Can you really get Alpha on CT?

Original title: "The Rorschach of Crypto Twitter"

Original author: Matt Gilmour, Matti

Original translation: Ladyfinger, BlockBeats

Editor's note:

Matt is an author with deep insights into the field of cryptocurrency. He examines Crypto Twitter (CT) from a unique perspective, comparing it to a Rorschach inkblot test, revealing how investors find self-identity and investment inspiration in this chaotic ocean of information. The article not only provides a thorough analysis of the operating mechanism of CT and the psychology of investors, but also puts forward a profound reflection on the essence of investment success. This article also resonated with the founder of ZeePrime. BlockBeats translated the original text as follows:

Crypto Twitter (CT) is a unique existence, like an elusive "monster". As time goes by, I have a deeper understanding of its operating mechanism, and more importantly, I have learned how to move with its pulse, which makes my relationship with CT closer and closer.

To truly understand the essence of a thing, rather than the appearance expected by others, is the true meaning of life. For CT, going deep into its core and understanding its essence is the key to mastering this game and the only way to devote yourself to it.

What is it?

Crypto Twitter is like a Rorschach inkblot test. The picture it presents depends on the inner desire of the observer. To the obsessive, it's a casino, a place of endless memes and cheesy spam. A novice might see it as a treasure trove of knowledge, where well-meaning individuals share their trading strategies. To the seasoned investor, CryptoTwitter is something more esoteric, filled with detailed, methodical investment ideas from savvy market players and high-profile venture capitalists.

But it's important to understand that these perceptions are often misleading, which is the essence of the Rorschach test. Imagine if someone were to pull back the veil on CryptoTwitter, they would find a morass of contradictions: occasionally innocuous market commentary, but more often wildly distorted investment advice. It all adds up to an unhelpful, even harmful, cacophony that makes it hard to detect the true signals.

Why it doesn’t work?

No one knows everything

How do you prove that people on crypto Twitter really have the secret to investing? While some people have certainly succeeded in past market cycles, there are always those who succeed by accident in a bull market. Like John in Fooled by Randomness , a high-yield trader who appears to be successful but could face financial ruin at any moment.

So what about those who have successfully raised large venture capital funds? One might assume that they must have extraordinary insight. But why are they able to raise such large funds? Many times, it’s because they have been successful in the past and investors hope they can repeat their past success. However, as we have discussed, it is often not just strength behind these successes, luck also plays an important role.

It should be emphasized that this is not to say that all investment success is just the result of luck. What I want to express is that investment success is often a combination of luck and skills, and the boundary between the two is often difficult to distinguish. Nassim Taleb has already explored this in depth in his book "Fooled by Randomness", so there is no need to repeat it.

No Alpha

Let's put aside personal talent or luck, can we really find excess returns Alpha on Twitter? Alpha, in essence, refers to returns that exceed the market benchmark. To capture it, investors must foresee future events and act before the public generally recognizes this. Therefore, the information on Twitter is no longer Alpha in essence. When you see this information on the timeline, you are already at the end of the information chain and have taken huge risks for a small profit. All publicly discussed Alpha will eventually be converted into the market's ordinary returns, beta.

Falling into the Lemming Effect

Even if you occasionally find some valuable information on your Twitter timeline, the mood swings there are so violent that it becomes extremely difficult to stick to your investment beliefs. Today, market sentiment may be high to ecstasy; tomorrow, it may fall into the abyss of despair. Even if you understand this intellectually, you cannot completely avoid being swayed by such extreme emotions. Eventually, the absoluteness of this emotion will assimilate you, causing you to unconsciously become a blind lemming.

Where to Go Next?

If one is truly pursuing investment success and deeply understands that they are in an Alpha chaos environment, then they naturally know to stay away from such places, just as people instinctively know to avoid speeding cars. However, while this concept is easy to understand in theory, it is not easy to truly accept it.

Recognizing the risks on Crypto Twitter is not complicated. The real difficult and critical question is what one is pursuing. What is their deepest desire?

If continuing to be active on this platform inevitably leads to poor investment returns, then why are there investors willing to stick with it? The answer is obvious: they are not actually pursuing higher investment returns, although they may not realize it themselves. Their behavior has silently revealed this.

The core of the question then becomes: "How can people pursue lower returns on investment?"

It's not that people naturally want lower returns on investment, but they often value other satisfactions more. Some people seek correctness, some seek entertainment, some crave a sense of belonging to a community, some want to be part of a consensus, some need their ego to be recognized, some want their anger to be validated, and some indulge in the comfort of self-pity. Although everyone's needs are different, it is obvious that pursuing higher returns on investment is not their strongest desire. In the end, the strongest desire will always prevail.

There is another irresistible factor that makes crypto Twitter so attractive: people always believe that they have not yet discovered the correct idea. Although they have not found an effective strategy so far, they firmly believe that there will be a breakthrough in the future. This belief makes people spend a lot of time and energy on CT, and may even waste their entire lives, whether in the investment field or in other aspects.

It is not wrong to pursue lower investment returns, and similarly, it is not absolutely right to simply pursue higher returns. Self-criticism is often unhelpful, and dwelling on "should" or "should not" does not bring real answers. What is important is that a person may be interested in gaining a deeper understanding of their real needs. This interest does not come from external expectations, but because they have realized that continuing in the current way will ultimately only lead to failure. No matter how many tweets they read or how many strategies they try, the results may be in vain. For some people, such a result may be acceptable, but for others, it is unacceptable. It is this feeling of unacceptability that will motivate them to embark on a new journey to explore the path that can truly bring world-class investment returns, as well as to understand the reasons that lead to failure.

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