In early June 2023, the cryptocurrency market was buffeted by a wave of negative news that led to a significant drop in the prices of numerous tokens. The market was awash with FUD, causing investors to lose faith. Even after these unsettling events, degens were still hesitant to capitalize on the lowered prices and were afraid to buy at the market bottom.
On the bright morning of June 21, however, the was a change in the atmosphere. The cryptocurrency community, which had previously been gripped by panic, was now buzzing with renewed optimism and dreams of wealth.
There was a fresh willingness among investors to enter the market and buy Bitcoin (BTC), which drove its price to exceed the $30,000 mark. Simultaneously, Bitcoin's market dominance reached 51%, signalling a considerable shift in investor sentiment.
Drawing from my experience in the cryptocurrency market, we are on the brink of witnessing a surge in altcoins. Hence, we must expand our knowledge and learn from past experiences to identify the right time to invest and diversify our portfolios.
So, in this second episode of "Tracking Degen Wallets", I will introduce you to an altcoin investor who's managed to rake in a whopping $2 million in just the past two months. To respect privacy and for various other reasons, I won't disclose the identity or the specific wallet address of the investor discussed in this article. The wallet he used is:
0x13b3a50f3947476eda74fe191344524e2d2d28e5
To give you a brief introduction, our main character is a trader with a fondness for buying memecoins and riding the early trends for quick gains.
He epitomizes the "Degen" in the market, having earned a massive $6 million since 2021.
When memecoins caused a frenzy in the market on April 15, a savvy opportunity-seeker like our hero was one to take advantage of it. He invested 2.1 Ethereum (ETH), which was 5% of his capital, to purchase 4 billion $PEPE coins. $PEPE had only been listed on Uniswap for a day then, so our investor had to deal with price slippage issues.
Despite the initial price slippage with $PEPE, our Degen was firm in his trust in both the $PEPE team and the larger cryptocurrency community. He was convinced that these initial fluctuations were minor bumps on the road to success. His faith was rewarded the very next day when he sold 386 million $PEPE, nearly recouping his original 2.1 ETH investment.
But our Degen's story doesn't stop there. He had a hunch about where the market was heading. After getting back his initial investment, he sold an additional 1.3 billion $PEPE, pocketing an estimated $40,000.
Next, he switched strategies and dived into other shitcoins such as $BABYPEPE, $FLIP, $AGI... These shitcoins are infamous for their high-risk, high-reward nature. True to their reputation, all his new coin investments plummeted, save for one - $BABYPEPE. This coin yielded an impressive 415% profit, covering his losses from all the other coin investments.
At this point, I wondered, "Was this just a lucky break?". To answer this, I immediately asked Twitter, and Twitter said no.
Conversely, some argued that investing $40,000 from a $500,000 capital into 10 different memecoins was entirely reasonable. Especially in the wake of the surging memecoin trend, they deemed such an investment approach justified.
From these differing viewpoints, I concluded that while investing carries risk, our Degen has managed to mitigate this by diversifying his investments across many coins rather than going all in on one potentially life-changing opportunity.
Returning to the $PEPE saga, after selling 1.3 billion tokens, our Degen's wallet now held 2.4 billion $PEPE, estimated to be worth $444,000. By this point, the frog token had yielded him a staggering profit of over 2,000%.
It's intriguing that Degen chose not to sell all of the $PEPE at a 2000% profit. Instead, he opted to incrementally sell as the price increased, despite the substantial potential earnings.
On the surface, it appears that this is just a standard strategy for taking profits, aimed at not missing the peak. But for the owner of wallet 0x13…8e5, the perspective is entirely different. This individual has shared a unique vision on Twitter that:
Driven by curiosity and a keenness to learn, I discovered the protagonist's strategy from their tweet.
Their approach to investing in memecoins starts with securing the principal investment, followed by gradual profit-taking. The profit from the initial round of investment is then reinvested into various other memecoins, creating a cycle of reinvestment.
In this specific case, the protagonist consistently took profits from $PEPE at different levels, then used these profits to invest in other memecoins like $BULL and $BABYPEPE, applying the same gradual profit-taking strategy. With an initial investment of $2,000 in $BULL, they earned six times the amount. Similarly, an $8,000 investment in $BABYPEPE yielded a profit of $15,000.
The investor then proceeded to distribute these profits among hundreds of different memecoins, reminiscent of the investor from the second episode. However, with a stroke of luck, they discovered $LADYS, which escalated their profits to an impressive $60,000.
When the memecoin craze subsided, this trader reoriented his strategy, plunging into other trends like AI and LSD. He diversified his portfolio, investing in hundreds of different coins, ensuring no opportunity, however small, was missed.
Applying the same strategy he used with memecoins, our trader managed to reap substantial profits from A.I and LSD as well.
Another noteworthy characteristic of this trader's investment approach is his apparent lack of interest in long-term altcoin investments. This inference is drawn from two primary indicators.
Firstly, he displays a propensity for swift loss-cutting in response to perceived market risks, seemingly indifferent to the Dollar-Cost Averaging (DCA) strategy.
When faced with a bear market, where many might employ DCA to adjust their investment positions, he limits his losses on all altcoins and switches his focus to tokens with smaller market caps.
Secondly, the duration of Degen's altcoin holdings is strikingly brief, often not exceeding two months. In fact, there are instances where he holds tokens for a mere day, willing to absorb slippage and transaction costs.
This pattern raises the question: 'Is short-term trading with altcoins the optimal approach?'
Given the multitude of potential altcoins and the significant returns long-term investments can yield, I decided to further explore this question. I turned to Twitter for community insights.
The majority opinion suggested that short-term holding of altcoins was indeed a prudent strategy, given their inherent risk. However, I remained unconvinced and decided to extend my research to Substack, a platform for content creators. Here, I found an article by Arthur Hayes, the CEO of BitMex, in which he stated:
I've come to understand that while individual strategies and mindsets may differ, there's a shared ambition to generate wealth from the market. Therefore, learning from a variety of strategies and perspectives can provide me, and others, with a more comprehensive understanding of the market. This knowledge can be invaluable in preparing for a potential uptrend season. Subscribe
Lastly, to fully benefit from airdrop guides and interesting articles, it's essential to stay updated on the latest airdrops and participate in as many as possible. You can do this by following https://twitter.com/spacepixel and subscribe to Pixel’s newsletter.
Many sources influenced this article. In particular, I should note: