A user has written in and asked: “Are Telegram BTC Ads legit?” So in this article, we are going to take a look at what Bitcoin bot scams on Telegram are and how you can avoid them.
Firstly – in a nutshell – are Bitcoin and BTC telegram bot adverts a scam? The short answer is yes, they are.
However, it’s important to note that Telegram isn’t a scam, it’s like Whatsapp or any other messenger service, all Bitcoin trading isn’t a scam, just as trading the stock market isn’t a scam. What is a scam is people flogging dodgy trading signal services claiming they can make money. And because Telegram is an encrypted network which means it’s good for privacy, it means that scammers can hide exactly what they are doing from the authorities.
Here, I’ll run through what a Telegraph crypto scam is and how you can avoid them.
Why are people taken in by Bitcoin Telegram scams?
I got a text a while ago from a friend asking me:
“What’s this Bitcoin algorithm guaranteed return all about??”
This was from a fairly sensible guy, 40s, professional career, nice family and responsible with money. To say I was shocked that even the most sensible people can’t see that some things are financial scams straight away is an understatement.
My response was fairly straightforward:
It’s about stealing your money. Avoid
What are BTC Signal Bots on Telegram?
The way Bitcoin signal bot scams work on Telegram is that they offer guaranteed returns above what you could achieve in savings accounts and the stock market. They often steal images of celebrities such as Martin Lewis, and Richard Branson or footballers like Wyne Rooney. They are not real endorsements – they are lies, often hosted on a fake website that is made to look like a real publication or newspaper.
The scams work like this:
- They advertise high investment returns
- You contact them for more information
- They contact you with high pressure sales tactics and convince you to invest
- You invest your money and never see it again as it is lost. Or worse still they produce fake statements that show you are making money encouraging you to deposit more. But when you try to withdraw funds, the scammers disappear.
Can you get free Bitcoin on Telegram?
No. We’ve produced loads of guides on how to avoid scams, including one on how to avoid getting scammed in Crypto trading. We even ran a survey with YouGov on financial advertising, which showed us that whilst most people have seen scam financial adverts online, very few of them report them to the advertising networks.
How BTC telegram signal bots make money
The signal provider will make money through either selling subscriptions to their telegram BTC channel or by referring you to an unregulated broker to trade.
Why Unregulated Bitcoin Brokers Are Dangerous
Unregulated or offshore brokers offer clients very little protection against scams and are sometimes set up solely to relieve you of your funds. Some, just take your money and disappear, whilst others offer a service that will enable you to lose your own money to them.
Excessive margin – Margin means trading on leverage. As with all trading, it enables you to buy more with less. For example, if you were stock trading Apple shares on margin. You could buy $10,000 of Apple shares with $1,000 on account. Which is 10% margin or 10x leverage. The FCA has restricted the levels of margin retail traders are allowed as many lost a huge amount of money when the CHF cap was removed. However dodgy offshore brokers, allow their clients to trade on 100x leverage (and more in some cases). This means that you can buy $100,000 of Bitcoin with only $1,000 on account. This means that if Bitcoin moves just 1% you lose all your money. Bitcoin can move between 5% and 10% a day. So, why do they offer such high levels of leverage? It’s because of the “b-book”.
B-book – Unregulated brokers offer such high levels of leverage on BTC because they essentially want you to lose your money. This is because they do not hedge your orders in the underlying market. It’s called the B-Book. The B-Book has been fairly standard in trading for years and was originally used by brokers to reduce their execution costs. However, as most retail clients lose money trading anyway, brokers found it was simply more profitable to take the otherwise of client trades. So, the more money these brokers allow you to trade with, the quicker you will lose your deposit and the more profit they will make from you. For more info, here is how to identify a CFD scam.
High costs – Other than commission and spread revenue, unregulated brokers also make money by charging high overnight financing costs. As you are trading on leverage, using $1,000 to buy $100,000 of BTC, the broker is essentially lending you $99,000. They will charge daily interest for this. This interest is rarely noted but can add up quickly as it can be between 10% and 25% depending on what you are trading.
What Are Unregulated Crypto Financial Advisors
No experience – To provide advice on what to sell advisors need to be regulated by the FCA and have the relevant qualifications. They also need to be transparent about fees and experience. It’s clear from looking at some Telegram BTC accounts that as well as hiding the true identity of a signal provider they are also not disclosing fees. As such you have no idea, who is giving you financial advice or if they know what they are talking about as there is no auditable track record.
Cannot predict BTC – It is very difficult to predict where any market will go for short-term speculation. The best fund managers in the world running the best global growth funds only beat the market by a few percent every year. There is no reason why someone running an anonymous trading signal channel on Telegram charging $90 for access will be a better trader.
Scam lifestyle marketing – We’ve covered how Instagram is a hotbed for financial scammers and most promote their telegram signal bots through flashy lifestyles. Then try to get traders to buy their signals either directly on Instagram or by referring you to an unregulated broker.
Do BTC Technical Analysis Signals Work?
- Historic performance is not an indication of future profits – BTC Telegram Signal Bots are generally based on technical analysis. Whilst technical analysis is a legitimate way to look at the market and generate trading ideas it is based on historic charting patterns, it cannot predict the future. If you want to know more about technical analysis read our ten-step guide to technical analysis.
Needs to be used in conjunction with fundamental analysis – Also, technical analysis works well in conjunction with fundamental analysis for market timing. That means looking at the underlying assets of a company, or the economic figures released for forex trading. Cryptocurrencies do not have the same fundamentals.
- Crypto markets are too illiquid and volatile for technical analysis – Finally, technical analysis works best in highly liquid markets where there is a constant flow of news, trading, institutional business, and sector peers. BTC is still unknown, in some cases very illiquid with wide spreads and prone to excessive volatility.
Still want to trade crypto?
If you are considering using a BTC Telegram signal bot to try and make some money. Do yourself a favour and avoid it like the plague. If you want to trade BTC or other cryptos, we maintain a list of cryptocurrency platforms that are regulated by the FCA.
- If you think something is a scam, here is how to report scams you find to the FCA.