👨🏫 3 Things I Wish I Knew Before I Started Trading Crypto
So I didn't get burnt by drinking the Kool-Aid
Dan is still away so forgive my shoddy penmanship as I fill in and half-ass this newsletter again…
I wanted to cover a few key areas I got COMPLETELY WRONG when I was first starting out so hopefully, people reading this can learn from my mistakes. You won’t though, the best lessons are learnt the hard way.
On that, all the theory, research and threads in the world won’t get you to where you want to be. You need to get your hands dirty and do it yourself. The issue with a lot of people churning out high-engagement, low-value content is that they have never experienced the stuff they profess about.
Threadboys should have to post their Degen Score if they want to be taken seriously. I am not taking advice from someone who has never bought Azz-Blaster Inu 10,000, lost it all in a Ponzi farm and/or joined a cult to get a WL for a new NFT mint.
Getting your hands dirty and trying s**t is the way to learn. It is tough and borderline psychotic at times but if you want to define an edge in crypto, DeFi, NFTs or whatever you have to go to the depths of Mordor with nothing more than a couple of ETH in your wallet and stare Sauron in eye.
👨🏫 3 Things I Wish I Knew Before Trading Crypto
Lesson 1. Everyone has a vested interest…
and if you say you don’t, you’re an idiot.
Crypto can be tribal at best and religious cult-like at worst. When you see people talk about things publically they (99 times out of 100) have an ulterior motive.
This motive is a spectrum that ranges from you like the project and you want to see it do well to being related to the dev so you got a seed round allocation.
As soon as people accept this the better. You and only you are responsible for hitting that buy (or sell) button. If you rely on others for your source of information without following up by yourself, quite frankly, you deserve to lose money.
When would you ever do this in the real world?
When a mix of community and financial incentives is at play in a world starved of traditional religious input, people do stupid s**t. I’m not religious btw, but there are so many similarities at play… Look at Satoshi, a god-like figure that created Bitcoin with an immaculate inception and has its loyal disciples spreading the good word in every smoking area on the planet.
What I am trying to get at here on this wild tangent is to expect people to say and do stupid s**t all the time, it's life. Crypto is this idea on steroids.
We are kinda all in this together but at the same time, I am in the arena against you. The aim of the game (which it is) is to win… for some people winning at all costs is their dogma, for others they try to convince themselves they can do it ethically… Who knows who is right, probably somewhere in between like all things.
Do what you need to do, don’t be a dick, and be open and transparent and people will leave you be. It is quite simple.
Lesson 2. The scams pump the hardest…
…aka do you want to make money or be right?
Cast your mind back to what you first bought when you were a wee boy or lassie and you said “weeeeeeewwwwwwwh one Bitcorns costs thousands of dollars I can’t buy one of those things”.
Not understanding you can purchase fractions of a Bitcoin combined with looking at others on the list around it which cost only a few dollars or even a few cents, you start to do the math…
“If ADA or XRP goes to the same price as Bitcoin, I’m gonna be stinking rich”
You immediately hit buy, and confetti falls from the top of your screen, congratulations! You’re an idiot… or are you?
Well… more than likely you heard from a friend or an Uber driver that they made so much money from crypto that they’re just driving cabs because they “don’t like being around their wife” or “It keeps me out of trouble, HAHA”
Yeah, this tends to happen at the end of the cycle, nobody in their right mind joins at the bottom and nobody sticks to their “BeAr MaRkEt StRaTeGy”...
Fresh meat forms the top but the earlier fresh meat causes wild market pumps.
We all know ADA and XRP are complete scams, anyone who tells you otherwise is in the cult, just ignore them.
But, they are incredible door-to-door salesmen… they’ll sign your nan up with the last of her 401K/Pension telling you the same s**t that Charles and those two other scammers have spouted a million times over…
If you understand this, you can kinda gauge when fresh meat is back on the menu… these assets will begin to move.
They’ll probably pull a topical narrative-hacking marketing plan out of their ass too to draw in additional dopes.
