The truth after analyzing 1,000 "altcoins"
1. LongHash's research on altcoins
Recently, I saw a very interesting statistics about altcoins, and I would like to share with you today:
LongHash, a world-renowned blockchain incubator and information platform, tries to discover the small-cap tokens that have performed well this year by analyzing the ERC20 tokens issued on Ethereum.
It selects the top 1,000 tokens by market capitalization among ERC20 tokens, and excludes tokens and stablecoins with a market capitalization of more than $1 billion for a total of about 900 tokens.
Then, analysis and research were carried out in multiple dimensions such as price, annualized rate of return from 2019 to the present, transaction volume, number of currency holding addresses, market value, and concentration of token distribution.
The concentration of token distribution in these dimensions is calculated by calculating the ratio of the total number of tokens held by the top 20 addresses of each token to the total circulation of the token, but excluding the exchange address and the address of issuing and destroying tokens .
In its analysis, it found that more than half of tokens had negative yields from a yield perspective, but 38 tokens had yields of more than 500%.
Most of these 38 tokens with amazing returns have a high concentration of token distribution. The concentration ratio of most of them exceeds 60%, and some are even as high as 90%.
In addition, when only tokens with a market capitalization of less than USD 10 million are considered, the correlation between the number of currency holding addresses, market capitalization, price, and transaction volume and the rate of return is decreasing, and only the distribution concentration of tokens has an increasing correlation. high. This shows that the more concentrated the small-cap token chips are, the more likely it is to obtain high returns.
From these analysis data, it can be clearly proved that the more concentrated the distribution of tokens with small market capitalization is, the more likely their rise is to be manipulated.
2. How to check the holding address of altcoins
So how do we observe the position of an ERC20 token?
1) We open the Ethereum browser etherscan: https://etherscan.io/.
2) Enter the name of the token we want to check in the search bar, as shown in the figure below:
3) After clicking Search, you will see the token page, as shown in the figure below:
Note: In the above picture, in order to avoid unnecessary misunderstanding, we have erased the token name and related information we searched for.
4) In the figure above, the "Holders" indicated by the arrows are all the holding addresses of the token. Click "Holders" and we will see the following information:
From this picture, we can see that the fourth-ranked address is the address of the exchange Huobi, and the total amount of tokens held by the top three addresses has reached 76%. If Huobi’s addresses are excluded, the total currency holdings of the top seven addresses exceed 84%. It can be seen that the currency holdings of this token are quite concentrated.
3. The Fall of Altcoins
I am often consulted by readers, hoping to recommend potential altcoins. In fact, after our preliminary research on coins ranked between 200 and 400 on coinmarketcap, we did not find many coins with great potential.
The trend of this round of market is basically led by BTC, followed by other mainstream currencies, while the vast majority of altcoins are as silent as a pool of stagnant water. Even if BTC rises, it does not move; when BTC falls, it falls even more.
The reason why altcoins have not gone out of the general market so far, we believe that the main reason is that the current blockchain technology has encountered a bottleneck, and there has been no disruptive application scenario like ICO.
Most of these altcoins born according to known scenarios proved to be pseudo-demand, so they fell to this point.
4. The significance of LongHash data to investors
So what should ordinary investors think of this data from LongHash?
Some speculative investors may immediately find the altcoins with a market value of less than 10 million US dollars, and then analyze their positions one by one, and buy as soon as possible when they find that the holding rate is concentrated.
It would be a mistake to interpret the data in this way. Any speculator who has such an idea should think carefully:In the game played by the dealer, dance with Zhuang and cut the dealer's flesh, what are the chances of winning?
I think the biggest significance of this data is to further reveal to us: even if altcoins rise in the current round of market, it is very likely that it is due to the manipulation of the banker rather than the real application demand. This should make us more vigilant, stay away from meaningless altcoins, and hold on to mainstream currencies.
