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Co-founder of the Bitcoin Vector project, Willy Woo, stated that a majority of crypto investors find themselves in a “pit of despair,” as the returns on their altcoin portfolios lag behind Bitcoin’s performance.
According to Woo, the poor performance of altcoins is largely attributed to trading patterns that emerged during the asset sell-off of the bankrupt FTX exchange. During the bankruptcy proceedings, managers were compelled to liquidate large amounts of locked assets, including Solana. This resulted in the development of a specific model that allows for the sale of assets that cannot yet be circulated.
“A scheme was established for selling an asset locked in the blockchain through a legal agreement for future delivery. Hedge funds purchased such coins at a discount of over 60% to mitigate the risks of prolonged freezing,” Woo explained.
The analyst noted that market participants adapted this model for profit generation. By acquiring assets at significant discounts, funds simultaneously open short positions in the futures market, which helps to minimize price risks and secure returns.
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Woo estimates that this practice has spread across a substantial portion of the industry. Many projects have early investors or funds with large volumes of locked assets that are being liquidated through a similar approach.
“Assets are sold to hedge funds, which immediately ‘dump’ them onto the market via futures, creating excessive price pressure long before the official unlocking of the coins,” he remarked.
As a result, a considerable portion of the potential returns anticipated by retail investors effectively shifts to hedge funds. This, according to the analyst, has contributed to the weak performance of most crypto projects in the years 2023–2025.
“Investors were ‘dumped’ prematurely, turning the market into a sort of casino, where the advantage always lies with those who understand the mechanics of such transactions,” Woo added.
The analyst believes that without understanding these mechanisms, achieving sustainable returns in the altcoin market is challenging. As an alternative, he advised investors to focus on Bitcoin.
Previously, Willy Woo stated that Bitcoin still has two-thirds of the bear cycle ahead and urged investors to remain vigilant.
