What does Sniping Mean?
Sniping is a buying strategy that involves being the first (or among the first) to buy a newly released token and selling them to new buyers. The aim of sniping is to make quick profits by capitalizing on the rapidly increasing price of newly released projects.
When the liquidity pool is created on a decentralized exchange, buyers rush to get their tokens as early as possible. This causes the price of the token to increase rapidly. By sniping the coin as soon as it is released, persons can get tokens for as cheap as possible and sell them back to investors for a significantly higher price just minutes afterward.
Since this technique requires a significant amount of timing and speed, snipers typically use automated sniping bots.
A Deeper Look at Sniping
Sniping is an effective strategy during presales, and they are especially prevalent in Binance Smart Chain projects. When a project is about to be released, the project team will usually inform investors of the time the liquidity pool opens.
Once the pool is created, buying and trading can commence. As investors continue to buy upon release, the number of coins in the pool changes, causing the price to rise due to increasing demands. This mechanism makes it advantageous to buy newly released coins as soon as possible.
Snipers take advantage of this mechanism, using automated means to be among the first buyers. Since prices can soar by tens or hundreds of percent upon launch, snipers can sell their cheaply bought tokens to new investors for massive profits.
While sniping has its benefits for the users of sniper bots, it can be detrimental to the price of new projects. Projects that have a significant amount of their coins sniped can suffer crashes due to large sell-offs. This rapid price decrease can scare away potential future investors.
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