The Shitcoin Roach Motel

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I am not a professional trader by any stretch of the imagination; before Bitcoin, I had some divident paying stocks and index funds, and that was about it. The average passive millennial investor, working hard, spending less than I make and putting it away in cash to deploy into the poorly performing assets that are meant to give me a return I can retire on.

I didn’t think much of it until I discovered Bitcoin and saw how I was getting shafted by these investment vehicles. Naturally, once you get into Bitcoin, you have the urge to give the cacophony of shitcoins an equal chance.

I get the thinking, hey, these coins are like Bitcoin, only cheaper, I can buy more units of this and maybe make an even bigger return.

As the so-called logic dictates, the further you move out the risk curve, the greater your chance of a larger return, but this rule isn’t absolute, as I have come to find out.

The real tether

The fact is shitcoins are Tethered to Bitcoin for their value, like it or not, but whatever Bitcoin does, these coins are sure to follow, and no one has broken that mould.  They cling to Bitcoin for guidance, direction and value. As speculators feel they’ve made enough on a Bitcoin run, they’ll rotate into smaller cap coins to try and secure a little extra cream.

Additionally, sideliners will feel they missed out on Bitcoin and start driving capital into shitcoins thinking these coins can mimic Bitcoin, so we have altcoin run ups.

To the novice coiner, see this as a harmony of the market and not the parasitic tether that shitcoins are. They trap the initiated into positions they can never recover from without losses.

What is true for the few isn’t true for the many.

As a retail noob myself, I get the appeal of I put my money in X, wait for the market to be overbought and take my money out at Y. Pat myself on the back and call myself the next Warren G the regulator or Warren Buffet.

So you’ve had friends who put a few $100 in and were able to pull out $100 more. I mean, doubling your money in a matter of months sounds great.

Why didn’t I do it with $10 000 or $100 000 and really stack the gains. The fact is these shitcoins don’t have the liquidity to handle bigger trades.

When you’re trying to dump your position, you NEED greater fools coming in at large amounts to replace you. The moment you sell a big chunk at sport, as most retailers do, you smash that order book down, and the slippage will leave you with far less than the paper gains you were expecting.

So you either need to wait and hope that there’s a constant bid for your shitcoin so you can exit at the price you see on the screen, or stomach the losses you’ll take for dumping on the market at any one time.

This is a lesson many retail traders have yet to learn, and they check themselves into a roach motel position they cannot check out from without considerable losses.

Learn to value your time

I see so many people trying to be smarter than the market with these small trades, sure. You can pull off a small trade that doubles your money at a few $100 but think of all the time and money you wasted.

  • You wasted money on fees,
  • You wasted time researching a shitcoin
  • You wasted time signing up for an exchange
  • You gave up some of your privacy
  • You wasted time watching an insignificant market

You could have been spending that time doing something you enjoy, allowed your money to work for you by DCA”ing into Bitcoin and letting that run on autopilot, and the funny thing is over the long term, you’d probably be far better off than trying to scalp on these shitcoin trades.

Yeah, but look at all the money I am making actively trading? Yes, we all like to look at the money we make, but how many are tallying up the money they lose? It’s often the case the market always wins.

Eventually, you’ll get greedy and fall for a bad trade.

The funny thing is, even if you prove me wrong and pull off the trading run of a lifetime, The real gut punch is, you know what your reward is for pulling off a good trade? Taxes.

Shitcoining makes taxes unavoidable.

Unlike Bitcoin, where I can HODL for years, you do not have the surety that a shitcoin will be around for years; you’re constantly on edge trying to find the best time to get out or bleed out over the course of liquidity flowing in.

You’re either exiting to Bitcoin if you’re smart or exiting into fiat if you still feel stable means of temporary value. Either way, you’re forced into taxable events.

The shitcoin trade is a government’s gain; every time you trade out of your position, a little more is owed to your government.

So ask yourself, are you really “outside the system”?

You’re constantly trying to figure out who you prefer to be robbed from:

  • Be it some shitcoin business, masquerading as a foundation, bleeding you dry through their insurance and favourable allocation over time.
  • Or you’re a government, as you create more taxable pain for yourself.

The shitcoin trade keeps you between a rock and a hard place, constantly under threat of losing your value, constantly under the strain of being underwater on the trade.

The sunk cost of shitcoining

I get it; I felt the same way when I stomached my shitcoin losses and moved on. You feel like you’ve put so much time and money into it, you’re not willing to walk away, the loser, but you’re not, you realise that you were throwing good money after bad, and that’s a good thing.

The trades you make always give you something; either you make money or learn a valuable lesson.

Stop beating yourself up trying to make something work that won’t, like Gretchen trying to make “fetch” happen?

Why would you do that to yourself?

I know it feels daunting when a market is volatile, and you feel like you need to be active in it to get the most out of it, but has that really proved to be the smart play in long volitlity? 

For the life of me, I cannot understand why people feel they need to be active in the market and try to be smarter than what Bitcoin is building.

I guess what Im saying is stack calmly, stack at your pace, stack constantly, your future self will thank you.

Disclaimer: This article should not be taken as, and is not intended to provide any investment advice. It is for educational and entertainment purposes only. As of the time posting, the writers may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency, as all investments contain risk. All opinions expressed in these articles are my own and are in no way a reflection of the opinions of The Bitcoin Manual

One Response

  1. Checking in to the Roach motel is one thing but checking out is a whole other story! Learned that the hard way and you’re right, it is stressful trying to keep on top of so many things and then when you do “turn a profit”, better get ready to hand some over to your tax man! Every transaction you make from shitcoin to Bitcoin or to fiat is a taxable even in the UK so hope you have good accounting skills to keep on top of it all!

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