The total number of cryptocurrencies has skyrocketed over the last two years. Over the past year alone, the number of cryptocurrencies has doubled. There are now over 10,000 active cryptocurrencies in existence.

Most of these cryptocurrencies are classic examples of illiquid pump-and-dump schemes manipulated by insiders for short-term profits.

However, this is not the narrative retail investors will hear from popular cryptocurrency exchanges. A perfect example of this is Coinbase

Coinbase generates most of its revenue through trading fees, listing fees, and custodial fees. Because of this, Coinbase is incentivized to list more cryptocurrencies, promote speculative trading, and discourage self-custody.

When a new cryptocurrency is created, early investors typically make investments, a development team is formed, and a percentage of the coins are issued to these insiders at extremely low prices. This is easy to accomplish because there is zero cost to creating a new cryptocurrency.

This insider allocation usually occurs in the form of a “pre-mine.” This is an aptly named term to describe coins that are given to early investors and the team before the general public has the ability to mine or buy them.

After the launch, if the coin gains in popularity and is listed on a large exchange, the VCs and other insiders then have the opportunity to dump their holdings on retail traders who are sold on the narrative that the coin is “the next big thing”, “the next Bitcoin”, or is “better than Bitcoin.”

This strategy has been used under many different names over the years, such as ICOs, DeFi, and NFTs, but the outcome remains the same — the insiders get richer, and the outsiders lose their life savings.

Every single one of these ICOs have underperformed Bitcoin since they were listed on Coinbase. A majority of these hyped ICO tokens are deeply negative against Bitcoin, with an average drawdown of -58%.

Since being listed on Coinbase, the average loss against Bitcoin for these DeFi tokens is -61.6%.

Just like the ICOs that came before them, these DeFi tokens only served to harm retail clients who were sold a narrative that these were the next big thing.

When an altcoin finally gets listed on Coinbase, a majority of the upside has already been made by insiders via backroom deals. As George Carlin famously said, “It’s a big club…and you ain’t in it!”

In total, out of the 161 cryptocurrencies (excluding stablecoins) trading on Coinbase in the US today, the median performance against Bitcoin after their listing is -67.3%, with a median days since listing of 274 days.

What retail investors desperately need in today’s macroeconomic environment is a digital sound money that can’t be inflated or censored. They need to be saving in Bitcoin to preserve their wealth — not gambling on unregulated digital penny stocks using bucket shops like Coinbase.