The altcoin sector is bleeding … why the worst could still be in front of us … how to navigate this dangerous market … what our crypto experts see coming on the other side of the meltdown
Perhaps the most common refrain from crypto investors during a bear market goes something like…
This pain is normal. Stay the course and focus the future. You can’t have the life-changing returns without terrifying drawdowns.
Now, this advice can prove to be wisdom, potentially helping nervous investors hang in there and make lifechanging returns…
But it can also lead to a devastating loss of your hard-earned dollars.
Since bitcoin, the grandaddy cryptocurrency, launched 12 years ago, thousands of altcoins have gone to zero. According to Coinopsy, from bitcoin’s debut through May 24th of last year, 2,047 cryptocurrencies failed. And that number is certain to be larger given the destruction in the altcoin sector over the past 12 months.
Perhaps investors were able to pull some of their money out before the doors closed for these failed altcoin ventures. If not, those investment dollars went up in smoke, and “stay the course and focus on the future” is the worst possible advice that investors could have followed.
***Unfortunately, an altcoin doesn’t have to go to zero to derail financial goals
Obviously, achieving your financial goals requires a return on your money.
But a return on your money carries an unspoken implication – at a minimum, you’ll get a return of your money.
But that’s not a guarantee in the altcoin world.
According to the crypto analyst Nihar Shah, 84% of new crypto coins are “underwater” one year after launch when measured in bitcoin. In other words, for every eight out of 10 new altcoins hitting the market, their value ends up below their debut price within 12 months.
Eager investors who bought in near the debut price aren’t simply getting a poor return, they’re losing their investment nest egg. It goes without saying that this is not how you build wealth.
Bottom line, the altcoin sector is not for the faint of heart. And as we stand today, if our crypto experts Luke Lango and Charlie Shrem are right, most altcoin investors risk losing practically everything in the coming months. That’s because Luke and Charlie believe that 98% of altcoins could soon go to zero.
But in the same way a wildfire destroys a forest, which actually “cleans” it for new, healthy growth, this crypto destruction stands to hit the “reset” button for the entire sector. The crash will clear the way for a new period of massive growth for investors willing and able to take advantage.
Tonight at 7 PM ET, Luke and Charlie are covering all of this in detail in an urgent, live event called Crypto in Crisis.
They’ll explain why the crypto sector is melting down (with, potentially, the worst still ahead), why the standard tropes about “stay the course” are only partially appropriate today, yet also why a new era of enormous sector growth is coming once the metaphorical “blood in the streets” has run its course.
***The current “falling knife” in the crypto sector
For newer Digest readers, Luke is something of a prodigy. From a perfect score on his SATs, to an illustrious academic career at CalTech, to being the #1-ranked analyst (out of more than 15,000 investment experts) on TipRanks, Luke is no stranger to success.
In fact, he has a growing list of 10X winners under his belt. And few sectors offer greater potential for 1,000% wins than cryptocurrencies.
Meanwhile, Charlie was one of bitcoin’s earliest backers and today is considered one of the most influential people in cryptocurrencies.
He’s been mentioned in Fortune… Forbes… CNN… 60 Minutes… TED Talks… Bloomberg… and The Wall Street Journal… to name a few. His story has been featured in numerous Netflix documentaries and best-selling books. And yes, he’s become a bitcoin millionaire many times over, thanks to his early involvement.
Let’s jump straight to how they’re viewing today’s market. From their Saturday issue of Ultimate Crypto:
All year long, cryptos have been struggling amid soaring inflation, rising interest rates, slowing economic expansion, and falling risk sentiments.
…We are long-term exceptionally bullish on the crypto markets. Eventually, we strongly believe this current “crypto winter” will turn into a generational buying opportunity like November 2011, January 2015, and January 2019…
However, our job isn’t to try and catch falling knives amid the current wipeout. Instead, it is to identify that critical turning point at which the current crypto bust cycle turns into a crypto boom cycle, and then go “all-in”.
