People are always looking for more “alpha”. Everyone wants to buy into the next project early so that they can flip it for profit when it moons. Sometimes, when there’s too much going on, or if investors are simply too busy to do their own research, they turn to alpha callers. When I say alpha callers, I mean anyone who shills projects at any time and in any place. They don’t have to be professionals.
I no longer listen to what people say, I just watch what they do. Behaviour never lies.
So here’s the thing about alpha callers. If viewed through a completely sceptical lens, the act of alpha calling is somewhat paradoxical in itself.
If someone truly believes that a project will do well and will increase in price, why will they want to tell people about it? Surely, they’d want to buy it themselves, so that they can make more profit than anyone else. Why would they want to share the information and risk paying more themselves when someone else buys in before them? It makes sense if they themselves have bought their fill first before recommending it as an entry to other people — but that would still mean that those other people are pumping the caller’s bags.
In fact, it makes far more sense for callers to do the opposite if they’re extremely bullish. Surely, they’ll want to heap fear, uncertainty, and doubt on the project. This may cause people to lose faith and sell, bringing down the price of the asset and giving the caller a better entry.
With that in mind, it’s worth considering the possible reasons for why someone would make a particular alpha call.
- As mentioned earlier, for other people to pump the bags that they’ve bought beforehand. They may even use them as exit liquidity.
- They’ve been paid by the projects themselves to make the call.
- They’re paid professionally as alpha callers for a community and it is their job. This, however, does not automatically mean that both points 1 and 2 can’t still apply.
- They are nurturing a social media presence and want to gain Web3’s respect by showing that they have knowledge and can predict future trends.
- They may not have liquidity themselves, but they truly want other people who do have liquidity to benefit. They are so genuinely passionate about the project and about helping people.
The charitable assumption is that everyone’s motivation is always reason 5. Unfortunately, as we well know, this isn’t always the case. Reason 4 is the next best, since the caller’s motives are still fully aligned with that of their audience even if they are a little self-centred. Once we go to reasons 1, 2, and 3, the quality of the calls start to degrade as motivations muddy the objectivity of the assessments.
So are alpha calls even useful at all?
The answer to this is actually a resounding yes. All calls are useful, even if the call is malicious and designed to create exit liquidity for the caller. They should never, however, be taken at face value no matter how good they may seem. The usefulness of each call lies in the analysis of the call itself. Even the worst call is useful because investors who have properly analysed the caller and the call itself can know to avoid the precise project being shilled.
Occasionally, alpha callers may even make you aware of a project that you’ve never known about before. This is useful in itself as it puts a project, regardless of how good or bad it is, within your radar. You would still need to do your own research after knowing about it, of course, but at least you’d know to start.
So how should you analyse a call?
Caller Integrity
Look first at the person making the call. Are they known to sell their services to projects? Are they known to be big whales that have used their followers as exit liquidity in the past? Or perhaps they are simply an enthusiastic caller that calls what they are truly bullish on (these are rarer than you may think).
As part of caller integrity, try to decipher the motive behind each particular call. For instance, if a project is called on a presale and the caller’s buy-in is the same as yours, then there can’t be much of a selfish motive since, if anything, callers would want more people to buy on normal whitelists or secondary so that they can use those people as exit liquidity. Of course, this does not apply if the caller is simply a paid shiller whose job it is to sell as much of the presale as possible.
Caller Competence
Consider also the competence of the caller. Look at the historical record of a particular alpha caller. Consider all their calls, not just the calls that they’ve been successful with. Many alpha callers will naturally want to showcase their successes and downplay their failures. Some may even try to delete historical evidence of their failures. Be wary of these individuals.
The Call Itself
Consider the actual project that the alpha caller is shilling. Consider the explanation about why a particular call has been made if an explanation has been offered. This may involve a bit more digging and research on your end. Look at the project’s Twitter account, look at the team and read through their profiles if they’re doxed, look at their Discord channel. Look at how long they’ve been around. Study the charts — look at whether a particular buy-in makes sense based on recent a longer-term price movements. Gain a general feel of the project independent to what the alpha caller has proclaimed.
Also survey other preferably trustworthy and unrelated alpha callers. Are they bullish on the same project? As many of us are aware, hype plays a big part in whether a project is successful or not, especially in the Web3 ecosystem. The fact that many separate, unrelated callers are shilling the same project all at once may be reason, in itself, to buy in since they could be creating a self-fulfilling prophecy by creating an artificial hype-pump later down the line.
Avoid Confirmation Bias
Confirmation bias is where you’ve already made up your mind about something, but continue to do your own research and subconsciously take on board only information that supports your conviction. Alpha calls can create a lot of confirmation bias as they’re more often than not hyper-bullish about projects regardless of how good those projects actually are. In such scenarios, it is a case of consciously trying to remain objective.
Closing thoughts
The purpose of this article is not to villainise all alpha callers — but rather, to remind you, as investors, that there is almost always more than meets the eye behind each and every single alpha call. If investing in Web3 was as easy as simply buying and selling whenever someone else tells you to, everyone would be rich now.
All alpha calls are useful, but only when coupled with deep objective thought, research, and analysis.
