If you spend any amount of time in the crypto banter online in the different discords, telegrams, Instagrams, Twitter threads and YouTube videos you'll probably be thinking that this is an absolute slam dunk way to make money. Look how many people are doxing their holdings in paper gains, bro.
Everyone who gets into bitcoin and shitcoins thinks they're going to earn a bunch of fiat, buy low, call the top and sell high, it sounds simple enough but most people won't pull it off.
It can be down to inexperience, greed, rug pulls, scams, hacks, but very few make it to the other side unscathed. That's why the media selectively loves to promote that one kid that sold an NFT, that one chick that sold at the top, that one guy who YOLO'd in to give you a false sense of it being achievable for you.
Bitcoin's ecosystem
In the bitcoin ecosystem, you get miners, they expend energy to secure the network and are rewarded in bitcoin. Most miners are looking to hold on to their bitcoin as long as possible to try and sell at a higher price, so they sell less bitcoin to cover expenses.
They want to remain profitable and in business for as long as they can and maximize the returns they suck into their setup. When they sell, they need to cover fiat expenses such as wages, energy, repair, new machinery, and internet bills.
Mining bitcoin is not free, which is why bitcoin mining and fiat mining is required to work in tandem.
What is exit liquidity?
Now this concept has been taken by the crypto community and bastardized to unrecognizable levels. In a cryptocurrency most of them have little to no cost compared to bitcoin, they are pre-mined, they are allocated, they are airdropped, and they are returned through staking.
When you get into an ecosystem like this, regardless of how early, if you're NOT the initial central group, you are the exit liquidity and you're always looking for the next sucker to be your exit liquidity.
You think you got in on SQLana on the cheap, but A16z got in cheaper and the founders created it for nothing.
You think you got in Terra cheap but the founders are selling it hand over fist to you to buy bitcoin.
So if you are going to play these ape games, you need to understand these differences and that you're sitting on a hot potato. It's time we be honest about what is going on so people understand the risk and if they do want to play, by all means.
I know what I say doesn't make me the most popular because I refuse to shill bullshit, and I look at things from a risk perspective and not for potential upside.
I am here to critique things and if they fall apart by a part-time bloggers analysis how would it hold up when it's being audited by a hacker, by the SEC, or by anyone with any amount of reasonable capital.
Funds don't care about shitcoins
You see a lot of funds getting into shitcoins now, I spoke about Grayscale's rebalancing recently, well the truth is, they don't care about the performance of the coins, they care about assets under management.
The bigger the fund, the more fees they earn, also as the bigger the fund, the more they can move the market and suck up retail capital trying to compete with them.
So if the initial pre-seed guys didn't dump on you enough the bigger boys will pick you off eventually.
Have your say
What do you good people of HIVE think?
So have at it my Jessies! If you don't have something to comment, "I am a Jessie."
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