My mistakes and lessons in this bull market

Well, dudes, it looks like the happy times are over and the bear market may be around for a while.

Looking back at the one and a half year bull market from 2020 to 2022, the entire currency circle is crazy. Many veterans have made a lot of money, at least they have gained some. Of course, in a bull market there are also some very difficult times, and in addition to the loss of paper wealth, I think some of the spiritual feelings of fully participating in the cryptocurrency bull cycle cannot be underestimated.

I mentioned full participation above because this is the first time I’ve fully invested in a cryptocurrency bull market. I became interested in cryptocurrencies in 2013, mainly through the grey market in the early days of DOTA2.

In 2017, I became more interested in cryptocurrencies, I had published several articles on cryptocurrencies at that time, and read all the groundbreaking stuff at the time, but still hadn’t really gotten into it. a field.

And this bull market is actually the first time I really devote myself to the cycle. What kind of experience is this? Obviously, everything is still operating step by step, the team is still building projects, and crypto Twitter is still posting some spam, but we have to deny that the atmosphere of the entire currency circle may be the same as the currency price, which has fallen by 90%

We should reflect on our investment strategy before we make a mistake, but it’s not fun to do, is it? Plus, you don’t really know what you’ve done wrong until the loss occurs. A common mistake people make is to use present experience and heights to evaluate past decisions. But no one can know when the Russian-Ukrainian conflict will start, when the Fed will announce a rate hike, or anything else that might be conspiring to take away our online possessions.

So I took some time to reflect on what I did well in the bull market of the past year and a half, and where I went wrong. Since people like to watch other people make mistakes, and of course these lessons are more useful, let’s start with my mistakes. Maybe I’ll write a dedicated “what I did right” post at a later date.

Here are some mistakes and lessons I have learned through thinking:

1. not profitable in time

This is one of the most mistakes I make. I’m a long-term investor in cryptocurrencies, so I think Ethereum and Bitcoin are the best long-term investment assets, but I’m doing really stupid with the altcoins I’ve invested in.

I bought a bunch of TOKE at $30, held it until it was close to $80, and held it until the price dropped to $2.

I bought a bunch of ALCX at $200, held it until $400, and held it until the price dropped to $20.

I have held LUNA, MATIC and JEWEL for a very long time, as well as a lot of altcoins such as OHM, TIME and so on. Obviously, looking back it’s easy for me to say, “Wow, if I sold at the perfect time, I’d make a lot of money!” Not doing anything at all.

This is really stupid. My goal is to increase the amount of ETH I hold, and I think most of my transactions are doing the opposite.

Only once did I do what I was supposed to do. I found some projects early on, picked a reasonable price to try to buy, and set a sell price, and once the price got there I would sell a certain amount of tokens, which I followed almost perfectly this rule. When I wrote the JONES article‌, I bought quite a bit at $5 and sold the vast majority of my position at $13, knowing that an investor unlock was coming.

On a broader level, I should also profit from cryptocurrencies when they start to exceed my target equity allocation percentage. Earlier in 2021, I had overall financial goals, including the proportion of cryptocurrencies, real estate, indices, etc. in my portfolio, however as cryptocurrencies rose, I completely forgot about my original goals. It wasn’t even intentional, I really forgot.

It wasn’t until I started thinking about buying a house that I recalculated and realized that things had gone horribly wrong. So I started actively pulling some of my money out of cryptocurrencies in early 2022, and that saved my life. Of course, I still haven’t come up with enough money, I should have started doing this sooner, but in any case, my decision is the right one for now.

My takeaway from this lesson is to create time to reflect on my equity allocation ratio, rebalance assets more intentionally, and formulate rules for making profits.

2. Too much attention

Adam Smith has a wonderful passage in The Money Game:

The greatest safety is to put all your eggs in one basket and watch that basket. If your investments are concentrated in just a few stocks, you have to measure each stock against each emerging idea by its potential, and doing so in turn affects your bottom line.

It’s easy to think that we should try to make some profit out of everything. In some ways, our thinking has been distorted by index fund investing as the best strategy, but an index fund is a basket of stocks. I think what we need to do is in cryptocurrencies, take a few high-conviction bets and stick with them, and judge other coins based on those bets.

I believe the highest stakes are Ethereum, MATIC, SOL, CVX, ALCX. If I only held these cryptocurrencies and compared all the other coins to them, I might choose to put my money in other better coins and dump the underperforming coins, so that I would Do better. The ALCX in my hand ended up playing out, but everything else was doing fine.

