Crypto Crossroad: Profit or Adoption?

Last month, somebody needed to send me a lot of money.

He couldn’t use Zelle, didn’t have a checkbook, and didn’t want to pay a $25 wire fee.

Venmo would’ve taken many batches over many days, and I didn’t want to pay 3% to a payment processor to take his credit card.

I mentioned he could open a Coinbase account and use USDC to send me the money for free, in full, instantly.

He laughed.

In the end, he paid $10 to overnight a paper cashier’s check through USPS priority mail.

(And you think ETH fees are high!)

DALL-E drew a cartoon about it:

LOL DALL-E

Uphill battle

People are strange. They will go through all sorts of inconveniences to stick with what they know.

Crypto peeps go on and on about usability and product-market fit, but that’s a big hurdle.

Ask anybody who’s had to guide Aunt Sally and Uncle Morton through their iPhone settings. They can tell you it takes more than a good interface and UX. You need to give people a compelling reason to switch.

(For Aunt Sally and Uncle Morton, those reasons are Facebook, Facetime, and text messages.)

So far, we have two compelling use cases: stablecoins and Bitcoin — amazing technologies that serve niche categories of users.

We’re still trying to find that killer app or service that reaches “the masses.”

That could take a while. We’re fighting against powerful disincentives.

You reap what you sow

In today’s crypto market, you can make more money with memecoins and new blockchains than apps and services that give people a compelling reason to use crypto. We know this because we can see where the money goes.

Proph3t on X (formerly Twitter): “crypto is 1 person digging a hole, 10 people debating the best way to dig holes, and 100 people betting on how fast the digging will go / X”

crypto is 1 person digging a hole, 10 people debating the best way to dig holes, and 100 people betting on how fast the digging will go

You don’t get rewarded for creating things people use. All that matters is whether your token goes up.

As such, you can understand why entrepreneurs feel discouraged and developers feel angry.

That’s a shame because some crypto projects generate economic value.

People use AAVE to make money from lending activities. Traders earn income contributing liquidity to decentralized exchanges, from huge ones like Uniswap to tiny ones like Demex.

Investors get millions of dollars in staking or mining rewards from altcoins and crypto protocols. Entrepreneurs squeeze revenue out of upstart payment networks built on crypto rails, particularly in less-developed economies.

Fold built a debit card that rewards you with Bitcoin when you spend on its preferred vendors. Use my referral link when you sign up (it’s free).

tZERO built an SEC-compliant platform for buying and selling natively digital securities like real-world assets (RWAs), altcoins that regulators label “securities,” private placements for new token offerings, and similar products.

RWA platforms like Maple, Goldfinch, and Figure have tripled their total assets since 2023. Stablecoins are booming.

We have plenty of other examples.

Why not talk about those?

Because they’re boring. To make money from them, you need patience, persistence, fortitude, and a willingness to learn new things.

Tapping buttons on a screen for quick 1,000x gains?

Easy sell.

That’s the setup

I’m sure you’ve heard the routine from your favorite guru. “If you bought my super-secret altcoin pick, you had a chance to make a 10,000% gain.”

That is, if you bought a few months before or after the recommendation, then sold at the exact top. That’s why they promise a chance, not a guarantee.

I know this because I mystery-shopped several of these services when I started my newsletter. They ain’t cheap!

They also cherry-pick the information that they show you. Yes, a handful of picks do well. The rest do not.

It’s like the miracle diet you see on TV. You can eat anything: ice cream, cookies, brownies, Big Macs, fries, cake, milkshakes, and whatever else you want.

Do you know why they call that a miracle diet?

Because it’s a miracle if you lose any weight!

To be fair, you only need a handful of winners to do well with crypto. 20% of your portfolio will deliver 80% of your gains.

Most altcoins will fail. The ones that succeed will do so well that they will pay for your investment many times over and probably beat the returns you would get buying and holding Bitcoin.

That’s the approach I take with my altcoin reports.

Altcoin Reports

But that’s not the pitch you hear from the gurus. Their pitch?

Financial freedom and insane wealth for $2,000 or $5,000 each year — no effort needed!

Why do the gurus feel the need to hype everything up?

Because you won’t sell many $2,000 or $5,000 subscriptions promising people they’ll get better results than most traders and everybody who buys Bitcoin in a fixed amount on a fixed schedule, regardless of market conditions.

(Ironically, you will beat most traders and gurus by simply buying Bitcoin in a fixed amount on a fixed schedule, regardless of market conditions.)

My plan

Instead of paying thousands of dollars for somebody’s secrets, try my plan.

My Plan for Buying and Selling Bitcoin

No timing the markets. More upside with less risk. Three lines tell you when to buy. Two metrics tell you when to sell.

With my plan, here’s what you would’ve done after buying for most of 2022:

That looks good, but natural volatility makes comparisons challenging.

