Some quick thoughts on cycles, phases, conviction, and profiteering from the market:
Most people in crypto now have winning future 6-7 figure bags now in various alts and majors that they will sell too early because they lack cyclical conviction.
If you don’t have the conviction that another blow off top in some form is coming (could end in a distro, double top, single top etc etc), you will sell far too early.
In order to capture the insane multiples only found in crypto, you have to be able to:
– Know when to go risk on
– Know when to take some off the table to rebuy at a lower price
– Know when to diamond hand and expect HUGE volatility on the way up
– And know when to run for the hills
Imagine buying $ETH at single digits, and selling the DAO hack because you didn’t have conviction in ETH then. Or the Vitalik death fake news.
Big RIP.
Imagine buying AVAX at low double digits, and selling before the 2nd FTX/3AC double top in 2021. Or selling LUNA at single digits after the first blowoff top, before it ran to over $100 at peak.
Heck, I know a dude who sold 20 bored apes for just a few ETH in 2021 right before NFT season really kicked off.
The easiest way to truly get rekt in this space is to borrow your conviction from someone else…
And to not understand what the hell you’re doing in this place.
When you buy a coin, you should know:
– What the pampamental potential is, i.e. how far it can run, its tokenomics, FDV, what dynamics it has to pump hard
– Is the tech actually good? Good tech can be a good meme, can be a new L1 tech, can be new consensus, but try to educate yourself on it after aping so you know what you’re holding
– How early/late are you to the narrative? If you’re early, you can full risk on, get a heavy spot/levered bag and just monitor the position. If it’s late, you may just have to scalp dips. If it’s late early, you may just be able to ape in before the masses arrive, but exit far sooner than you’d think
You should also know the coin’s competitors, and the holders of the coin.
Are they:
– Cultists that will never sell due to true belief? See $TAO, $KAS for examples of this
– Memecoin traders who will sell off into -70% candles to ape another coin? See recent memecoin selloffs for examples
– Institutions/VCs who are waiting for unlocks to dump on poor retail, or who will put the pump on before that happens? i.e. $TIA , $SOL previous cycle
– Retail that will continue to bid and bid until they don’t have any life savings left?
Tokenomics, holders, narrative – study the combination of these 3 to understand whether you can make money off a coin that you’ve just stumbled upon.
What market cap is the coin? What comparisons does it have to other coins? What is the likely ceiling cap of the coin?
Some coins will never make it above 100m. Others are destined for billions. Others are destined to be 10m, despite having a great PMF because people just won’t bid on the narrative.
You must be both realistic about the multiples your coin can give, and also, bulltard enough to see if it can outperform. Tricky balance.
Then, what is the liquidity and buying process of the coin?
SOL seemed dead when RLB was at fractions of a cent, but you could’ve captured a sweet 20-50x on the coin as long as you saw the revenue and users of the product, and just diamond-handed a bag through the FUD and volatility till now.
The harder it is to buy a coin, often, the earlier you are. $TAO was at 10-25 OTC, and the buying process for it was complicated enough to only get true believers in at the time. Now, it’s trading multiples from that and early buyers were rewarded.
In a bull market, there will be countless ways to make filthy, gains, and countless ways to lose it all on the way down as we descend into a filthy bear.
Your job is to ride the bull, spot when almost everyone has bought, and start exiting quickly before the liquidity vanishes, the chart turns red and people turn on each other like hungry fiends desperate for their money.
Stop thinking about making it in the next market move. Start thinking how you’ll make it in the overall cycle.
There will be so many coins to play for, so many NFTs, and new innovations that will emerge that all you need to do is listen to the market and pay close attention.
Even now, the next unicorns in crypto are being built, and when their tokens launch, you must be ready.
But you must hone in on your understanding of yourself, and how you perceive the market, to be able to take the right actions to win.
Some will make millions with leverage, others with onchain bags, others with just the right spot coins, the right NFT mint, etc.
Figure out which path you can take, but also know how to exploit the other paths in the market to win.
If history repeats, we are going to enter about 18 months of a bull market soon.
But it will be difficult.
You’ll want to sell early. Or, you’ll be convinced at the top that this time, it is different, and we finally created the future of finance.
You’ll want to exit before the party ends, and you won’t squeeze out enough juice from the orange before it’s over.
No cycle is ever truly that different. The driving factors of the bubble may be different this time with inflation, dystopia and modernity, but the behavior is the same.
A crowd of people are convinced that a new asset, stock or commodity is the next big thing, credit expansion allows prices to climb ever higher, until the bubble pops, and the market transfers money from the hands of the many into the hands of the few.
And just like there will be another bull cycle, there will be another bear.
There will be a time to call everything vaporware once more, but at the current moment – it’s all shiny new objects to the crypto natives left in the trenches here now.
You must be ready, and you must believe.