Degen is a shorthand form of the word ‘Degenerate’. It is used to describe traders who invest in crypto assets without first doing their due diligence, hoping instead that a fear of missing out drives its value.
The Long Explanation
‘Degen’ as a term can trace its origin to sports betting where it was a generally negative (and sometimes insulting) term. The term was originally used in reference to ‘degenerate’ gamblers who staked large amounts of cash with no clear strategy or experience to back it up.
Today in crypto, Degen is more of a romanticized term than a negative one, with traders and investors wearing it as a badge of honor. As with gambling, degen traders are willing to risk sums of money (sometimes large) in investments they know little about.
Thus, a degen’s trading strategy – if it can be referred to as such – hinges on their ability to get as many people as possible involved in the project, thus boosting its price and profitability. Often times, an increase in price is quickly followed by a dump as the degen’s exit the space in profit.
Needless to say, degen trading is risky business. It adds an extra layer (or five) of unpredictability to an already uncertain market, as it depends greatly on people catching on with the hype you generate. While this may work for some with large followings, a lot of degen traders get burned along the way.