Dear Daniel,

Thank you for your response. I would argue on the contrary that the lack of alpha in passive trading strategies is a symptom of a well-functioning and transparent market place.

It is precisely because there is ample and efficient price discovery, opportunity for copy trade to erode beta that erodes profit opportunity — as close as we’ll ever get to a perfectly competitive market.

In such circumstances, far from there being any issue with the underlying asset — it is the efficient market which has made it difficult for passive trading to generate and sustain profits.

Whilst some would argue that cryptocurrency markets are inefficient (they are) — it is precisely this inefficiency which allows traders to discover and generate profits for extended periods of time.

Because trading strategies are not created in an instant, the effort and cost that goes into developing profitable trading strategies need to be sustained and in this regard, cryptocurrency markets are perfect examples of inefficient marketplaces with plenty of opportunity for alpha.

Thank you for your thoughts on this matter and again, thank you for your considered contribution to the discussion.

Yours,

Patrick Tan