Can you use Twitter to catch altcoins before they pump?
A real life example of Do Your Own Research
I'm slowly learning technical analysis right now. It's currently pretty confusing. I have trouble connecting the dots between candle patterns and why those patterns tend to mean there were certain fluctuations in supply and demand. People tweet a chart that shows a clear bullish pattern, and then someone replies with the same chart arguing that it's a bearish pattern. Not to mention remembering what all those patterns are in the first place. I still think it's possible to learn technical analysis, but while I do, I want to explore if qualitative analysis is a more viable path to find pumps.
Good ole value investing....will the underlying value of an asset reliably increase due to its utility, scarcity, or some other characteristic increase?
Moreover, and this is important - will you be able to find this type of information on Twitter, and not some rabbit hole in a Discord channel?
I predicted from the outset that there will be a few characteristics that the major pumps have in common, and vetting your crypto investments with this extra layer will help weed out short-term, flash-in-the-pan coins.
I started this exercise with a pretty open mind. Who knows where it would go? Frankly, I had no clue what specific items to even look for.
First, let's do the easy part and find coins that pumped in 2021. I'm going to be lazy and just Google some super pumps. Some prices went wild since I started writing this, and are already outdated by the time this will go live (and hopefully more so in the future as I bought a bag of Fantom after doing my research). But here are some winners:
AXS (+23,621%)
Ecomi (OMI) +15,034.09%
Gala (GALA) +10891.26%
Telcoin (TEL) +9597.44%
Solana (SOL) +7998.67%
Fantom (FTM) +7155.14%
Bam! First pattern emerges. There are three gaming/NFT tokens, and three platform/utility type tokens.
To analyze the coins, my methodology was pretty straightforward. I used the underrated Twitter Advanced Search function to see what people were saying about the coin during the 3-6ish months before the token started to pump. Sometimes, I expanded the time horizon to go further back in order to find some more interesting news items. 'Interesting' is subjective. In general, I looked for events that would suggest that a project would attract more buyers: strategic partnerships, new technology, new investment, etc. I set the minimum likes to 100ish to filter for tweets about more newsworthy items instead of chart movements. There are definitely more scientific ways to do this.
Please reach out if you have any improvements in mind!
Here are my findings for the six coins:
Telcoin
Telcoin was interesting because it hit a peak in May and immediately cratered, losing over 2/3 of its value. The coin had also been languishing for a long time during the bear market with a skeleton crew that slowly reassembled and launched a slick upgrade in mid-2021.
Telcoin is working on disrupting the global remittance market. Like a lot of Web3 projects, Telcoin is going after an industry that is inefficient, expensive, and relies on trusted third parties to conduct transactions. Let's say you're an immigrant in the United States and you want to send money back to your family in the Philippines. You currently have to go to Western Union, pay a fee, and wait forever for the money to arrive. If Telcoin succeeds, it will be immensely valuable to families that rely on remittances, and lucrative enough that you can dream of Telcoin being a household name along with Western Union.
That said, if you tried to follow signal on Twitter, you would be down bad right now:
(4/17/21) Signs partnership with Unipagos, Mexican remittance platform (Highest ROI, 8.51x to ATH if you bought at this date)
(5/25/21) Nebraska signs crypto banking law coauthored by Telcoin
(4/16/21) Launched an exciting community update
(7/1/21) $10m Series A (Lowest ROI - today’s price has dropped 45% from this date)
Solana
Solana has been a darling of the Web3 community in 2021.
Ethereum's sky-high gas fees shocked many people as DeFi platforms and NFTs exploded in usage in 2021. Spending hundreds of dollars' worth of computing power just to move a modest amount of money from one place to another made it seem like Ethereum was already the legacy platform.
Solana built a novel solution to reducing transaction costs and processing times on the blockchain. The innovation drives the value. It also has a robust developer community working to solve the most important problem in crypto: scaling a product that can serve billions of people.
Solana is arguably the leader of the 'Ethereum killers', but when I looked at its news history on Twitter, I didn't see much just massive investment after investment from exchanges and the king of all Web3 VCs, Andreesen Horowitz.
(9/20/20) Tether launches on Solana
(10/21/20) USDCoin launches on Solana (Highest ROI - 132.46x to ATH if you bought at this date)
(3/25/21) Raises $40 million from exchanges
(5/20/21) Launches on Coinbase Pro (Lowest ROI - 5.73x to ATH if you bought at this date)
(6/14/21) Featured in World Economic Forum article
Fantom
Man, I fucking love Fantom. Another one of the 'Ethereum killers,' it has been taking off like wildfire because of its scalability and unique consensus mechanism. The Fantom Opera mainnet can support decentralized applications and is compatible with Ethereum.
Fantom has been an absolute killer in sentiment, positive events, investment, momentum, everything. I had less trouble populating my excel list of events than I did for any other coin here.
The only thing I would knock it on is that some of the positive events like government pilots didn't move the needle on price at all.