For example, Bitcoin’s price traded as high as $74k and as low as $62k while my “sell” alert was actionable. Even if we both followed this plan, you may have done better or worse than me. A lot depends on when you start and how you do it.

I like my plan because it’s an easy, efficient way to get Bitcoin without trading or timing the market, with results that beat dollar cost averaging.

The plan doesn’t apply to altcoins, but when Bitcoin’s price is in the buying zone, you can usually feel comfortable buying them, too.

You get what you pay for

Does it seem odd to buy when OGs are peeling out and VCs have left to chase new markets? When developers pour their hearts and souls into apps that nobody uses? When memecoins and L2s suck up investment capital?

Each day, more crypto insiders see no point in putting time, money, and effort into new projects. In the United States, the SEC might sue you for creating anything that benefits token holders.

Adoption is harder than you think. Much easier to launch a memecoin and hope speculators will pump your bags (or hire influencers to do the same).

As such, is it any wonder that so much time and effort goes into get-rich-quick schemes and projects that make fast money from token-generating events and vesting/unlocks for insiders and early investors? It’s what people want.

There’s your product-market fit.

If that leaves you empty or doubtful about whether any of this stuff matters, I know how you feel. We will never capture “1% of institutional capital” or benefit from a wave of financial innovation when most of our money goes chasing after cats, frogs, dogs, and bonks.

Does that mean we should give up?

No.

The industry will grow beyond its greed. Meaningful projects will grow, too. Hype around memecoins and VC tokens will die out as it did for ICOs, NFTs, and yield farming.

Time and temperament will sort winners from losers.

Along the way, we will have plenty of opportunities to grow our financial portfolios — as long as we act now, when the market is soft and prices are low.

Ride the king’s highway

Once speculative enthusiasm runs out, people will smarten up about their investment decisions. Speculators will lose enough money that they will stop chasing fast profits. The market will have to develop useful products and services.

With adoption, our projects will grow bigger. We’ll also have more liquidity and usage, which will lead to milder price swings and more sustainable uptrends.

Our returns will not depend on banana zones and cycle theories but on the benefits we get from our tokens.

By buying now, we gain from this growth. It will raise the value of our tokens and make our wealth more durable, secure, and useful.

There is no reason to wait. The altcoin market hit three of my four targets.

While I would love to hit that fourth target, the ideal zone, it’s too risky to wait for it. We may never get there.

The market is low enough already. Some altcoins are down 90% from just a few months ago!

Cautionary tale

Consider my experience with AAVE.

I got into crypto in late October or early November 2017 (can’t remember exactly). Watch this video for a funny story about that.

https://medium.com/media/cc892a272c160aa3ab56532657948a85/href

After a big pump, I pulled out my initial capital for a “free ride” and started gambling on altcoins. The first one I bought?

ETHLEND, AAVE’s predecessor, at the peak of the 2018 altseason. It was a pioneer in DeFi with some amazing people working on it.

The token price collapsed, going down 99% at one point. Foolishly, I thought it was dead. I gave up on it. When it rebranded to AAVE, I figured it was toast. I didn’t buy any more tokens until November 2020, even though its team helped me write Consensusland.

I made a crucial mistake that so many beginners make: I assumed a project was bad, dead, or a scam because its price went down.

As a result, I missed out on massive growth and sold earlier this year at a 400% gain instead of a 100x gain.

Oh well.

What nobody tells you about altcoins

You may feel like it’s useless to buy altcoins because they keep going down.

Think about how the market moved in July, when the altcoin pumped 40% in a few weeks. Or October to March, when some altcoins went up 300–500% or more. Two of my altcoin reports went up over 1,000% in that time.

And that wasn’t even altseason.

Play altcoins like this:

Get your initial stake whenever you can. You know the altcoin market will crash, but you don’t know if your token will go up 1,000% before that crash. You risk buying right before an 80% drop, but you can make up for it later. This is just an initial investment.After the market drops a lot, add more to your winners and favorites and pick up other projects that you think can do well. When the market inevitably turns, some of your tokens will run hard. Others will not. Many will pace the market. A handful will die.After the market goes up, reassess your decisions and selections. You don’t have to sell, but you may find yourself in a position where it makes sense to do so.When the market drops again, add to your winners and favorites and pick up other projects you think will do well.

Repeat the process until your portfolio has a few huge winners. Those winners will outpace a Bitcoin-only portfolio.

(Bonus if we get altseason, which is not guaranteed.)

Take profits at your peril! It’s hard to get 100x gains when you sell after the first double. Follow my checklist, Taking Profits With Crypto? Check These Four Boxes First.

Taking Profits With Crypto? Check These Four Boxes First

Other tips:

Stake whenever possible. You can do this on an exchange, but the exchange will take a hefty cut. Usually, you get better results staking directly to the protocol from your private wallet. Check on your opportunities with Staking Rewards.Appreciate the role of dilution and treasury policies. These things are different for each altcoin. I summarize some key aspects in my altcoin reports. You might want to brush up on the basics. Use the links on your token’s CoinGecko page.Read my altcoin reports and market updates, where I discuss altcoin strategy and, sometimes, individual altcoins.

