Cryptocurrency Shilling And Signal To Noise Ratio

Up to early 2017 you could know exactly why some cryptocurrency is rising, and why others are not rising. It was simple – some good news came, market bought it. Then in mid 2017 cryptocurrency market became hectic, ended up being a mania, and then it crushed down and died, and continue to be dead for 3 years. In 2021 we saw boom, and then again bust.

So it is a cyclic, and you can notice that new cycle is beginning with price surges, but also you will notice that some cryptocurrencies are rising, and it is becoming increasingly harder to determine why these are rising and others not.

So the problem with internet money land, when crypto is becoming exciting, is the signal is disappearing and the noise is exploding. Also overall signal is weakening, because people do not want to take notice on what is happening while it is boooooring.

That is why at each cycle we have weaker and weaker promoters who are loud, but not wise. Yet people who are new-comers do not know what is wise and what is not. I am witnessing this generational degradation from 2014. I remember how little resources there were back then, but they were very helpful to understand what crypto is about. I saw what topics were 2017 and what topics were 2021, and I see what people are talking about today.

This is such a wide space, and so much beautiful and ugly are happening every week. There are so many things to go into one of these protocols and it looks like these protocols are pretty special and unique in their ability to create and capture sort of unprecedented amounts of value. The problem that is happening in the space is there is so much noise there, so much baloney, so much BS.

Everyone is superbiased, and they are doing this to protect and grow their own bags or “investment.” When you buy a cryptocurrency, you are part of the herd of people who own that cryptocurrency, weather you want it or not. And you want your cryptocurrency to moon just like these other cryptocurrencies did.

Leaders of cryptocurrency projects know this, and some are doing their best to lure in the most “investors” to pick their own cryptocurrency. That is called shilling. When you see cryptocurrency project trying their best to attract attention, run away from them, because they already attracted a lot of dumb money, and there is less upside for you because of that. These are, no wonder, the cryptocurrency projects that overpromise and underdeliver. You will not find gems there, but on the opposite of the spectrum.

I knew for a long time the mechanics of why and how it is happening, but I could not explain it easily. Then after lot of brainstorming, I came to simple graphic way to explain this.

This is what people wrongly assume:

This is how it is actually:

What is happening is there’s a lot of people try to sell you, basically, stock picks for Internet money… who are there just guessing is it going up tomorrow, is it gonna go down tomorrow. They give 15 recommendations daily, and if 3 are successful, they will say I told you so, now these who listened to me are getting all this profit, and you who did not, well you are a sucker who does not know to listen. And all that because they want to charge you for their call signals.

Vast majority are traders, who are trying to exploit the volatility of the cryptocurrency markets and make 10% 30% 50% in few days or weeks. That is because they do not know better, and they are sharing whatever chart is supporting their thesis. When they buy or go long they will be supportive and positive, they will communicate in a way that you would want to fomo. When they sell or short, they will share such a things that is assuming that it is inevitable price to fall.

Because noobs do not know what to look for in crypto, they pick up from people before who also do not know what to look for in cryptos, this notion that Technical Analasys is the answer. They are sold the idea that only if they learn this TA, then they will be able to successfully trade cryptocurrencies and earn lots of money. Then they start daytrading, following news on daily basis and reacting to market movements.

But there is one BIG problem with this: IT IS NOT INVESTING! It is trading, and not trading based on fundamentals but based on speculation. Definition of speculation is when you are making market decisions based on what other market participants will do after you.

I was admin in many cryptocurrency related projects and I was always trying to prevent this, and talk about real things… just to conclude after 3 years that market does not give a shit about fundamentals. They just care about price and quick profits. That is why majority are clueless traders, and that is why majority is actually losing money.

It is very easy in crypto space to buy grossly overvalued crypto thinking it is dirt cheap.


About the author

Robert Bartus

Robert has a marketing background, he worked as internet marketing growth hacker. He bought first "altcoin" in the mid of 2014. From 2017 he worked for 2 crypto exchanges and dozen various crypto companies as advisor and community manager which gave him valuable insights about the crypto industry.

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