Jonah Van Bourg, former oil derivatives trader at Goldman Sachs and Vitol and crypto and precious metals trader at DRW, recently shared why he is confident in his contrarian view on altcoins. He proposed a systematic strategy: buy an index of the top thousand altcoins, market cap-weighted, when Bitcoin has been in a bull market for over six months.
While this strategy would have performed well in 2017 and 2021, it only has two data points to support it, which is not statistically significant for systematic trading. The expert believes it will fail the third time because retail investors have been burned twice before, failing to deploy the strategy optimally and holding the bag during the last two altcoin bull markets.
In a conversation with Blockworks Macro, Jonah said, “I think what’s really causing the selloff is a broader light bulb going off, which is that most altcoins are completely worthless. Billions of dollars worth of VC unlocks are happening, and a lot of retail is finally waking up to the fact that their shitcoin of choice is dead.”
His overall thesis on altcoins and tokenomics is that new sources of capital are needed beyond random individuals. There must be genuine business activity and disruption of traditional finance economics to bring in the necessary capital to sustain multi-billion dollar valuations. He doesn’t believe this will happen in the next year or two, leading to underperformance of altcoins.
Jonah advised against investing in the altcoin space but acknowledged that some tokens like Ethereum and Solana could still succeed.
He concluded, “The meme coin casino is a fun way to play around and make money, but I think the majors like BTC, ETH, and Solana are an awesome long-term hold. Anything in the middle of that risk curve, the altcoin space, is risky. We’ve run out of great fools to buy your shitcoin, and I think that whole altcoin space is going to go from hundreds of billions of dollars in market cap to a lot lower, unfortunately.”