S..tcoins, staking, airdrops and NFTs: how crypto calls to the degen gambler in us all

Crypto has more pitfalls than an 80s side-scroller, and forget WAGMI were simply not all gonna make it. But the meme-loving asset class still has potentially attractive opportunities for those who look in the right places, bear market or not. Read on for no financial advice

US Securities and Exchange Commission boss Gary Gensler labelled crypto the Wild West of finance late last year a fairly obvious, go-to metaphor. But largely unregulated as it has been for a long time, it does the industry a huge disservice to tar it as one big gambling den.

That said, many a crypto trader, flipper and even some HODLers do tend to refer to themselves with some pride as risk-embracing degens (more on that in a sec).

But while the high-risk, high reward/loss element remains strong in crypto, the space has also matured a good deal in the four and a half years since I first took notice with a small speculative purchase of Bitcoin and Ethereum (and, embarrassingly, a total rug-pull called Confido).

That maturation will likely gain pace as yet more institutions, sovereign states, and high-net-worth investors jump in and regulatory clarity ensues.

 

Degens and dollar-cost averagers

Gotta risk it to get the biscuit? Crypto has historically been as volatile an asset class as you can possibly find, outside trading Pokmon cards, crystal meth or maybe nuclear warheads. So, broadly speaking, its inherently risk-on.

But, as with all investing, there are different risk-level strategies to assume within that arc, depending on your tolerance and the amount of capital youre prepared to lose. Here then, are two of the more commonly known, sometimes employed in tandem

The degen strategy is actually probably better described as a mentality. Short for degenerate, in the crypto world degen is regarded less an insult and more a way of life. It generally describes investors who regularly ape in and out of various sh*tcoins (a loose term for mostly lower-cap altcoins), usually spending next to no time researching the investments.

That might sound a little pump-and-dumpy, but its not necessarily as darkly orchestrated as that (or as stupid as it sounds). It should be noted that while not much due diligence is given to research by degens, gaining a naturally quick feel for potentially lucrative projects can take some time. Its a case of time in the market and timing. And luck.

Because investment opportunities in crypto and NFTs can shift at lightspeed, some do this as a kind of spray-and-pray thesis, hoping the wins outstrip the many losses, duds or even scams.

Its worked spectacularly for those who managed to catch on to dog-meme coins such as Shiba Inu (SHIB) early doors, a Bored Ape Yacht Club NFT, or more recently Moonbirds (which has a floor price thats risen from 2.5 ETH to 30 ETH at the time of writing about US$90k). Easier said than done.

Yeah, there’s a market for crappy drawings there. Picture: CoinGecko

As for dollar-cost averaging (DCA), this is by far the safer, more conservative route, and involves investing a set amount of money in manageable increments at regular intervals. Its commonly done with blue chip coins, particularly Bitcoin (BTC) and Ethereum (ETH).

For example, if youd invested $20 AUD per week into BTC over the past four years, youd have turned $4,160 into about $18,000. The same equation with ETH would put that investment at around $43,000.

Admittedly, the figures dont look as hot if you adjust the time period to only the past 12 months, and theres no guarantee were not heading into an extended bear market from here. But for those with a longer-term bullish crypto outlook, its probably a more sensible play than flipping jpegs on OpenSea.

 

New around here? Five things to consider and look out for

The staking opportunity
One of the biggest boons that crypto offers investors is the ridiculous levels of interest or yield that can be earned through DeFi, comparatively speaking, that is, to the trad financial world. Were talking 5, 10, 15, even 20% per year on some cryptos and stablecoins using certain protocols.

There are various means to do this, with, again, various levels of risk. Many top exchanges (eg. Binance and Coinbase) offer crypto staking, which makes things easy, although it means handing over your crypto and they take a fee, natch.

The more decentralised options include staking your crypto from your own address directly into the protocols (eg. Avalanche, Cardano, Solana, Terra) staking platform or official wallet; staking through a third-party wallet such as Ledger cold storage; or through a staking-as-a-service provider such as RocketPool.

 

Airdrops
Theres no such thing as a free lunch yada yada. But keeping your ear to the ground in crypto can help you find occasionally very lucrative opportunities. For example, the decentralised exchange Uniswap famously airdropped a minimum of 400 UNI tokens to every crypto address that engaged with its protocol by a certain date in 2020. At its peak, UNI grew to be worth US$44.92 per token. Thats nearly US$18,000 if youd sold at the right time.

From time to time, Stockhead lets readers know about potential airdrop possibilities, which are essentially ways to receive free crypto tokens from decentralised projects either launching and dispersing or using the method as a marketing strategy.

But, by keeping your ear to the ground, we also mean keeping your eye on Crypto Twitter. Weve found @OlimpioCrypto to be a pretty handy source, for example.

 

Be careful who you follow, though

Even the most dubious of intentioned crypto influencers will tell you theyre a) not financial advisers and b) that you should never invest more than youre prepared to lose. Before absolutely shilling you the epitome of a sh*tcoin, such as Kasta.

If it sounds too good to be true in crypto its usually being enthusiastically sold to you by a Tweeter or YouTuber who uses Home Alone-style shocked/amazed faces for video thumbnails.

There are some great crypto influencers, of course, but sorting the wheat from the chaff can be hard work. Note to self: its probably about time we attempted to do so for Stockhead readers.

 

Be wary of the HODL trap

You gotta know when to HODL em, know when to FODL em? To be honest, Im still working this one out. But the well-worn HODL (hold on for dear life) mentality is something I subscribed to a bit too heavily for probably the first three years of my crypto-investing journey, and it cost me.

Made a 5X, 10X, or even 20X profit or more on a sh*tcoin? Yeah, probably best to at least pull out that initial capital, and then some. Then maybe HODL the rest and see where it goes.

 

unless youre stacking those blue chips

Of course, if youre truly set on the Bitcoin and/or Ethereum long-term, financial freedom, inflation-hedge thesis, then HODLing and dollar-cost averaging is pretty much speaking the same language.

The author is not a professional financial adviser. Instead, hes more set on making just about every mistake in crypto as a kind of ongoing social experiment.

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