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Seeking Alpha - The Daily Gwei #435
There's alpha to be found if you know where to look.
In investing and trading, there’s a term that gets thrown around a lot known as ‘alpha’. This term is used to describe the concept of using some piece of information to invest in something in order to generate outperformance against an index or just outperformance in general. Of course, in crypto, there’s alpha littered everywhere - all you have to do is take the time to look.
The meme above is a very accurate portrayal of what happens most of the time in crypto. Some big “crypto YouTuber” will make a video purporting to have some unique alpha to share with you (usually with clickbait thumbnails and titles). Then, once they’ve hooked you in, they’ll start selling you something - whether that be a coin that they’ve already bought and are trying to pump, referral links in their videos description, some paid trading course or something else. In reality, the paid trading courses are almost always bullshit, the random tokens these people are shilling you are literally hot garbage, and the referral links only enrich the referrer while you get nothing.
Now, if you want actual alpha in crypto that’s not based on “hopium” and scams, you actually need to put in the time and do the research. Usually this alpha can be as simple as knowing the upcoming catalysts of a project that many people aren’t paying attention to but it can get more complex such as . Though having this alpha is only half the battle - you also need to have the conviction to invest in a coin/token using this alpha and then also have the conviction to hold it. I’m sure there’s been many times in your crypto journey where you knew you should’ve bought something because you had access to some alpha but you never pulled the trigger - and then that something went 10x and left you behind. Don’t worry - we’ve all been there!
I think there’s a distinct difference between public alpha and “insider knowledge” and of course that difference is the availability of the information. It’s no secret that insider trading is absolutely rampant within the crypto industry and there’s little that can be done to stop it (since addresses are pseudonymous). This is why whenever I talk about finding alpha, I’m talking about information that is publicly accessible but just not evenly distributed yet. You’ll actually be amazed by how much alpha can be found by just following a projects Github repository and their Discord server. You may think that doing this stuff is obvious, but it really isn’t - most people are either too lazy or don’t have the drive to do basic due dilligence like this.
I still think that crypto gives people a very false sense of security around investing and makes them believe that it’s easy when in reality it’s very hard. Finding alpha is really just the first piece of the puzzle - you then have to act on that alpha, find the conviction to see things through, and then take profits when the time is right. Don’t let the bull markets fool you - investing is an artform - and the best investors are modern day Picassos.
Have a great day everyone,
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All information presented above is for educational purposes only and should not be taken as investment advice.