Crypto traders down bad thanks to alpha groups that cost $1,000+
In recent years, crypto influencers have rebranded ‘newsletter guru’ and ‘trading signals’ communities under a new name: ‘alpha drops.’ These groups of mostly young, male, English-speaking crypto influencers congregate on social media platforms like Discord, Telegram, or WhatsApp to hear so-called leaders flex newfound wealth in an effort to lure followers into buying subscriptions by promising to share their best trades. ‘Alpha’ is a Greek finance term that refers to an asset’s excess return relative to a benchmark index like the S&P 500. It is the idiosyncratic price, isolated from broad, correlated movements of assets. In finance, ‘seeking alpha’ is the goal of non-passive investors, as this measures their success at outperformance. In crypto lingo, ‘alpha drops’ occur when a guru alerts followers about an asset that he believes will outperform the market. Given the high-risk profile of the average altcoin investor, subscribers expect alpha of tens if ...