SafeMoon is an alt coin created on the Binance Smart Chain (BSC) in March 2021 and caught the eye of many cryptocurrency enthusiasts, when its value was ratcheted up by 99% after its debut. It reached an all-time high of $0.00001094 on May 11, 2021.
SafeMoon capitalized on the phrase “safely to the moon,” ensuring investors a “rapid rise in price” with pre-calculated market risks. SafeMoon entered the market with the aim of rewarding investors who hold the tokens instead of trading them, thereby, as per CEO John Karoney, “circumvent the processes of bank lending and instead, establish peer-to-peer networks”.
Following its swift rise to being the third-largest token on the Binance Chain by market capitalization, due to its insane price action, a common question is – ‘Will SafeMoon Reach $1?’
In a nutshell, it is implausible for SafeMoon to reach the $1 mark. Why? Let’s take a look.
First, let’s see how SafeMoon works.
According to the SafeMoon “white paper” it has three core components:
- The first is “reflection” where, when someone conducts SafeMoon transactions, a 10% fee is charged, 5% of which gets distributed among holders of the token.
- The second is that out of the total fee charged on SafeMoon transactions, half of it is re-divided i.e. 2.5% is given to various liquidity pools on Pancake Swap and other platforms, while the other 2.5% goes into SafeMoon development and marketing.
- Finally, the third is that a token burn occurs on each trade; nothing is mentioned about what percentage goes into the burning, but the “white paper” mentions manual token burns by pre-built mechanisms in SafeMoon’s protocol, done at the discretion of the team.
The price of SafeMoon did soar shortly but has since fallen by 80% from its peak, back to earth, and in a shallow grave. SafeMoon, like all cryptocurrencies, is an extremely speculative asset with no intrinsic value, which means, if you invest without proper research, you might just end up losing your money.
Reasons why Safemoon cannot reach $1
1. Market Cap and Supply: Terrible Tokenomics of Safemoon
SafeMoon started with 1 quadrillion tokens, out of which 223 trillion tokens were burnt, so there were about 777 trillion tokens in circulation when it launched, each with a value of $0.0000000010. At the time of writing this, the market cap of SafeMoon is $2.28 billion compared to the $819.87 billion of Bitcoin.
Market cap is simply based on the supply-demand ratio, which is why even a new cryptocurrency with a reduced supply might have a high price depending on the demand. Safemoon has a massive supply and it is impossible for it to reach $1 one because then it would have to reach a market cap which would have to be more than the GDP of most countries.
2. Utility: No Real Purpose For the Token
SafeMoon has managed to entice investors based on popularity and the ongoing crypto investment mania, but it inherently has no real-world purpose.
For example, when it comes to Bitcoin, it can be used as an alternative to normal-day currency to procure services and products, while Ethereum can be used to enable smart contracts that help developers build decentralized applications.
For a cryptocurrency to retain asset value, it needs to have a real-world purpose or a competitive use – neither of which exists in the case of SafeMoon. Thus, it is very unlikely that SafeMoon will sustain itself in the long run.
SafeMoon had a promising start. It got celebs like Logan Paul, Afrojack, and Dave Portnoy promoting it through tweets. It went ahead and covered lots of future plans on the website and through live streams, too. Some of these include:
- SafeMoon wallet, app and even, a video game
- An exchange dedicated to SafeMoon
- Integration with African markets like the Gambia to “provide technology for innovation and learning purposes”
- Turning SafeMoon into the “fuel of the unbanked” through the discovery of “Project Pheonix” (yeah, it’s spelled like that)
But months have passed since – there’s no sign of Project Phoenix, and no amount of marketing gimmicks have been able to raise the value of this fallen cryptocurrency token.
Let’s enumerate the risk factors of purchasing SafeMoon now.
3. Volatility: Extreme Volatility When Compare to Other Coins
SafeMoon has exhibited a very volatile trend with its rise and fall in pricing. After its initial market introduction, SafeMoon had risen to about 20000% before tumbling down to a negative 80% in the following months. The price action of the coin is news and hype driven. With such frequent and wide fluctuations, investors have understandable difficulty in trusting their returns.
Since SafeMoon was built to hold and not trade in mind, the 10% fee for buying and selling sticks like a sore thumb when it comes to investing in it.
SafeMoon trading is not very convenient due to two main reasons – one, since it was built to be held instead of to be traded, it is inconvenient for traders looking to buy in and sell out of SafeMoon quickly, owing to the 10% fee, that makes liquidity an issue; and two, SafeMoon is not available on many major crypto exchanges, but instead, has to be bought off pancake Swap, which does allow for trading for quite a number of cryptocurrencies but still has a long way to go, in terms of becoming mainstream.
Owing to factors like low market cap and high supply, centralized token distribution, and no competitive edge, SafeMoon is a very risky asset to start your cryptocurrency investment portfolio with. Although there is still time for the tide to turn and the value of SafeMoon tokens to rise, it cannot be speculated to exceed 1$ anytime soon!
We have analyzed price actions for popular meme coins, might be worth a read.
Anish loves reading, researching, and writing about crypto and blockchain. He started his crypto journey early in 2017, what started as a fad is now a full-time hobby. He curates guides after thorough research on platforms and is responsible for the most in-depth guides on the site. You will find him walking his dog (not Doge) when he is from his Laptop.