(11/28/19) Announces Afghan government pilot (Highest ROI - 324x ROI to ATH if you bought at this date)
(12/24/19) Opera Mainnet launches
(1/20/20) Featured on CoinMarketCap twitter
(12/10/20) Introduces staking tools to drive liquidity
(1/27/21) Coinbase Custody supports deposits and withdrawals
(1/29/21) Available on SushiSwap (Lowest ROI - 27x ROI if you bought at this date)
(1/30/21) Daily transactions as much as ETH
The game tokens
Let me be candid and confess that I don't really give a shit about gaming and won't pretend for the slightest second that I know about the space. I'm just not plugged in, not aligned, don't intuitively feel the pull that others do.
Whatever, let's just look at the coins and see if I notice any patterns. Maybe if I get some alpha, I'll begin to like it.
Turns out, there was even less that I could find on Twitter. The only really notable event in my opinion was suspicious activity around Gala Games. Breaking an NFT record when your coin is barely worth anything, right after you secured a strategic promotional partnership....I don't buy it. It didn't seem to add up.
Still, some impressive gains:
Axie Infinity
(1/21/21) Scored top 10 Galaxy Score (Highest ROI - 249.21x to ATH if you bought at this date)
(1/30/21) Activity surged by 810%
(1/31/21) Featured in Entrepreneur as top dApp (Lowest ROI - 191.46x if you bought at this date)
Ecomi
(1/21/21) Scored top 10 Galaxy Score (ROI unavailable on CoinMarketCap but if you bought in Jan/Feb you’d be filthy rich right now)
Gala Games
(9/23/20) Passes a security audit
(11/30/20) Partners with BAT (Highest ROI - 2733x to ATH if you bought at this date)
(12/3/20) Cut promotional deal with Brave
(1/4/21) Broke NFT record
(2/24/21) Partners with Binance Smart Chain
(3/31/21) Partners with Polygon (Lowest ROI - 32.80x ROI to ATH if you bought at this date)
Conclusions:
The shitpost engines of Crypto Twitter and (gulp) Crypto YouTube make it seem like the future is certain. Bitcoin is guaranteed to hit $500k in five years. ETH will flip BTC. SOL will flip ETH. ASSCOIN is going to be your biggest regret if you don’t buy it at one-millionth of a cent.
Alex and I want to do things a bit differently at Blockchain Calmly. We want to give you a window into our learning process, which will inevitably run into dead ends and uncover more questions than answers. We want to build a community of people who are okay with this level of ambiguity.
That said, we also want to build a community of people who are comfortable making decisions with the limited knowledge they have. You’re ultimately going to have to invest your own money or time into crypto if you want to enter the field. With thousands of projects out there, the odds you choose the very best one are slim. You’ll see opportunity cost everywhere you look, especially if your favorite token drops 50% in a matter of weeks. There is no correct strategy in crypto. If you want a “correct” strategy, throw your fiat money into an index fund.
This ambiguity is a good thing! Because it is so early in crypto, there are still information asymmetries out there. Risk/reward not properly priced in. Discord channels that predict the rise of meme coins. Institutions and everyday people are still too scared to jump in. Soon enough, they will, and the days of 100-500x gains in a year’s time will be gone as the market becomes more efficient.
With all of that said, what do we make of the Twitter history of these six coins?
I thought each project would have a paper trail of success stories, the same way that startups do. The difference, of course, is you can invest in a crypto project as soon as you hear about it with whatever amount of money or risk tolerance you're willing to commit! I thought every project would have a long list of killer events like Fantom and Axie Infinity. But even mighty Solana seemed to have a lukewarm buzz around it.
Surprise surprise: it looks like there’s no magic bullet. If you bought the crypto projects that had just received 8-figure investments, you would have lost your money with Telcoin and 17x'd your money with Solana. If you bought when a project was featured in a mainstream news article, you would have gotten rich off of Axie Infinity and gotten beer money with Solana.
Even though I can't report back to you with a clear 'buy this, buy now' sign, I personally feel more confident following these events than I do looking at charts. I will use this methodology as a lens for evaluating long-term investments, and if I do end up doing technical trading, I will use this analysis as a filter to weed out the projects that are just trash anyway.
I feel like I just got one number on an expert-level Sudoku puzzle. I have a new lens to see the puzzle in front of me in a slightly different way, but it is nowhere near solved.
Here's how we can build on this:
Research more coins, period. n=6 won’t get peer-reviewed anytime soon.
Compare these to projects that seem promising, but didn't make much progress at all in 2021.
Find other projects that have impressive roadmaps and news stories. Did they pump? Are there any that seemed to really take off with developer activity or partnerships, but didn’t pump? Why?
Look at other sources! I just used Twitter since I spend so much time on it.
Discount these price pumps compared to Bitcoin, the price of which acts like the bellwether of the crypto market. Always compare a crypto investment to the opportunity cost of just buying Bitcoin. If you think $SOL will triple this year, but also think Bitcoin will hit $150k, just buy Bitcoin!