On the randomness of investing in 100x coins

In yesterday’s article introducing Degen, I quoted a piece of data on the price trend of this token. According to the data on https://www.coingecko.com/, the price of this token has risen more than 1,000 times from January 15 this year to yesterday, which is a true 1,000-fold coin.

This reminds me of the topic of “hundred-fold coins” that we often talked about in the past.

I remember that in an article about the year before last or last year, I shared some judgments on "100x coins". One of them is: if we refer to the cases of the last bull market (such as YFI, etc.), it is very likely that the future 100x coins (at that time) have not appeared at all.

Today, the example of Degen has proven this point.

If we take a closer look at its background and examine its price action, we can see some very interesting things.

It was launched on January 15 this year. The idea came from a channel called Degen in a now popular decentralized social application (farcaster.xyz). The token was issued on Ethereum's second-layer extension Base chain.

So if we are lucky, it would be best if we can catch it at the beginning.

So let’s go back in time to that period and see what we who have experienced that period were thinking and paying attention to at that moment, and whether we could pay attention to it at that time?

As it happens, we had a Twitter discussion a few days before Degen went online (January 6). I summarized the questions that readers were most concerned about during that discussion, which are basically the following categories:

BTC Layer 2 development and future prospects

Bitcoin NFT ecosystem and potential projects

What is the current status and future of the Bitcoin asset ecosystem (including ARC, Runes, BRC420, etc.)?

Do the golden shovels in the Bitcoin ecosystem (such as Bounce, Turt, etc.) have any potential in the future?

Will the Inscription Token drop further so that investors who haven’t gotten on board can hurry up and get on board?

Will a bull market start in the first half of the year?

Opportunities for Ethereum’s second-layer expansion (such as Starknet)

What is the current status of the Ethereum gaming ecosystem (such as Magic and Bigtime)?

Did you notice that none of these questions are about decentralized social, and none of them mention farcaster.xyz, Degen channels, or Base?

I knew about farcaster.xyz at the time, but I haven't used it until now.

Why?

Because it is not easy to use for me. It only has a mobile version but no desktop or browser version, and I don’t like to do various operations on my phone. In addition, you have to pay a fee to register an account, and the key is that you can only pay by traditional payment methods.

These two points give me a headache, especially the payment method, which doesn't look like a Web 3 application at all.

So it's hard for me to imagine using this app during that period.

I also knew about Base at that time, but in my opinion, Base did not have any outstanding features compared with other second-layer extensions. As for its ecosystem, I only knew a relatively famous DEX, so I could not pay attention to this token.

I guess many readers will have a similar situation as me.

Let's take a look at its price trend:

Based on the data on Coingecko, I divided it into four stages.

Phase 1: From January 15 to January 29, its price rose from 0.000023 USD to 0.0003 USD, an increase of more than 9 times.

The second stage: from January 29 to February 24, during this period, its price rose from $0.0003 to $0.005, and then returned to $0.0008. In other words, it rose more than 10 times, but then there was a correction of more than 80%.

The third stage: from February 24 to March 14, during this period, it rose from 0.0008 USD to 0.003 USD, but then fell back to 0.0017 USD. In other words, it rose nearly 3 times, but still did not allow users who bought at 0.005 USD to get their money back, and then there was another drop of nearly 50%.

The fourth stage: From March 14 to April 1, it started a wave of rapid rise, from 0.0017 US dollars to 0.06 US dollars, an increase of more than 34 times.

In the first stage, I estimate that even if many investors are lucky enough to buy it, they will not be able to resist the temptation of 9 times return and will take profits and leave.

In the second stage, I estimate that many investors may not be able to tolerate the large pullback and will cut their losses and leave the market.

In the third stage, I estimate that investors who did not leave in the second stage will reluctantly sell their stocks after seeing another sharp drop without even getting their money back. Even among the investors who were lucky enough to buy stocks in this stage, many will sell their stocks after a 50% correction.

It is only in the fourth stage that its growth is the largest and its influence on expanding the circle is the strongest. It is probably also the stage when the most investors enter the market.

We might as well ask ourselves, even if we are lucky enough to buy it at any of the above stages, can we endure the multiple plunges and temptations in the process and hold on to it, waiting for the final harvest?

So far, Degen has increased by more than 1,000 times. If we analyze its growth process now to decide whether to buy it now, it will be meaningless. What is more valuable is what experience and lessons we can learn from it.

From Degen's thousand-fold growth, we can see that to find a 100-fold coin and get a "100-fold" return from it, you can try the following two points:

First: Pay attention to new projects.

Second: When we make up our minds to invest in a project and hope to gain high returns, before it reaches our expectations, we must be able to withstand the impact of a sharp drop, withstand the risk of returning to zero, and reject small temptations along the way, only then will we be able to reap big rewards in the end.

The first of these two points requires a high degree of luck and depends on one's personal understanding, which may not be something that everyone can do. But the second point is something that everyone can do as long as we control the risks, try it with a small amount of money that we can afford to lose, and endure the torment of human nature in the process.

This is why I have frequently expressed this view in previous communications and articles:

In a bear market, when we have used some small positions that can be completely sacrificed to bet on some projects that may generate high returns, as long as there is no problem with the project team, we might as well hold on to it and completely ignore the plunges and small rises in the process. Unless its increase has reached our expectations, we will not consider cashing out until the middle and late stages of the bull market.

This is something we don't need luck for and everyone can do it.