protos.com
In recent years, crypto influencers have rebranded ‘newsletter guru’ and ‘trading signals’ communities under a new name: ‘alpha drops.’
These groups of mostly young, male, English-speaking crypto influencers congregate on social media platforms like Discord, Telegram, or WhatsApp to hear so-called leaders flex newfound wealth in an effort to lure followers into buying subscriptions by promising to share their best trades.
‘Alpha’ is a Greek finance term that refers to an asset’s excess return relative to a benchmark index like the S&P 500. It is the idiosyncratic price, isolated from broad, correlated movements of assets. In finance, ‘seeking alpha’ is the goal of non-passive investors, as this measures their success at outperformance.
In crypto lingo, ‘alpha drops’ occur when a guru alerts followers about an asset that he believes will outperform the market. Given the high-risk profile of the average altcoin investor, subscribers expect alpha of tens if not hundreds of percentage points and, incredibly, they expect this outperformance within hours or, at a maximum, days.
Crypto alpha drops
Now known simply as ‘alpha groups,’ subscriptions to these gurus’ inner circles can cost hundreds or thousands of dollars per month. The sales journey for a new subscriber often begins with word-of-mouth referrals, previews shared on free social media channels, or highlights of profitable trades.
In general, leaders of alpha groups aim to instill a fear of missing out (FOMO) in their audience, convincing them to subscribe. Highlights shared on social media are overwhelmingly profitable, often overstating entries and exits to illustrate the maximum percentage gain.
Losing alpha drops are usually ignored or deleted.
Membership charges start as low as $5 but they quickly go up from there. Indeed, Andrew Tate’s alpha group starts at $49.99 a month and increases massively depending on how many chatrooms the user wants to join within his Discord channels.
Other crypto alpha groups charge $50, $70, $100, $140, and some well over $1,000 a month.
Although it’s difficult to find reviews of the cheaper groups, the most expensive ones generated visible complaints on social media.
Read more: What happened to influential crypto pumper Teeka Tiwari?
Andrew Tate’s Hustlers pyramid scheme
Many investigators have called Andrew Tate’s Hustlers University a pyramid scheme whereby new subscribers, rather than making money from their education, are led to sell more subscriptions once subscribed. Tate’s subscription product has rebranded and intermittently shut down amid various social media bans over the years, with 2.0, 3.0, 4.0, ‘Academy,’ and ‘The Real World’ among its shifting naming conventions.
In promo videos referring to charting software, Tate once said, “You’re guaranteed to make money with this system. Hold on tight, you’re about to get rich.” Needless to say, that didn’t happen for thousands of disappointed unsubscribers.
Crypto alpha drops inside Tate’s group were once the most expensive tier of the service, costing up to $2,000. As it turns out, making money trading digital assets that trend toward $0 is harder than it seems.
Nowadays, crypto is an unremarkable topic in Tate’s group with no price premium alongside common ‘work from home’ topics like wholesaling, freelancing, dropshipping, copywriting, e-commerce, and romance scams.
Read more: Andrew Tate says he doesn’t endorse shitcoins but he definitely did
Nansen was another high-profile alpha group that ratcheted up prices from $99 to 1 ether (1 ether is now worth $2,578) per month for access. Users complained of low profits or losing money entirely on its alpha drops, claiming that the inconsistency of trading alerts didn’t correlate with its astronomical price.
All the best and none of the rest
In general, crypto alpha drop groups are just another iteration of a decades-old confidence scam. Self-proclaimed investment gurus spend most of their time broadcasting their winning trades on social media, luring customers into high-priced monthly subscriptions.
Once inside the membership area, the quality of alerts is nebulous, record-keeping is mostly non-existent, and complaints have trouble surfacing on social media as an endless stream of new promotions broadcast cherry-picked winners.