Altcoins
Expert Reveals Why Altcoins Will Underperform This Time
Jonah Van Bourg, former oil derivatives trader at Goldman Sachs and Vitol and crypto and precious metals trader at DRW, recently explained why he has confidence in his contrarian view on altcoins. He proposed a systematic strategy: buy an index of the top thousand altcoins, weighted by market capitalization, when Bitcoin has been in a bull market for more than six months.
Even though this strategy reportedly performed well in 2017 and 2021, it only has two data points to support it, which is not statistically significant for systematic trading. The expert believes it will fail a third time because retail investors have already been burned twice, failing to deploy the strategy optimally and hold on during the last two altcoin bull markets.
In a conversation with Blockworks Macro, Jonah said: “I think what’s really causing the sell-off is a larger light bulb going off, which is that most altcoins are completely worthless. Billions of dollars in venture capital releases are underway, and many retailers are finally waking up to the fact that their shitcoin of choice is dead.
His overall thesis on altcoins and tokenomics is that new sources of capital are needed beyond random individuals. It takes real business activity and a disruption of traditional financial economics to provide the capital needed to sustain multi-trillion dollar valuations. He doesn’t think this will happen in a year or two, causing altcoins to underperform.
Jonah advised against investing in the altcoin space, but acknowledged that some tokens like Ethereum and Solana could still succeed.
He concluded: “Meme coin casino is a fun way to play and make money, but I think the majors like BTC, ETH and Solana are a great long-term hold. Anything in the middle of this risk curve, the altcoin space, is risky. We’re running out of big fools to buy your shitcoin, and I think the entire altcoin space is going to go from hundreds of billions of dollars in market cap to much lower, unfortunately.
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