Cryptocurrency Investors Caught in the Hope Trap, Struggling to Find Profitable Altcoins

A Hard Lesson in Market Realities: High Hopes, Low Returns, and the Perils of Sticking to Failed Choices

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The cruel price of cutting-edge technology is that to develop it, it needs people and money for experiments. In the same way that medicine needs corpses. Thanks to them you can take advantage of medical advances. As long as you’re among the living.

Historically, investments in successful innovations have performed better than in any other investment category. You create value when you develop something new that replaces the old, obsolete.

However, this is far from easy. At the cutting edge of technology, companies do not follow in the footsteps of others. They have to discover the path on their own and work hard to ensure the favorable conditions that will consolidate their implementation.

The same is true in the cryptocurrency market.

As in any period of prolonged decline, there have been many promising projects that have been squashed. Yet their holders still kept them in their portfolios, hoping they would recover.

Not unreasonably, in many cases. That’s because the project their money had been put into had all the right conditions: They had raised enough capital, so with prudent management, lack of funding would not be an obstacle.

They had stood out from the competition, leaving behind others with similar ideas or focus. The leadership team was working honestly to develop and operate the network.

They were differentiating themselves from the thousands of other crudely made cryptocurrencies as their app or product solved real consumer or user problems.

In addition, they had a large community with active participating members.

Particularly on the topic of active users, let’s make a point. There are many criteria in terms of investment in technology.

Most importantly, it has to do with one question alone: the number of users. Look at Facebook, for example. What does its value depend on?

On the number of people who use it. Subtract its billions of users and you will see that it is not worth anything special.

To play the altcoins game seriously, you need to answer one basic question. Which one looks the most promising, without necessarily being the most promising.

As Keynes has said, if we want to predict the outcome of a beauty contest, we need to focus on the judges, not the contestants.

By buying an altcoin you are not paying for the physical or intangible assets of the business behind it. You are paying for the hope that the other investors who make up the market will appreciate its true value with a time lag.

In other words, by buying an altcoin you are investing in the possibilities. Except that potential is hard to calculate and is subjective because it involves future valuations.

And not only that. The way to make money is not to be correct in your prediction. You have to be right and at the right time.

That’s where those who chose Avalanche, Uniswap and Chainlink were wrong. The three worst in terms of performance known cryptocurrencies, even though their network is well developed.

Although they are not a failed project, few investors have made money. To illustrate, according to IntoTheBlock’s data, in AVAX, 88.6% of investors who have bought it have suffered losses. Only 5.8% are in profit.

Uniswap is in second place on this list, with 87.91% of investors having lost money while only 11.26% are gaining from buying UNI coins.

Chainlink and Shiba INU follow close behind, with about 86% of holders having suffered losses.

Cryptocurrency Investors Caught in the Hope Trap, Struggling to Find Profitable Altcoins

In contrast, the cryptocurrencies with the most winners are Bitcoin and Ethereum.

For Ethereum, 64.08% of investors have positive returns and 33% have negative returns.

In Bitcoin, the corresponding percentages are 62% and 37.8%.

They are followed by Lido Staked Ethereum, Litecoin and BNB, with percentages of 54.3%, 46.3% and 45.8% respectively.

Cryptocurrency Investors Caught in the Hope Trap, Struggling to Find Profitable Altcoins

Generally speaking, the hardest part of shopping is admitting you were wrong. All mistakes in investing hurt us in two sensitive areas. In the wallet and in vanity.

When a move hurts you, it’s painful. Loss hurts. But nothing is as painful as staying stuck in a failed choice and it loses uncontrollably. Like gamblers who refuse to leave before the last of the cash in their pocket is taken away. Admit it. You lost. There’s nothing wrong with that. You won’t always win.

Others follow an outrageous theory that when their positioning loses, it doesn’t matter. It’s not about actual losses, it’s about accounting. They become real when they sell. There is no better way to go broke. Denying reality because you don’t like it doesn’t mean you are exorcising it.

Hope serves as a driving force. But that’s as far as it goes. Hope is a feeling. The one who acts on emotion never wins. No one. Hope and prayer are great for religion, but not for markets. Investors are judged by their performance, not their faith.

The most accurate phrase in the stock market is “where the price is, it’s cheap”. It’s been true since… forever. We even read it in the book “Reminiscences of a Stock Operator“. The fictional biography of Jesse Livermore, published in 1923. Exactly 100 years ago.

That’s not the only thing mentioned in the book that is true. There are other interesting tips, such as: “If I am walking on the railroad tracks and see a train coming toward me at sixty miles an hour, shall I go on my way? No, my friend, I will pull over. And I will not even congratulate myself on my own cleverness and prudence.”


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