Dogecoin’s heady returns make investing in crypto look easy. But over 80% of altcoins are ‘underwater’ within a year, report says

The world of cryptocurrencies can seem like a Wild West at times, where sensational and seemingly meaningless price swings sparked by social media posts or memes are the norm.

Take the swings in Dogecoin’s price this week. The meme coin jumped 27% on Monday to hit a high of 16.5 cents after Twitter’s board of directors announced they had accepted a buyout offer from Tesla CEO Elon Musk, but has since cooled down to trading at roughly 14 cents today.

But a new report from Jump Crypto, the crypto arm of investment firm Jump Trading, suggests that the cryptocurrency market as a whole, despite its volatility, acts a lot like a traditional market—which means consistent market-beating returns may be hard to come by.

Where’s the alpha?

According to the report, written by Jump Crypto researcher Nihar Shah, 84% of new crypto coins are “underwater” a year after launch, meaning their value has plunged beneath their debut price when measured in Bitcoin—which Jump Crypto uses as a baseline currency for comparing crypto performance.

For investors looking to raise alpha and beat average market returns, that’s bad news. Shah says average returns on any new cryptocurrency are “close to zero, over various horizons and entry points,” meaning that most crypto trades will always result in net-zero gains compared with Bitcoin.

Yet crypto enthusiasts should take heart. The fact that the crypto space has grown so unforgiving is a sign that it is functioning as a market should, Shah says, and proves that crypto trades are not the “underdeveloped sideshows that critics claim.”

Efficient markets look messy

Jump Crypto’s report was designed to show that crypto markets are “efficient” in the same way that traditional markets are, in that investors rapidly buy and sell shares based on new information, leading share prices quickly to their “proper” value.

If crypto markets were not “efficient,” then a savvy trader would be able to consistently and systematically predict the return of a given coin—and thus do better than everyone else. The fact that new coins often fail to outperform Bitcoin—which Shah used as the standard for comparing altcoin prices, rather than the U.S. dollar—shows that the market is functioning properly.

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For Shah, the results prove that “even on the frontiers of the crypto landscape—dominated by memes and emojis—the market’s invisible hand equilibrates the supply and demand of capital.”

No market for beginners

But there’s another implication to Shah’s report: Much like how average retail investors will do better putting their money in an index fund rather than actively trading stocks on a traditional market, average crypto traders will likely do better just placing their money in Bitcoin than trying to figure out what altcoins to bank on.

“The same ingredients needed for success in traditional markets—thorough due diligence on an individual trade and accurate predictions about the macro environment—are needed [in crypto] too,” argues Shah.

That implies the crypto market has already grown too mature for casual traders to navigate successfully and that any investor trying to find market-beating returns in crypto may have a tough time.

This story was originally featured on Fortune.com