You can also read a series of Medium articles I posted about altcoins.

My Medium Articles About Altcoins

You pay a high price for a cheery consensus

Mark, it’s stupid to buy until prices start going up!

Right. Everybody else tells you to wait for the pump. “If Bitcoin’s price goes above $65,000, I’m buying. If it goes below $50,000, I’m selling.”

The problem?

It’s hard to win with a “buy high, sell low” strategy. If you wait, you’re probably late. Many of those altcoins will go higher — potentially much higher — before you buy.

And you’ll still get those 25–50% drops you’re worried about.

Sticking with AAVE as our example, look at what’s happened since its most recent major “bottom” last summer:

And that’s a tame chart. Other altcoins show bigger swings.

My alternative?

Buy low and grow.

When the market falls, gas and transaction fees drop. Use this time to migrate, stake, bridge, swap, and take advantage of these low costs.

Prices have already started to climb. Once they start shooting up, you’re screwed.

Don’t look a gift horse in the mouth

Today, you’re getting the same opportunity you had six months ago with less downside and more upside.

Accept that you have an opportunity to make slow money. Slow money is easy money — easy to get, easy to grow, and easy to keep. The market does all the hard work.

You’ll still suffer volatility, but now you can turn that volatility into an advantage.

For example, RUNE, one of my altcoin reports, hit $11.50 this year. When I published the altcoin report, each RUNE token was $0.11. A few months after I published the report, its price dropped below $0.09 — a 25% drop.

It zoomed to $1.30 during DeFi summer of 2020, then crashed to $0.32 that fall. Since then, it has followed a similar pattern–up a lot, down a lot, with higher swings.

Many altcoins share this pattern. You buy at $1, $11, and eventually, if we’re lucky, $111.

Instead, try buying at $0.11, $0.55, $1.50, $2, and $4 (twice), like I did.

That way, you’ll be ready for the zoom to $111 and not upset when RUNE only returns to its all-time high of $20.

Do you prefer to set price targets? I’m happy to consult about that, even if just to have somebody to bounce ideas off of. You can reply to this post, email me at mark@markhelfman.com, or schedule time on Tealfeed.

Strong stories

Crypto still has powerful narratives.

DeFi generates hundreds of millions of dollars in revenue for crypto protocols. Developers continue to make it cheaper, easier, and more secure.

Tokenization of real-world assets can unlock trillions of dollars in global capital. $12 billion in RWAs and $170 billion in US dollars have already been converted into natively digital tokens.

Blackrock’s BUIDL and Coinbase’s BASE should bring a lot of support for those building out crypto technology.

Narratives abound.

Special Report: Three Big Crypto Narratives to Follow

In the coming decades, many goods and services will flow across decentralized physical infrastructure networks (DePIN).

Today, most DePIN tokens are highly dilutive and contain lock-ups and aggressive vesting schedules for early backers. Once emissions taper off, we will have plenty of fertile ground to find great opportunities there, too.

It’s hard to remember these things when prices go down. The natural assumption is that they’re all trash, destined for zero, useless. Every pump is a “fakeout.”

“At least you can make money with memecoins,” they say.

Can you?

For every Shiba Inu, there were a hundred other dog tokens you never heard about because they failed too quickly to be noticed. Once the speculative enthusiasm dies, so does your chance to profit. If you don’t sell in time, you’re screwed.

For any project that can sustain its success, the potential return is limitless.

That’s the rub. Who’s trying to build those projects? We’re all trying to get as rich as possible as fast as possible. Chasing profits is fun!

Until the money runs out. The fun ends.

Missing out? Hardly

Narratives and cautionary tales don’t matter when the market’s down.

You don’t have any “greater fools” to buy your tokens after they go up. The shills seem hollow because prices don’t go up as soon as you buy — whereas earlier this year, they did. People talk about banana zones, but you don’t see any bananas.

You might be excited about liquidity cycles, but many people consider this a bad time for crypto.

They wonder why Bitcoin’s price is still lower than just a few weeks ago, after historic rate cuts and Trump making the first president Bitcoin transaction. They’re holding cash for “one last flush” before “up only.”

Use the bad times to prepare for the good times. When the good times come, they’re really good.

If you wait until the good times come, you’ll miss the best opportunities. The projects that can sustain themselves — AAVE, RUNE, and a handful of others, including some of my altcoin reports — will deliver so much value that you’ll laugh about ever trying to trade memecoins for Lambos.

In the move from speculation to adoption, we have a tremendous opportunity to benefit from the shift in capital flows and mindset. It’s big work that will take some time to bear fruit, but it’s lucrative for those who dare to persevere.

With such tremendous upside, you don’t need perfect timing. We’ll discuss selling when (if) the time comes.

Of course, you want the big discount. That big crash. That “final capitulation” that sends prices into the gutter.