Instead, I put my money into basically any meaningful project. I joined dozens of Discords that I couldn’t keep up with and lost tons of money on projects I didn’t investigate enough. I have developed a fear of some projects, held them for too long, and did not stop in time, in short, there is no benefit in doing so.

Now that I’ve merged almost all of my investments, I should have done so sooner. It’s really hard to ignore all the new stuff, but I think it’s a better strategy than trying to get a piece of every project.

3. Failure to recognize the relationship between DeFi mining and investment

Cryptocurrencies, and DeFi projects in particular, often face an unfortunate fact: even a good project with good token economics‌ is likely not a good investment if their mining is too profitable.

I think TOKE is a good example of this. I believe in their product, love their build, but they have a pretty high yield distribution and people all come to this platform to mine and then choose to sell it a lot when the big distribution starts to slow down. When TOKE is doing well and TOKE/ETH goes up by 150%, people choose to keep it, but when that stops, people immediately sell.

Even for a good project, you have to realize that most people working in cryptocurrencies do it for short-term gain, other than the absolute top network coins (Bitcoin, Ethereum, maybe a few others), trying to be a value investment It might be a bad idea.

Anything that can be mined and dumped will have the same ending. Don’t try to be the hero of a project, don’t stick with it just because you believe in it. And foolishly think that anything with distribution and liquidity rewards generates a lot of revenue, so that’s most of the reason it’s valuable.

4. Misunderstanding Small Hype Cycles

While the broader cryptocurrency market is going through a hype cycle, there are also many smaller hype cycles within each big cycle.

The first is the DeFi Summer, which started in the summer of 2020 and continued into the fall, began to fatigue last winter, and died this spring. Yearn’s price chart captures this well. DeFi started dying when it crashed in May 2021.

My mistakes and lessons in this bull market

Next is the profile picture craze, which starts around May and June and continues into the fall. Boring Ape kicked off the small picture craze, but by the end of the prologue, it seemed like every day there were shitty small picture projects coming out. I bought a lot of stupid stuff (these weren’t my projects, but a lot of irons learned from my articles and even bought small pictures, sorry for the irons who are still involved in these projects).

My mistakes and lessons in this bull market

Then there’s the OHM fork craze, which lasted from last fall to winter, and you can see it pretty well on Olympous’s market cap chart.

My mistakes and lessons in this bull market

There are other small narrative cycles like GameFi mania, you can see its life cycle on the JEWEL price chart.

My mistakes and lessons in this bull market

I want to mention the point of these little cycles: everyone is looking for the next big winner. And these hype cycles have been happening in different fields, and they follow somewhat predictable patterns:

  1. Blue-chip cryptocurrencies, the original version of the project took off (Bitcoin, Punks, Axie, Olympus, etc.)
  2. Some derivatives prices are starting to take off (Solana, Cool Cats, DeFi Kingdom, Wonderland, etc.)
  3. Prices of all projects took off when people were missing phase 2 and started FOMO

Every time I get in at the third stage, I lose money. And when I’m smart enough to profit off Stage 2, I’ll do well.

One of the best investments I’ve ever made was in the Boring Ape Yacht Club. In the early days of the PFP mania, I bought a Boring Ape for 4 ETH and sold it for 61 ETH, when my friends outside the currency circle started asking me what NFT to buy, and Lazy Lions’ Prices are starting to take off. While I don’t know what Lazy Lions are, some of this information was a doomsday sign for me, and that was when the NFT market started to move into phase 3 and I sold most of my NFTs.

But with Olympus, I made the mistake of not only missing my place in the hype cycle, but also failing to recognize the difference between mining and investing. I still really like the Olympus product and it’s doing pretty well compared to other products on the market, now the mania is over, but it’s ridiculously priced due to the mania and the stellar annualized yield, I hold too long.

I made the same mistake with RAIDER, thinking the price had started to take off, but in reality it’s just going from phase two to phase three, and the money starts looking for a quick profit. If you put the JEWEL and RAIDER charts together, you can see the trend.

