My favorite strategy to maximize profits on-chain

Avoid buying the newly launched memecoins

Nov 02, 2024

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Murad has recently gone viral after his memecoin talk at Token2049, and the explosion in price of $SPX, which is one of his main memecoin picks.

I am not going to present Murad’s entire thesis, as you can find it in the video just above. But I want to emphasize an important trait of his memecoin picks that I think is usually overlooked in on-chain trading despite being crucial to maximise your EV :

This trait is being an ‘old’ memecoin (several months since launch) that has gone through several periods of ups and downs with at least one drawdown of -80% or more from ATH.

Why is this important ? Let me explain my point of view :

The problem with competing on new launches

Most on-chain memecoin traders are usually focused on new launches and sniping, and it has become an increasingly competitive field where you must absolutely have the best tools if you want to be profitable. If you are among the very best, and you spend all your time doing on-chain tracking that enables you to catch some 100x’ers very early in their lifetime : this is probably the best field to extract alpha and make a LOT of money.

How does it work ? You buy a considerable number of new coins everyday, most of them go to zero but you are so early that the few ones that go 50x, 100x or 500x in some cases will make your whole strategy EV+ because your winning trades will more than cover all your losing trades and make you a profit on top. These elite on-chain traders also know how to not sell their winners too early so that what I just describes effectively happens, and it usually requires a substantial amount of hours spent trading, and refining one’s strategy to optimize the EV.

Basically you must be able to buy the memecoins early enough AND have a decent ratio of winners over losers AND not sell the winners too early.

But what often happens when someone that is inexperienced tries to do that, is that he won’t be able to buy the memecoins as early as the best traders, and he might also not catch enough ‘winners’ to cover the cost of the losers (which are by far the overwhelming majority). What is an overall EV+ strategy for the best traders very quickly becomes an EV- strategy for an average or inexperienced one. This is especially true for someone that does not spend all his time tracking what happens on-chain to be able to jump on every high potential new memecoin.

So you have two choices, either you decide to compete with the on-chain elite traders by becoming one yourself (not impossible, it just requires a lot of time and energy), or you can chose a second option.

One solution : competing in a different field

Buying new coins is risky because most of them will go to zero or close to zero in a few hours or days, AND with almost zero hope of coming back to life. So what if, instead of buying these newly launched coins, you only focused on coins that have existed for months (without being ‘dead’) ? Suddenly you can drastically reduce your losses by not buying coins that are at risk of doing -99.93% in two days.

The shortcoming compared to buying a completely new launch is that your coin won’t go 100x in two days either. So how can you make this strategy EV+ ?

Here are the things I look at to find memecoins that offer a great risk/reward :

Launched a few months ago
Down a lot from its ATH (ideally -80% or more, -90% to -95%)
Chart looks bottomed (ie not making consistent lower lows but rather flat-ish or making higher lows)
Community and bullievers still alive
Unique meme
Cult potential
High mindshare with regards to market cap
Low market cap

One of the best examples of coins that ticked all of these boxes was $SPX, and apparently the ‘only’ thing it needed was Murad starting to shill it for this to go from $10M market cap to almost $900M.

I had been positioned in $SPX for months before its pump, and that 50x pump was one of my best trades of the year (I took some profits on the way up but still hold a sizable position in SPX).

I strongly believe that for most people, it is easier to find coins that are similar to SPX rather than trying to buy new launches hoping for a 300x in two weeks that will most likely result in a -99%.

People tend to overlook the power of Lindy-ness with regards to memecoins : the longer something has existed, the higher the chances that it will keep existing in the future. In the memecoin sector, time tends to quickly sort out what has no future and drops to zero within hours, days, or weeks, and what is still alive after months, with the potential for another significant pump.

Of course, there are a lot of nuances to this strategy, but given my experience on-chain, you can have a positive expected value way more easily with it rather than by competing on the ‘new coins’. It is also much less time-consuming during the day. One of the drawbacks, though, is that it requires more patience, as you might sit on coins/trades for weeks before they start moving in your direction.

The next part of this article will be a long list of examples to ‘prove’ my point.

An abundance of examples

$DOLAN is really a textbook example of that strategy, mostly for its chart : launched in January 2024, peaked at $9M mcap in March, then spent 6 months ranging with a clear bottom below $1M, went down -92% from top. Buying this in Mid-September could have returned you a 100X, while taking a minimal downside risk with a coin that consolidated for so long without making new lows :

$SKBDI : 9 months old, down -85% from top, clean consolidation with a bottom around $2.5M mcap, and consistent higher lows => Almost 20X

$USA : 6 months old, -97% drawdown, clean bottoming structure that formed over a few weeks with $4M mcap acting as support, Murad memecoin pick => 15X

$GIKO : 5 months old, down -86% from top, clean bottoming above $2M mcap with a flat chart => 25X

$HEHE : clean flat bottoming after -90% dump => 10X

$EPIK : 5 months old, down -86% from top, consolidates for a few weeks without making lower lows => 5X

$USEDCAR : 9 months old, down -97% from top, spends a few months consolidating and forming a bottom at the $1M mcap round number, very unique meme => 10X

$AABL : 7 months old, down -98% from top, spends 2 month flat at $1M mcap => 18X

$WYAC : 80X with the right catalyst (Ansem shilling it)

$monk : 9 months old, down -94%, consolidates around $2M mcap => 7X

$FATGF => 10X

The examples above have been mostly about coins bottoming around $1M market cap or more, but I actually think that you can find better r/r trades with the $100k-$300k market cap bottoms, because at this level there are really not many sellers left.

$AUTISM is a great example, it went down -97% from ATH to $300k mcap and then was unable to make a lower low, and printed consistent higher lows very slowly (it looks flat on my screenshot, but check the log chart) over a few weeks, and this ended with an almost 50X pump when the market got hotter.

$BONGO : ‘unique’ cat coin (ie not a direct derivative to anything), 10 months old, down -97% from top, spends 4 months ranging around $100k mcap, and then pumps almost 200X. Most coins won’t have these gains of course, but that gives you an idea of the upside you can sometime catch.

$ELGATO : This is a cat coin launched at the same time as POPCAT (in 2023!) and that is also an Internet meme similar as POPCAT, down -96% from the top, used $300k mcap as support for 4 months => 20X

$MIMANY : 6 months old, down -99% from top, and then marks a very rounded and clean bottom around $200K mcap before pumping almost 20X. Mimany is also a Milady derivative, but with a unique visual identity, ie the type of meme I feel comfortable buying. => 18X

$CHRIST : 4 months old, down -97%, unable to dump below $100k mcap, and with the potential to become the leader of a ‘religion narrative’ => 25X

$MEWING : This is an interesting example because it illustrates that when you follow this strategy with a good meme and a market cap low enough, you sometimes just have to wait for a new team to CTO the token and it will giga pump even if it was abandoned by the previous team. 30X in the end, after a ‘rug’.

$BINGUS : 20X. This is a cat coin that Murad had mentioned several months ago.

$usdcat : 23X

$HAPPI : 16X

$LMI : 50X

$QUBY : 18X

$RIZZ : 28X

$SPOODY : 25X

I hope I have convinced you with this article that buying new launches is not the only strategy on-chain, and probably not the optimal one for most people.

Feel free to follow the strategy that suits you the most though, this article is only for educational purposes.

See you in the trenches,
Cheers,
Viktor.

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