But, once again, if you can look past this and just focus on the trade, you can make great returns.
Example… Cardano or more commonly known as Carbongo, in the heights of the DeFi summer of 2020, decided, “We shall now have smart contracts”...
This was because Ethereum was gaining a lot of traction with its dapps and users were beginning to ask big Charles… “Soooo, these dapps on Cardano, are they in the room with us right now?”
Big Charlie Boy would host sessions on his beloved YouTube channel for hours on end preaching that they would be the new home of DeFi, because Vitalik and Ethereum have failed the community.
This time next year I predict there will be hundreds of assets running on Cardano, thousands of DApps, tons of interesting projects and lots of unique use and utility. 2021 is going to be so much fun watching Cardano grow and evolve. The community is definitely ready to innovate
— Charles Hoskinson (@IOHK_Charles)
Jul 26, 2020
What did the Cardano community do? They drank ALL the Kool-aid.
Well, the Kool-aid was good s**t because ADA had a 13,000%+ move… so, the lesson here is to buy stupid s**t that you know idiots will buy off you later, the more cult-like the better, just don’t drink the Kool-aid, or do, I don’t care.
Lesson 3. HODLing is for idiots…
Yes, it is true that if you held the S&P, Bitcoin or ETH from its inception you will have made a pretty penny and certainly HODL will outperform the average wanna-be day trader.
That being said, there is a high likelihood that your bags aren’t gonna make it to the next cycle… I know you do not want to hear that but this is the sad reality.
This is the 17th December 2017 or the last Bitcoin top of that cycle.
Look at those dinosaurs DASH, BCH, IOTA, NEM, XLM, EOS, NEO…
There are no stablecoins in the top 14 by market cap, no DeFi, no liquid staking tokens, no alt-layer 1’s with actual dapps…
This space changes so quickly, bags fade to irrelevance in a matter of weeks.
Now look at today.
Additionally, the ones that are still kicking around like ADA, XRP, BCH well… see point 2.
To add insult to injury, a lot of dino-coins from the last cycle didn’t reach previous ATHs but are still in the top 20 by market cap.
Why is that?
Well, emissions, inflation schedules, private sale unlocks, and market-making deals coming to a close all drastically increase the circulating supply.
So, the market cap of the project could reach all-time highs but the price of the underlying token could be many multiples away from its ATH.
If your assets do not outperform its inflation schedule you are cooked.
Look at this community-built sheet that the blocmates community threw together. Feel free to add whatever you like to make it run better and use it as a guide.
In a nutshell, this sheet shows:
The supply of a token at its previous ATH
The supply of a token NOW
The previous market cap ATH
The current market cap
What price increase would the token have to reach in order to get back to the PRICE ATH
An example using a hypothetical token, do not buy this token… (have to say it).
BLOC Token had a market cap of $1bn and a price of $10 exactly 1 year ago today… this means there were 100,000,000 (one hundred million) tokens. Circulating supply x price = market cap thus 100,000,000 x $10 = $1bn.
BLOC token is highly inflationary and also had predatory vesting terms for private investors.
So, 365 days later (Today) there are now 1,000,000,000 (one billion tokens) or 10x the circulating supply.
Surprisingly, we have a cult-like following and the token price has only dropped 90% to $1.
So, our market cap is still $1bn (1,000,000,000 tokens at $1), yet your portfolio trackers say you have lost 90% of its ATH value…
So, to get you back to break even you need a 10x in price to return to break even… the issue is to reach those heights again, the market cap needs to be $10 bn…
Projects will use stupid staking, burn or even locking tactics to take that circulating supply from the market. It is transparent and doesn’t work.
Additionally, if a project has a long inflation schedule which goes on for several years, then the dilution will continue and the gap back to price ATH widens.
Don’t be a fool.
I’m gonna leave it there and will probably expand on this in a YouTube video or something in a week or so… if you are interested you can subscribe to the blocmates YouTube account by clicking this link.
And on that note, normal service will resume next week,
🤝 A final word.
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