Author: 099.eth, Crypto KOL; Translation: Golden Finance xiaozou
Below is the performance of the top 30 popular tokens on DexScreener from July 10 to July 11. The snapshot time is approximately 00:30 GMT.
I will explain it in more understandable language and charts below. Here is the raw data I compiled:
The simple average unweighted return for all 30 top coins is -18%. If you divided your $1,000 equally across all coins, you would end up with $821.34.
The simple conclusion is this: if you believe that returns are randomly distributed, or that you are no better than random in picking winners, then you might conclude that you will suffer a loss if you buy and hold for 24 hours.
Market capitalization < $100k (+8% d/d, positive outlier)
Your expected return is 8%. You have a 33% chance of suffering a loss of more than 80%, and only a 17% chance of choosing a token with a positive return.
Market capitalization of $100,000-$1 million (-30% d/d)
Your expected return is -30%. You have a 41% chance of losing more than 80%. Your chance of choosing a coin with a 24-hour positive return is only 17%.
Market capitalization of $1 million to $10 million (-30% d/d)
Your expected rate of return is also -30%. You have a 33% chance of losing more than 80%, and only a 17% chance of choosing a positive return token.
Market capitalization > $10 million (-2% d/d)
Your expected return is -2%. Tokens of this size don’t usually crash, but only 29% of tokens have seen positive returns in the last 24 hours.
24 hours after the snapshot, only 30% of the tokens are still in the top tokens ranking. It is very likely that a popular coin will disappear from the spotlight and lose attention (trading volume). Devaluation is fast, especially when the market cap of the token is less than $1 million. There is only one token with a market cap of less than $1 million that has not fallen off the list, and this is due to its status as a moonshot token.
Only three coins were able to stay hot in less than a week.
Lesson learned: Think of new tokens as options with fast time decay (time is not your friend, bet fast). Treat long-term Lindy hot coins differently, every day spent on the hot list inspires more confidence.
If you randomly pick a coin from the hot list, you have a 30% chance of suffering a loss of more than 80% within 24 hours.
Instead, you’re selling out the dream of a 2x, 3x, or greater return. You should have a 7% chance of doubling your return, or betting on a random token and holding it for 24 hours to earn a higher return.
60% of the coins in the hot list have paid advertising. Does this have anything to do with the positive performance of these coins? Hardly anything.
Tokens with paid media on DexScreener had an average return of -50% over 24 hours.
Revelation: If someone pays cash to make sure I see the token, then they can attack me if I’m stupid enough to notice.
Of the tokens that paid for ads at the time of the snapshot, only 11% were still on the hot list a day later. So staying hot has nothing to do with ads.
in conclusion:
-Randomly selecting a coin is a negative expected value strategy.
-Trying to randomly select coins on a smaller timeframe is also an -EV strategy, you’re just adding more random trials to your betting sample…given the high probability of a crash (80% drop), if you don’t understand the specific unique circumstances of a coin before making a random bet, you may end up getting more than just a black eye…since stop losses are basically impractical for small market cap coins.
- By only picking tokens with a market cap of $10m+, you can significantly reduce the chances of a token crashing. But be careful that the token has been issued for at least 48 hours. I have seen high market cap honeypot tokens crash before, although none of them are in the snapshot for this post. Also, if you are unfamiliar with a coin, make sure the liquidity is locked at least 5% LP/FDV.
-If you see a coin being advertised… RUN…unless you know there’s something special about it. They tend to perform poorly.
-While plenty of volatility tempts you to enter the market…24 hours after a random snapshot, the prices of small-cap coins are on average 70% below their all-time highs. You are unlikely to catch the upside.
-Tokens will soon drop out of the hot list. Only 10% of the popular coins that have been issued for less than a week will stay on the hot list for 24 hours, and they will soon fall off the list.
-In conclusion, looking for tokens from DexScreener hotlist is a bad strategy and it is easy to be fooled by fake trading volume or advertisements. So, even if you are bored or tempted, stay away.
-You are better off digging into social media and your trusted networks, or avoiding the game altogether unless you are investing for fun. The above is some data to supplement what you think you know. Invest with caution.
