Fellow crypto investor here (since 2015⁄16), 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 “AI tokens” 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 didn’t matter what project fundamentals were. Trends cause things to go up. There is a large degree of pyramic scheme/ponzinomics 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/insiders/smart 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 don’t. There are some bullish narratives around but also, bitcoin/eth are already up like 3x. What if the bullrun already happened and this is the “cycle’s top”? What if the Bitcoin ETFs don’t 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. Pompliano’s supply squeeze or whatever based on miners is stupid. I think the last one was most likely coincidental due to ZIRP and I don’t suppose you have great macro forecasts to suggest we are going back to these territories that haven’t 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 don’t 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?
I’m 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 doesn’t apply to us.
Everybody feels that they are a super savvy investor who will get above market returns and thus “others should donate now while I seek great financial returns to donate more later”
I’ve thought about this tradeoff a lot. I feel the same way. I have a realized APR over the last 4 years of around 300%. I’ve 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 didn’t go in my favour
I haven’t figured out a better answer then “yes, you should always donate for several reasons, every year”. There are also non-financial factors at play here like value drift as well to consider as well as stable ecosystems/whatever 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 don’t. Crypto is now a much much larger market than 2012/2013 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/people with other jobs won’t do nearly as well as the pros.
Copying from the Facebook Group
Fellow crypto investor here (since 2015⁄16), 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 “AI tokens” 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 didn’t matter what project fundamentals were. Trends cause things to go up. There is a large degree of pyramic scheme/ponzinomics 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/insiders/smart 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 don’t. There are some bullish narratives around but also, bitcoin/eth are already up like 3x. What if the bullrun already happened and this is the “cycle’s top”? What if the Bitcoin ETFs don’t 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. Pompliano’s supply squeeze or whatever based on miners is stupid. I think the last one was most likely coincidental due to ZIRP and I don’t suppose you have great macro forecasts to suggest we are going back to these territories that haven’t 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 don’t 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?
I’m 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 doesn’t apply to us.
Everybody feels that they are a super savvy investor who will get above market returns and thus “others should donate now while I seek great financial returns to donate more later”
I’ve thought about this tradeoff a lot. I feel the same way. I have a realized APR over the last 4 years of around 300%. I’ve 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 didn’t go in my favour
I haven’t figured out a better answer then “yes, you should always donate for several reasons, every year”. There are also non-financial factors at play here like value drift as well to consider as well as stable ecosystems/whatever 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 don’t. Crypto is now a much much larger market than 2012/2013 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/people with other jobs won’t do nearly as well as the pros.