In their update, Luke and Charlie walk through a historical market analysis they conducted of the timing of sector booms and busts.
The good news is the data suggest the current “bust” cycle is likely to run its course later this year (if you’re an Ultimate Crypto investor, make sure to read your Saturday update for specific details).
The bad news is there’s a “big flush” between now and then that has the potential to wipe out the imposter altcoins that still litter today’s market.
This is why Luke and Charlie have been urging portfolio consolidation in recent weeks, focusing only on the best of the best.
But how do you know what’s the best of the best versus as opposed to the coins that will go belly up?
***Separating the good, the bad, and the ugly
Identifying genuine value in the altcoin sector is challenging, to say the least.
Take the recent Terra debacle.
Luna’s affiliated stablecoin, TerraUSD (UST), was supposed to be sturdy, pegged 1-to-1 on the dollar.
But last month, it collapsed, losing its peg. The Terra blockchain ecosystem melted down, costing investors billions.
This was supposed to be a durable, “safe” altcoin. Keep in mind, it had the endorsement of many so-called crypto “experts.” We won’t get into the details of TerraUSD here, but you can see what set it apart from other stablecoins that are still out there in this explainer from one of our crypto experts, Ashley Cassell of New Digital World.
If this type of coin turned into a failure, how is any investor supposed to discern real quality? Especially if the “final flush” of the altcoin sector remains in front of us?
Well, you can reduce your risk by taking a few preventative steps.
First, read the whitepaper.
What is the vision? What’s the team trying to accomplish? Do you agree with the vision? Is it explained clearly? Do you see an obvious value-add?
Second, does your research point toward increasing demand for the coin, and/or decreasing supply?
Because it can be challenging to value an altcoin, you want to have a firm grasp on the demand/supply situation for any given token.
Is this altcoin incentivizing increased demand such that supply is continually decreasing, or least stable? If not, you might find that tokens are being issued at a faster rate than supply warrants. Translation – this is not an in-demand altcoin, steer clear.
Third, look hard at the team and the stakeholders.
Do key personnel have real experience? Have they launched tokens before? Do they have a respectable tech backgrounds or relevant experience? What’s their real value-add? Are they backed by big-money venture capital groups?
If the answer is “no,” to these types of questions, it’s a major red flag.
This is hardly an exhaustive checklist, but it’s a start. Luke and Charlie use a far more robust analytical framework called the MultiFactor Altcoin Grading (MAG) system.
It analyzes 10 critical attributes of every altcoin, scores them on each attribute, and produces a total score.
If an altcoin earns a score above the “buy threshold,” Luke analyzes it further for a potential investment. If an altcoin scores poorly, he recommends investors steer clear.
Luke has credited the MAG system for why he avoided Terra when other well-respected crypto analysts were recommending it. Terra had a cool algorithm that a lot of people were excited about – but it fell down on several other key attributes. You’ll hear more about the MAG System this evening.
***Coming full circle, this is not the time to be bold
This is not the time to be taking a lot of shots in the crypto market.
Most of the cryptos out there in the market today will fail in the long run. That’s a simple reality.
The market became overcrowded with unsubstantiated froth. That froth needs to be killed off, and you need to avoid it.
A helpful exercise is to look at each altcoin in your portfolio. Imagine you didn’t already own it. Then ask, “would I buy this altcoin today, under these circumstances, with cash I could be keeping safe from this market carnage?”
If you can’t answer “yes, absolutely,” then there’s a good chance you should axe it from your portfolio.
For far more insights into today’s crypto market and wise action steps, I urge you to join Luke and Charlie this evening. Based on previous crypto winters, they believe the current bear market is in its final innings. Unfortunately, bear markets tend to end with a violent capitulation. Tonight, you’ll learn how to position your portfolio to avoid that, while preparing for the ensuing growth phase that will cycle into the next crypto “boom.”
You’ll get all those details at 7 PM ET with Luke and Charlie. Just click here to reserve your seat.
Have a good evening,