Author: Mohamed Allam, Research Analyst at Messari;
Translation: 0xjs@Golden Finance
A few weeks ago, I wrote an article titled "Stick to Your Investment Thesis, or You'll Lose Money," and oh my, it feels like no one has an investment thesis—most importantly, everyone is losing money. If this is your first cryptocurrency cycle, welcome to the casino. If you try to gamble against the house, you will lose. Ahem, $TRUMP, $LIBRA, $JAILSTOOL, and $CAR. These are just mainstream memes, but if you are really in the trenches, you know this is just the first layer of the onion.
Let me say it again: If you treat cryptocurrency like a casino, it will treat you like a gambler.
In a casino, one in five players wins on the jackpot machine. This means the vast majority are losers—even the "winners," if you calculate how much they lost before hitting the jackpot, aren't really winning. Suppose you bet on a bunch of meme coins, losing over and over again, and finally hit the jackpot. What happens? You think you are special. You think you cracked the code. But in reality, your win is just an exception, and if you keep playing, the casino will take the money back.
Casinos lure you in with free buffets and dreams of financial freedom. Memecoins entice you with airdrops, 10,000x dreams, wife-swapping returns, and shiny Rolexes.
Casinos set the rules, letting you play until they decide to spit you out. Twitter KOLs send memes to the moon and then cast you into the cold palace.
When your luck runs out, the casino sells you the fantasy of a "big win." Memecoins have the same effect, only with even lower chances of success.
Mathematics—Why You Might Lose
Now, I am a math person, so let's discuss the law of large numbers in simple English.
This law states that as the number of trials increases, your results will get closer to the expected average. In gambling, the expected average is the money you lose. Casinos and gambling games are built around this principle. The more you play, the more your personal results lean towards the house edge.
Think of it this way: if you flip a coin 10 times, you might get 7 heads and 3 tails—anomalies happen in small samples. But if you flip a coin 1,000 times, the results will be closer to 50/50. The same logic applies to betting on meme coins. You might get lucky once or twice, but after enough trades, the expected outcome will revert to reality. And the reality is that Twitter KOLs are getting richer while you are burdened with massive losses.
So, how do winners win?
Get in early—but we must face the reality that even the smartest people can't leave on time, and getting in early is nearly impossible.
Become an insider trader—despicable and unethical.
Become a KOL to disrupt—also very despicable and unethical.
So, in short, this is a game of luck unless you meet the above criteria, which you probably don't, including myself.
That said, the stigma around cryptocurrency needs to change. Memecoins almost never make you rich. If you really care about this field, then go learn and develop a thesis—a real thesis.
Making 10,000x in a few hours is not a rational idea. Making 2-4x in 2-5 years is a rational idea. If you understand this, you can make money (of course, NFA). Don't let the meme cycle consume you.
Will meme coins disappear? No.
Has the crime peak arrived? Yes. And it will likely remain so forever.
But if you want to succeed in cryptocurrency in this gray world, you need to be prepared and understand what you are investing in.
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