For an outsider, understanding the market and its variations might be reduced to: what bitcoin does, every other crypto do. Spoiler : It’s not true. Even in a bear market, the most talented investors make millions. With the following advices (adapted from the excellent blog of Willy Woo (https://woobull.com/the-two-types-of-altcoins-an-investors-view/)), you will be able to better understand the basic principles of the crypto world.
First, altcoins are nuanced. We have (among others): Protocol coins, Utility tokens, Security tokens and more. But to an investor, there’s only 2 types. Oscillators and Degenerators.
If you take a look at [this chart compiling the entire market](https://imgur.com/a/kO0Kjj8), the vast majority of alt-coins are Degenerators. Their price chart has a measurable half-life, like radioactive decay. Plotted on a log chart, it’s a straight line down. This one is Namecoin, a promising coin of its era, there’s over 2000 examples [like this.](https://imgur.com/a/gFurnfe)
On the other hand, only a small handful are Oscillators. You can have a good example by looking at [this chart.](https://imgur.com/a/r9q9InG) Oscillators are proving store of value (SoV) properties. To qualify they need to keep up with BTCUSD gains. To find them, plot their BTC value. It must oscillate around a horizontal line, for at least one full bull-bear cycle (around 4yrs). More cycles are better. Let me bring up [this oscillator.](https://imgur.com/a/NqxTBzg) It’s DOGE, a coin that was created as a joke, it has had no active development for years. It’s a humour fork of Bitcoin offering no technical innovation. **And it’s a freaking oscillator.**
DOGE achieved SoV because of Lindy Effect [*The Lindy effect is a theory that the future life expectancy of some non-perishable things like a technology is proportional to their current age, so that every additional period of survival implies a longer remaining life expectancy*]. It’s listed on nearly all exchanges, it’s supported by most wallets, it has a liquid market.
Note I didn’t say it has cutting edge technology, scaleability, fancy smart contracts, governance, or has solved sharding. I point this out to mock the common thought train that you need innovation and cutting edge tech to build value in your coin. These are monetary instruments, they build value with economic network effects.
If you plan on being in altcoins here are key rules of engagement:
-It’s critical to determine a Oscillator from a Degenerator.
-Oscillators are good to enter and exit to stack more BTC.
-Never HODL a Degen, period. GTFO.
-Be careful on the coins younger than one full cycle.
Finally, the biggest gains are made on Degenerators. The best example [is Ethereum](https://imgur.com/a/7QfRBJV). All the people that entered at 0.8$ or less will not contradict me. On the other end, Degenerators are also the one with the greatest risk. If you hodle one and no bounce back happens: your investment is gone.
This analysis was adapted from [Willy Woo Blog](https://woobull.com/the-two-types-of-altcoins-an-investors-view/) by Magelis86 for r/cryptocurrency and does not represent an investment advice.
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