Time and again crypto commentators make reference to a string of market conditions that they refer to as “alt season.”
For them, this is a period of time where altcoins are supposedly ripe for investment.
The connotations of this suggest that, across the board, altcoin prices are soaring and profits are in plentiful supply.
However, these commentators lack basic knowledge of market-wide dynamics since they neglect to realise that the sole purpose of a Bitcoin alternative is for it to be used as a BTC accumulation tool.
Therefore if Bitcoin itself is rising in value – what incentive is there for investors to voluntarily wade through the altcoin swamp?
You see – the lead motivation for serious investors is always to multiply the capital that they deploy into the market.
More often than not – this is accomplished via the lowest risk and most time and cost efficient method available.
With this being the case it would be foolish for an individual to become distracted by the misguided hope that the bundles of worthless tokens that he purchased during ICO will now surge in value due to the incorrect forecast of an impending “alt season.”
With this being said, please note: we aren’t completely writing off the viability of altcoins during this period – since, there are currently several exploitable opportunities to be seized upon in the alt market.
However – these opportunities exist in less than 20 of the more than 2000 altcoins that are available for trading.
Therefore the margin for error, especially for ill-informed traders, is huge.
In short, if you’re not confident in your own abilities – then, for you, venturing into the altcoin space would be like leaving the zoo and entering the jungle.
They say the best way to execute a robbery is to force a man to part with his goods without using violence.
An altcoin is a mechanism designed to enrich its creator
No matter how you wish to slice it, a carrot cake will always be a carrot cake.
Whether you acknowledge it or not, when you purchase into an asset you are engaging in a game of strategy against that asset’s market maker.
The sole aim of that market marker is to put his hands directly into your wallet and retrieve as large a pile of Bitcoins as is possible.
His every move is made with intention to ensure that he takes possession of your entire trading fund.
Whether it takes him a month, a year or several years to achieve – this is his definition of success in the market.
In order for him to accomplish this he spends his time creating traps.
He engineers price movements, which in turn creates the impression that his asset is highly sought after by investors.
This is accomplished via a tactic known as wash trading and is not unique to the crypto currency markets…
…in fact, those who are aware of these strategies estimate that more than 90% of all trades that take place in the global stock markets are wash trades.
If an exchange with low traffic has $300M volume and just 5 BTC in its wallet, users will be able to draw their own conclusionsCarylyne Chan – Global Marketing Chief, Coinmarketcap.com
In order for a market maker to cash out, he must first engineer a price rally – this price rally provides all market participants the ability to draw profits, therefore it cannot be denied – as investors, we thrive due to this activity.
However, those that aren’t yet skilled enough to understand these dynamics are the ones who get run down and left for dead.
It’s like bringing boxing gloves to a gun fight.
Market novices are the ones who often enter this arena with large trading funds only to be strategically assaulted and then forced to leave the market empty handed.
I say it time and again – the most foolish thing a person can do is to engage someone in a game of strategy despite having zero intentions of being strategic.
You will come up short 9 times out of 10.
The classic premine scheme
It’s important to pay attention to the dynamics that exist behind the production of cryptocurrencies.
You see, without financial incentive being made available to developers – there’d be no crypto assets.
The majority of developers will only engage themselves in a project if they feel that the eventual remuneration will be adequate.
With blockchain based assets though, developers are literally given licence to control their own financial destiny – via a process historically referred to as premining.
Those of you who have been active participants in this market over the last 6 years will have already been exposed to the mind-set of a crypto developer:
You see, a premine is the production of a set number of tokens which developers create and put aside for themselves before their currency is launched and made available to the public.
Historically, this behaviour was frowned upon.
It made for uneven distribution and allowed developers to dump large holdings on their investors and then vanish.
The same practice is used in today’s market.
However – it’s been cloaked under new terminology: an Initial Coin Offering, or ICO.
Seeing through the illusion
A person who has never developed and successfully launched a crypto currency is similar to the person who places a cup of milk by the fireplace to ensure that Mr. S. Claus receives adequate nourishment while delivering gifts.
Cryptocurrency developers are, by definition, illusionists.
They are skilled practitioners of sleight of hand.
These are the true risk takers of the market.
As each day passes, crypto developers grow wealthier and wealthier.
So skilled are these developers in the art of subversion that they took a page out of the Wall Street playbook and invented the ICO.
What is an ICO?
The official definition of an Initial Coin Offering is a fundraising mechanism that allows new projects to sell tokens in exchange for bitcoins. It allows new projects to raise funds for further development and marketing.
What’s interesting is this is literally the same reasoning (or excuse) provided by the old shitcoin developers to justify large premines.
This is no different, it’s the same exact scheme but under a new name.
Time and again we see huge ICOs that have enabled Developers to raise hundreds of millions in Bitcoins.
But – remember. These developers are expert illusionists. They are severely skilled in subversion and sleight of hand.
By using language in this way i.e. referring to an ICO as a fund raising tool – it diverts your mind and attention away from what is truly taking place.
You see, developers are buying their own tokens during ICO.
No matter which ICO it is we’re discussing, the number one “investor” during that ICO will always be its developers.
Devs are no longer expected to display verification ot proof of investment.
So whether “investments” are being made by friends and relatives or a developer is simply editing lines of HTML – it’s simple to make it appear as if a project has raised hundreds of millions of dollars.
In short, an ICO is essentially a tool to ensure that the majority of the total supply of a crypto currency remains in the hands of its developer.
This is not unique to the crypto-sphere though, the same thing happens on Wall Street during initial public stock offerings.
Steven Madden takes more than his fair share
In June of 2000 shoe designer Steve Madden was charged as a result of his participation in 22 fraudulent Initial Public Offerings between 1991 and 1997, including an IPO for his own company Steve Madden LTD.
I was guilty of stupidity, arrogance and greedSteve Madden, April 5 2002
The charges were related to Madden’s involvement with corrupt firms Monroe Parker and Stratton Oakmont.
Madden was part of a stable of “flippers” who had entered into secret agreements with the firms in which the parties conspired to keep control over publicly traded stock.
The flippers received their stock with the understanding that they would sell the stock back to Stratton or Monroe at prearranged prices once public trading had begun.
Stratton and Monroe would then earn their own profits by selling the stocks to their customers at artificially inflated prices.
In each of the 22 manipulations, Madden sold his stock back to Stratton and Monroe and kept a portion of the profit.
In some instances Madden’s profits were larger than the negotiated amount.
In those cases, Madden returned his excess profits to Stratton and Monroe by executing prearranged “losing” transactions through his brokerage accounts.
The schemes generated for Madden a total of $7 million in profits
Turning the illusion into real profits
Trading is a game of strategy.
The goal is not to shy away from the market due to these inevitable exploits.
You must gain an understanding of this practice so that you can become better able to assess which assets to avoid, and which assets to purchase into.
Furthermore – understanding the subversive tactics of market makers will give you the ability to construct a near fool proof entry and exit strategy.
This is the true nature of the market.
In order for you to succeed whether it be in the crypto markets or any other financial arena – you need to understand the nature of the beast.
You need to be fully aware that there is always someone on the other side of the trade.
It is only then that you’ll be able to dip your hands directly into the wallet of the market maker to retrieve bundles of bitcoins.