Fellow crypto investor here (since 2015â16), I now run a crypto fund. A few points to make.
1. In the short term, way more money is made on getting in on trends before they are big than on fundamentals, at least they have historically. You wanted to get in on NFTs early. You wanted to get in on âAI tokensâ early. You wanted to get in on yield farming early. You wanted to get in on ICOs early. You wanted to get in on dog tokens early. You wanted to get in on anything trending early. Etc. It didnât matter what project fundamentals were. Trends cause things to go up. There is a large degree of pyramic scheme/âponzinomics involved. You make money by getting in before others. They pump your bags and you dump on them.
2. In the long term, fundamentals are all that matter. Vast majority of junk dies with the founders/âinsiders/âsmart traders scheming off a good amount with bags held by retail traders.
3. I want to push back on the idea that we know a bullrun is coming. We donât. There are some bullish narratives around but also, bitcoin/âeth are already up like 3x. What if the bullrun already happened and this is the âcycleâs topâ? What if the Bitcoin ETFs donât get approved? What if they do nothing? There is no law of nature that causes crypto cycles due to halvings, in fact, you should expect those to be way less prominent now that bitcoin is much larger and most of the coins that will ever exist are already out there. Pomplianoâs supply squeeze or whatever based on miners is stupid. I think the last one was most likely coincidental due to ZIRP and I donât suppose you have great macro forecasts to suggest we are going back to these territories that havenât been priced into the market.
4. I want to caution people from thinking they have alpha. I think there are good reasons to think EAs can have alpha. Quasi-insider information from being so close to the tech scene, greater understanding of AI progress and effects, some first principles thinking, just being smarter, etc. But usually, retail traders donât have alpha. They are the ones who think they do and pay the people that actually do. You have to be crystal clear as to where your edge comes from and not expand outside of that. Why do you expect this group to be better able to predict a large scale crypto cycle better than people who do this full time with teams of super well paid analysts and quant traders?
Iâm not a big EMH proponent, but this group has had a lot of success and now I think has gotten too cocky and now thinks that even weak-EMH doesnât apply to us.
Everybody feels that they are a super savvy investor who will get above market returns and thus âothers should donate now while I seek great financial returns to donate more laterâ
Iâve thought about this tradeoff a lot. I feel the same way. I have a realized APR over the last 4 years of around 300%. Iâve also donated ~20% over this time. I can imagine some think that it would have been better for me to continue to invest this money but:
1) I by no means expect this rate of return to continue as I am investing larger sums
2) What if stuff didnât go in my favour
I havenât figured out a better answer then âyes, you should always donate for several reasons, every yearâ. There are also non-financial factors at play here like value drift as well to consider as well as stable ecosystems/âwhatever the opposite of the unilateralist curse is.
I also want to push back (as a crypto investor myself who runs a crypto fund) on the idea that we know a bull run is coming. We donât. Crypto is now a much much larger market than 2012/â2013 when EA had a lot of edge investing in crypto and I really doubt we are going to have another macro free money period again.
Bitcoin is an $800B marketcap asset and crypto as a whole is 1.7T. You should expect far greater efficiency now and that retail investors/âpeople with other jobs wonât do nearly as well as the pros.
Copying from the Facebook Group
Fellow crypto investor here (since 2015â16), I now run a crypto fund. A few points to make.
1. In the short term, way more money is made on getting in on trends before they are big than on fundamentals, at least they have historically. You wanted to get in on NFTs early. You wanted to get in on âAI tokensâ early. You wanted to get in on yield farming early. You wanted to get in on ICOs early. You wanted to get in on dog tokens early. You wanted to get in on anything trending early. Etc. It didnât matter what project fundamentals were. Trends cause things to go up. There is a large degree of pyramic scheme/âponzinomics involved. You make money by getting in before others. They pump your bags and you dump on them.
2. In the long term, fundamentals are all that matter. Vast majority of junk dies with the founders/âinsiders/âsmart traders scheming off a good amount with bags held by retail traders.
3. I want to push back on the idea that we know a bullrun is coming. We donât. There are some bullish narratives around but also, bitcoin/âeth are already up like 3x. What if the bullrun already happened and this is the âcycleâs topâ? What if the Bitcoin ETFs donât get approved? What if they do nothing? There is no law of nature that causes crypto cycles due to halvings, in fact, you should expect those to be way less prominent now that bitcoin is much larger and most of the coins that will ever exist are already out there. Pomplianoâs supply squeeze or whatever based on miners is stupid. I think the last one was most likely coincidental due to ZIRP and I donât suppose you have great macro forecasts to suggest we are going back to these territories that havenât been priced into the market.
4. I want to caution people from thinking they have alpha. I think there are good reasons to think EAs can have alpha. Quasi-insider information from being so close to the tech scene, greater understanding of AI progress and effects, some first principles thinking, just being smarter, etc. But usually, retail traders donât have alpha. They are the ones who think they do and pay the people that actually do. You have to be crystal clear as to where your edge comes from and not expand outside of that. Why do you expect this group to be better able to predict a large scale crypto cycle better than people who do this full time with teams of super well paid analysts and quant traders?
Iâm not a big EMH proponent, but this group has had a lot of success and now I think has gotten too cocky and now thinks that even weak-EMH doesnât apply to us.
Everybody feels that they are a super savvy investor who will get above market returns and thus âothers should donate now while I seek great financial returns to donate more laterâ
Iâve thought about this tradeoff a lot. I feel the same way. I have a realized APR over the last 4 years of around 300%. Iâve also donated ~20% over this time. I can imagine some think that it would have been better for me to continue to invest this money but:
1) I by no means expect this rate of return to continue as I am investing larger sums
2) What if stuff didnât go in my favour
I havenât figured out a better answer then âyes, you should always donate for several reasons, every yearâ. There are also non-financial factors at play here like value drift as well to consider as well as stable ecosystems/âwhatever the opposite of the unilateralist curse is.
I also want to push back (as a crypto investor myself who runs a crypto fund) on the idea that we know a bull run is coming. We donât. Crypto is now a much much larger market than 2012/â2013 when EA had a lot of edge investing in crypto and I really doubt we are going to have another macro free money period again.
Bitcoin is an $800B marketcap asset and crypto as a whole is 1.7T. You should expect far greater efficiency now and that retail investors/âpeople with other jobs wonât do nearly as well as the pros.