Alexander Lorenzo explains how crypto projects fake low risk by inflating circulating supply to pump market cap and control price. Real risk comes down to liquidity: low liquidity means very high risk, high liquidity means lower risk.
Low risk is not based off of market cap. Market cap is circulating supply times price. What happens with these coins is they fake their market cap by making a massive circulating supply on purpose, and they control the price because they get to control at what price they started at. So how to identify what's high risk and low risk, and it's accordance to liquidity. Basically, there's a pile of money within a coin project, and that pile of money really determines if it's big or small. And this pile of money is used to buy and sell a coin. As of this To date, this is what we consider low liquidity, medium liquidity, and high liquidity, a.k.a. low liquidity is very high risk, medium liquidity is medium, and high liquidity is lower risk.