My mistakes and lessons in this bull market

The two best ways to use this information seem to be to try to find them and invest early before they take off, or wait for a new story to start taking off and then invest in fast followers that have already started to grow. If you buy TIME when OHM starts to take off and sell when OHM starts to fall, you will do pretty well. Or just invest in leading projects that are taking off and ignore those followers entirely. If you buy a boring ape or a punk when NFTs start to take off and ignore the rest of the NFTs, you’ll do better than 99% of people trying to find hot new items.

Again, something similar won’t necessarily happen next time, but it does reflect human nature. I’ve seen similar hype cycle diagrams in other areas, like the famous Gartner hype cycle diagram.

My mistakes and lessons in this bull market

So I suspect this is a fairly typical trend, don’t think “this time is different”.

5: Misunderstanding of fanaticism

Cryptocurrencies can be very frenetic. Bitcoin had a very frenetic period, there are still Bitcoin maximalists who think everything else is a scam, the world will be defined as financialized and Bitcoin replaces all currencies, everyone will eat only steak, live In the Mediterranean, marry a daughter-in-law from Eastern Europe. And most people who hold Bitcoin are just silent holders and don’t feel the need to preach about it.

In my opinion, the more fanatical something is, the less likely it is to be legitimate. Real products don’t need craze because they just work. Fanaticism is often a crony belief that helps to obscure a known but uncomfortable reality.

A lot of people are crazy about Cardano because their blockchain technology is a joke. They don’t deliver real products, and most likely never will, which is why they keep talking about their “scientists” publishing “research papers” and all their so-called crap about helping people in Africa, etc. Investors in Cardano knew to some extent that they were being scammed, so they responded by being tough. When reason fails, we go back to faith.

The most obvious example of this bull cycle is the LUNA and Terra ecosystems. It felt wrong from the start. People are always asking me various Amway Anchors as a safe place to earn stablecoin yields, and this Amway just doesn’t feel right. I even wrote a lot about stablecoin mining in my article on stablecoin mining:

Well, I wouldn’t be able to talk about stablecoins without some Luna diehards showing up and yelling at me for not mentioning the Anchor protocol. Here’s the thing, Anchor is a stablecoin lending protocol on Terra that pays a fixed APR of 19.45% on UST. A fixed annual rate of close to 20% for a dollar-pegged stablecoin is insane, it’s staggering. This is the best product on the market, it just feels too good to be true. So, you can put your UST there and get 20%. And it hasn’t failed, yes, I’m bullish on Terra in general and hold some LUNA. But I wouldn’t put my stablecoin in the Anchor protocol, because that wouldn’t make sense at all. No one pays more than 20% to borrow UST. This is said to be mostly from the proceeds earned by Luna as collateral, with some backing from its creators/investors, but something just doesn’t feel right. Too much money seems to be made out of thin air.

But you know what, I didn’t follow my own advice. Even though I have some lingering doubts about LUNA, and deep down I don’t believe it has a future, I bought a lot of LUNA and staked it on Astroport. I’m also proud of that trade because I bought most of it early at $30-40 and held it all the way for a solid 3x gain, of course I didn’t make a profit.

Then it all went to zero in a crash. I was right about the Luna, but I bought it anyway. Anchor is too good to be true, but I didn’t follow my instincts about fandom and bought because of FOMO.

Similar things have happened in various projects. A fanatical organization forms around a product, calls for it, and then its price eventually collapses. The mistake I made was thinking that rising prices were a sign that I was wrong about fanaticism. I was right, I just had to wait a bit longer.

6. The most important lesson: impatient

The most important lesson I have learned from this bull market is that I should be more patient and do less. I would do better if I made fewer high-conviction bets and swapped them back to Ethereum on a regular basis.

However, I also won’t go that deep in this industry. I’m not going to learn everything I know now, I’m not going to have the opportunity to work with Crypto Raiders and other teams, I’m not going to create this content, and I’m not going to twitter with the oldies.

Maybe some opportunities are friends you made along the way? Of course I’m losing a lot of money with such an active operation, but I’ve also gotten some of the best results out of it. You certainly can’t expect to make perfect decisions, and I don’t expect to in the future either. Also, you can’t really learn many of these lessons by reading articles like this (sorry), you have to do it yourself, go through it.

So, I really don’t regret anything that has happened. Now I know what to look for better next time, and I can dig deeper into cryptocurrencies in this article while everything seems calm.

I’m not leaving the industry anytime soon. I still think it’s the next wave of the internet, I’m excited to see what continues to build here, and I hope you stick with me on it.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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