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Expert Reveals Why Altcoins Will Underperform This Time
Jonah Van Bourg, a former oil derivatives trader at Goldman Sachs and Vitol and a crypto and precious metals trader at DRW, recently shared why he’s bullish on his contrarian view of altcoins. He proposed a systematic strategy: buy a market-cap-weighted index of the top 1,000 altcoins when Bitcoin has been in a bull market for over six months.
While this strategy would have worked well in 2017 and 2021, it is only supported by two data points, which is not statistically significant for systematic trading. The expert believes it will fail for the third time because retail investors have been burned twice before, failing to implement the strategy optimally and holding the stock during the last two altcoin bull markets.
In a conversation with Blockworks Macro, Jonah said: “I think what’s really causing the sell-off is a larger light bulb going off, which is that most altcoins are completely worthless. Billions of dollars of VC unlocking is happening, and many retailers are finally waking up to the fact that their favorite bullshit coin is dead.”
His overall thesis on altcoins and tokenomics is that new sources of capital are needed beyond random individuals. Genuine commercial activity and a disruption of the traditional financial economy is needed to bring in the capital needed to support multi-billion dollar valuations. He does not believe this will happen in the next year or two, leading to altcoin underperformance.
Jonah advised against investing in the altcoin space, but acknowledged that some tokens like Ethereum and Solana could still succeed.
He concluded: “Meme coin casino is a fun way to play and make money, but I think the majors like BTC, ETH and Solana are a great long-term hold. Anything in the middle of that risk curve, the altcoin space, it’s risky. We’ve run out of fools willing to buy your shit, and I think the entire altcoin space is going to go from hundreds of billions of dollars in market cap to a lot lower, unfortunately.”