On what I've learned
As the market continues to lull us all to sleep, I thought it would be a good time to look back and reflect on what I’ve learned this cycle.
Submit to narratives
I probably wouldn’t be here today if it wasn’t for this one. I distinctly remember showing my brother NBA Top Shot and laughing at how stupid digital trading cards were. Then I saw how much money was being made and now I’m here writing about NFTs and cryptocurrency. As Hsaka would say, “we simply submit to the narrative.” Dog coins or digital art might be stupid to you, but if the market decides to pick them up, it’s best just to ride the wave (just don’t get stuck holding the bag).
Greed and comparison kill
Unless you’re Jeff Bezos, there’s always someone with more. More specifically, on CT, I might wish I had made as much money as Gainzy, and Gainzy as much as Cobie, and Cobie? Well, Cobie has more money than all of us, but you get the point. Maybe Cobie wishes he had Ledger’s forklift skills. Whatever it is, comparison is the thief of joy, and wanting what someone else has that you don’t or can’t, leads to greed.
I told my brother a number I’d be happy hitting months back, under the assumption we’d see a typical end-of-cycle blow-off top. I ended up hitting that number during a downtrend of all times and of course, at first I wanted more, but luckily I took a step back and tried to imagine what I’d feel like if I took a 50% loss from there, amidst all the uncertainty. So, I liquidated most of my holdings in early January. The worst-case might’ve been missing a move upwards, but in that case I still would be left holding the number I said I wanted to hit, and only by comparison would I have felt like I had missed out on more.
You don’t need to be in a trade at all times
Not taking a trade is, in fact, a trade. It’s a 0 R/R trade with a 100% hit rate and when the market is skewed towards the downside, it might just be the best trade to take (unless you’re good at shorting). Patience, my friend.
Be hyperaware of market conditions
Are we in an uptrend or a downtrend? Is the market largely PvP? These are things that need to be considered when making decisions. A PvP market doesn’t bode well for certain types of trading, especially when it comes to NFTs. Just make sure you’re the winner if you do decide to play.
Stick to your guns
This one is a bit more nuanced, so let me explain. If you’re confident in your assessment of a project and the price doesn’t initially reflect that, don’t immediately abandon your views. Unless it’s been proven factually wrong, stick to your guns and try to learn why the price didn’t reflect your assessment.
E.g. I minted one Neo Tokyo Identity in early October for the cost of gas. The floor price immediately opened around 10e and sat around there for a while. I thought that the project was largely vaporware and that its floor price was quite inflated. So, I sold it in late October when NFTs started their downtrend for around 7e and watched as the floor price of the completed citizens went to 60e at their peak. I coped quite a bit.
Then, the mint for Neo Tokyo Outer Identities came around and I minted 2 for 1.5e a piece. If I had altered my assessment of the project I might have held onto those, hoping they could hit a similarly inflated floor of 20-30e, but I stuck with my guns and sold them off for 9.5e and 12e. The current Outer Identity Floor? 2.6e. And Citizens? 14.9e.
My thesis played out. I missed the timing and exit, but because I stuck to my guns and learned from the price action of the original collections, I was able to sell at nearly the top on my second time around.
If you’re going to FOMO, do it early
This is probably the biggest mistake I see people make when it comes to buying into a project, specifically NFTs. Even I suffer from this one a lot. If you’re going to FOMO, do it early. Don’t wait for the price to go up 50% or 2x before you decide it’s time to buy-in. Not only does buying early increase your upside, but it gives you more room for an exit if you end up needing it. If you’re thinking that the project is going to go up for any number of reasons, there are likely hundreds of others thinking those same things, beat them to the punch. That’s not to say waiting for confirmation can’t be beneficial, it is, more so on coins when looking at support and resistance levels, but in a bull market with irrational behavior, buying early is the way.
Long-term holds > short-term flips
Know when to hold and when to flip. A good long-term hold will outperform a short-term flip every single time. Find an entry, have a plan, and…
You only have yourself to blame
You know the meme about Keyboard Monkey switching bias while you’re sleeping? I learned that one the hard way.
One day, I put a large chunk of my portfolio into Squid DAO after seeing all the buzz on Twitter about it, mainly from Keyboard Monkey and DCF God. This was at the height of the OHM-fork trend. I went to bed up 15% or so, but I still remember how anxious I was while trying to sleep, which should’ve been a massive red flag to begin with. I woke up the next morning to check the price… I was down 30%. Keyboard Monkey had not been happy with how the devs were planning on moving forward with the project and dumped his entire holdings while I was sleeping. I took the loss, watched the price moon to nearly 2x my initial entry, Keyboard Monkey bought back in at the top, and the rest is history (Squid is down 99.9% now).
This was my fault, not Keyboard Monkey’s. Not only was I highly overinvested, but my investment thesis was also backed by another person with financial motives of their own. I myself had almost no conviction and any I did have was gone when I woke up down 30%. Any losses, as well as gains, are on you: not the market, not the anon with an anime pfp on Twitter telling you to bet the farm, only you.
Health is wealth
Stop neglecting your health. Get some sleep, eat well, and at the very least get outside and go for a walk. You don’t have to start bodybuilding, just get up and move a bit. Your decision-making, mood, and overall quality of life will improve immensely.
Don’t leave
This one is quite timely. After I rode my NBA Top Shot gains to break even in March and watched my small stack of ETH halve in value in May, I left and didn’t return until August. This is probably my biggest regret so far. If I had stayed, at the very least I would’ve learned the lessons I’m sharing here today earlier, giving me more time to succeed in the following bull market. If we see a prolonged bear market, please do stick around. You don’t have to stay terminally online, but do some reading, stay up to date with projects, and familiarize yourself with the potential builders of tomorrow. You can thank me and everyone else who sticks around later.
Be a sponge
If you don’t know it, learn it. If you haven’t used it, try it. Instead of waiting for information to come to you, go find it yourself. Be a sponge, and soak up as much information as you can while you’re here.
Oh, and read. A lot.
These are by far my favorite writers in crypto: Cobie has a lifetime’s worth of experience, Ansem foresees narratives like no other, Arthur has top tier macro prowess, and Knower is a DeFi guru. There is nothing better than learning from those far smarter than yourself.
If you’ve made it this far, thank you. I hope you’ve gained something from this. To the continuation of the bull run, wealth preservation, and another year of gains. Cheers!
Twitter: @bagfaced
Feel free to leave a comment and share some of the things you’ve learned thus far on your journey.