Cryptocurrency is a global market that is open to anyone. The barriers to entry are much lower than traditional finance, presenting an opportunity for individuals to participate, whatever their means. Stories of people who have amassed life-changing amounts of money through being early, being lucky, or simply being right have created a crypto gold rush. Particularly pronounced during bullish market conditions, this trend has popularized the notion that anyone can become a profitable crypto trader.
The reality is far different. It has been estimated that 95% of retail investors lose money trading bitcoin and other cryptocurrencies. Even the few who successfully generate a positive Return On Investment are prone to losing their newly acquired riches when the market cools and they fall into the trap of holding onto assets for too long.
Consistently operating profitably over a long timeframe is virtually impossible for all but the most skilled traders. Moreover, those who have found an edge that enables them to master the market, are faced with the challenge of information overload. The rate at which new coins, networks, trends, and verticals flourish requires constant learning to stay ahead of the curve.
The net result of these factors is that crypto, an industry that is meant to be open to the masses, in reality only serves an elite few. While it’s true that anyone can enter, it is also the case that only a slender majority can exit with more than they started out with.
The very nature of economics dictates that not everyone can get rich off cryptocurrency. Such cases are bound to remain the exception, since there must be sufficient buyers to support the sale of assets by whales, crypto’s nouveau riche who trade with size. Nevertheless, there is sufficient liquidity and opportunities within the crypto market to enable millions to operate profitably and see a return on their initial investment.
The solution, for all but the 5% who have mastered the markets, is to outsource the trading component. Humans already outsource significant components of their lives that were once handled internally; even our memories are now assigned to the cloud or stored on our smart devices. The average person no longer recalls the phone number of their closest friends, such is our reliance on technology to handle jobs that are best suited to machines.
In an era in which software and AI/ML are routinely being used to automate processes ranging from art to writing, it is natural that technology should be applied to crypto. The industry runs on algorithms, which machines are optimally suited to learning and mastering. From the algos that control high-frequency trading to those running sandwich bots to extract MEV profits, crypto is increasingly controlled by machines.
The only viable option for retail investors seeking an edge is to side with the machines by turning to automated strategies that can do the hard work for them. This in turn raises a challenge, however: which system to utilize? Any trading solution proffered must not introduce further complexity and must be shown to operate effectively, with a reasonable prospect of returning a profit.