Alt-coin gambling is a $379B market. Question being: Is it worth it?
As I’ve said in the past, for the vast majority of people that want to invest in digital assets, their best bet is Bitcoin.
The reason being, in dollar terms, alt-coins can outperform BTC on short time horizons. But expand the time out a bit, and it is almost always better to hold BTC.
The one odd exception (at least among the majors) has been BNB. I used to be a fan of the token for that very reason.
Have a look:
That is the BNB (Binance) chart, priced in BTC. The orange line is BTC/USDT and the teal line is BNB/USDT.
As you can see, from early 2021 until late 2022, BNB appreciated rapidly in BTC terms. It’s since fallen off a bit, but that’s unsurprising given the scrutiny Binance has been receiving lately.
I’ve since abandoned BNB as an investment. There was an article floating around that suggested BNB price was being manipulated via under-collateralised BUSD.
Whether it’s true or not is irrelevant.
The fact that it might be true is enough for me to steer clear. There’s plenty of shitecoins out there to speculate on. I certainly don’t need to be wrapped up in a narrative that might go sour.
Not to mention this:
That is BNB priced in ETH. Teal is BNB/USDT, red is ETH/USDT. Notice anything strange?
Like how closely correlated BNB price action (in USDT) is to ETH? That does not look like natural market movement.
That looks intentional, which means manipulated.
Is it evidence? Nope. Does it strengthen the notion that something is rotten in BNB-land?
It does for me.
Alt-coin gambling
Enough about BNB though.
The real question we’re going to answer here is: Will your [fill-in-the-blank] shitecoin outperform ETH?
Or, would it have been better to just buy ETH in the first place? Did you guess the answer? It’s ETH.
100%.
Just look at the charts. I picked these coins because they have sufficient history to be relevant. Things like Aptos haven’t been around long enough to determine price performance.
What these charts DO show is shitecoins might outperform ETH for a short time. But, sooner or later, the rocket comes back to earth, and the shitecoin will bleed.
Meaning, you would have been better off just buying ETH.
Let’s take a look. The blue line on all charts is ETH/USDT. Prices are in ETH.
AAVE/ETH
As you can see, this chart is just like I said earlier. AAVE had a brief couple of months in early 2021 where it outperformed ETH. Meaning, AAVE got more expensive in ETH terms.
But, then AAVE slowly bleeds against ETH until today. Meaning, AAVE gets cheaper and cheaper in ETH terms.
Or, in other words, you would have been better off buying and holding ETH. If you’re clever, you buy AAVE with ETH when it’s cheap and sell AAVE for ETH when it’s expensive.
Thus, you stack more ETH. Make sense?
I’ll warn you now, it’s easier said than done. Which takes me back to my first point — for most people, they should probably just stick with ETH.
DOT/ETH
Do you know the music they used to play in old sitcoms like I Love Lucy. They’d play it when something went wrong.
Wah-Waah.
If this chart could make a sound, that’s the one it would make. If you bought the absolute pico-bottom of when the ETH/DOT pair launched on Binance and then sold the absolute pico-top the same day, you did great!
Otherwise, you should have just bought ETH.
GMX/ETH
Now, here’s a chart worth paying attention to. I had no idea what GMX was. The first I heard about it was on CryptoBanter.
I didn’t do any research. I poked around on the GMX dashboard a little bit, but that was it.
I just aped-in really.
It wasn’t much money and it took a second to figure out how to bridge to Arbitrum. A couple nice things have come from this:
- I received the ARB airdrop;
- I’m earning legit yield in ETH on a token that is appreciating steadily against ETH.
That’s a double-rainbow my friends! The tokenomics for GMX are actually pretty good. It’s a gamble that seems to be paying off for me so far.
I’m NOT recommending it. I’m pointing out that there are some tokens that can outperform ETH, but it’s RARE.
Or, at least, it has been rare in the past. Maybe crypto is finally growing up?
LINK/ETH
Speaking of outperforming ETH, this chart is what I’m afraid GMX/ETH will eventually end up looking like.
As you can see, on a long enough time horizon, ETH tends to outperform ALTs. And, LINK is a great example. For over two-years, LINK bigly outperformed ETH.
But, sure enough, given enough time, the bleed began and hasn’t stopped since. If you had been clever enough to swing into LINK early and swing out in 2021, you could have really stacked a lot of ETH doing so.
If you weren’t quite that clever, you just round tripped and probably should have bought ETH to begin with.
Seeing a pattern here?
SOL/ETH
Here’s a chart for the venture capital hype-driven dumpster fire that is Solana. ETH killer?
Okay buddy.
If by “ETH killer”, you mean down only bleed-out into oblivion, then sure. Make no mistake, for the venture capitalists that bought Solana for pennies and then dumped on your head, they did GREAT.
For all the folks that bought the 2021 top, they got REKT. Bad. Narratives sell tokens. If you’re not part of CREATING the narrative, you’re probably someone’s exit liquidity.
Or, you could just buy ETH.
Conclusion
The boring truth about crypto is, for the overwhelming majority of retail investors, there are really only two projects worth looking at:
- Bitcoin; and
- Ethereum.
If you are collecting shitecoins during the project’s fund-raise or presale, then ALTs make a lot of sense. If you’re buying retail, you’re buying a narrative designed to entice YOU.
You can capitalise on that, but it’s tricky. Even for someone like me that has the weird combination of a tech and finance background, I’m probably going to be wrong more than I am right.
Not to mention, one of the best performing ALTs I have in my bags right now, I had never heard of until seeing it on a show. I just blindly aped and got lucky.
My ultimate goal in crypto is to stack BTC. I don’t like ETH and I don’t hold it.
Here’s a list of ALT projects I do speculate on, why I do, and the allocation.
- Axelar — AXL: Cross-chain protocol; “likely” strong narrative in next cycle; tokenomics suck, BUT was available just above presale price; 2.5% (future) allocation, closed long in profit in February.
- Planet Finance — AQUA: fair launch; investor friendly tokenomics, but they’re struggling against “real” yield protocols like GMX; 2.5% allocation.
- Constellation — DAG: legit potential game-changing tech stack; token is right around presale prices from 2018; 5% allocation.
- FraxFinance — FXS: fair launch; next-level innovation and devs; yield generating; 10% allocation.
- GMX — GMX/GLP: good tokenomics (for the GMX token); real yield paid in ETH; 10% allocation.
- Fantom — FTM: I use the protocol more than all others combined; solid and evolving tech; inexpensive; long dev runway; 10% allocation.
- NEAR Protocol — NEAR: legit tech; easy dev on-board; simplified UX; bought at roughly 3x launch price; 2.5% allocation.
- Stargate — STG: Same as AXL basically; 2.5% allocation.
And, that’s it. Roughly 45% of my crypto budget is in those ALTs. The rest is dedicated to big daddy BTC.
To be clear, I am NOT recommending you buy ANY of these. The overwhelming likelihood is that I’m wrong about some, if not all of them, and their potential to outperform BTC or ETH.
It’s just something to give you a little food for thought before you ape into whatever shitecoin narrative you might be considering.
But, if someone in real life asks me about getting into crypto, my answer is always:
“Just buy BTC and don’t worry about that other crap.”
These are just my opinions. I’m not a financial advisor, this isn’t financial advice, and always DYOR. Following any of these ideas might cause you to lose all of your money. I am 100% serious about that. I like tinkering with this stuff, but I’m on record acting like a total baboon. Invest accordingly.
Until next time, be safe, be smart and be sure to tie the camel.
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