liquidity death spiral. The Greater Fool Theory explains the dynamics observed in meme coins. These are speculative tokens driven primarily by social hype and excitement without any organic demand.
Traders buy a token with the expectation that the “greater fool” will pay a higher price in the future. However, this scheme will disappear once there are no more “big fools” left to continue fueling the price, often facing liquidity issues and death spirals.
