How to survive in crypto long-term (without getting lucky)
How to survive in crypto long-term (without getting lucky)
First of all, if you want to make money in crypto you have to play the long game.
Secondly, the people in crypto you look up to today all started out with empty hands. They're here today because they took profits.
Most of them learned how brutal crypto could be when the market nuked 75% after the Jan 2018 top.
Those who're wealthy now learned from that episode and took profits on the way up in the 20-21 bull-run.
They understood that wealth preservation and capital protection is the only way to survive long-term.
Never give out your seed phrase or password to anyone.
Crypto is a big boys league.
If you f*ck up, there's no one out there to save you. There's no customer service in crypto. You can't call your dad.
If someone has your secret 12/24 words and/or password, it's over.
Long-term investing vs. trading
There are two camps in crypto.
The long-term investors vs. the traders.
The long-term investors will say that the only thing that works is to hold tokens and DCA every month.
Traders on the other hand believe that the narrative changes too quickly to hold tokens long-term. I agree with some parts of both camps. The only tokens in crypto I would be comfortable holding long-term with a DCA strategy are $BTC and $ETH.
To back this up, look at the top 100 crypto list from 5 years ago: coinmarketcap.com/historical/
How many of the tokens are in the top 100 today? 10? 15?
You get my point, the probability of your favorite crypto tokens surviving long-term is small.
Don't become a maxi. Never marry your bags. Traders use technical indicators and trendlines to decide when to buy and/or sell.
While it can look like astrology for some, the pro traders are using tools, mental models, and frameworks that help protect their capital.
I remember the first time I tried crypto trading with leverage.
I lost $1,000 in a matter of 2 minutes.
I didn't understand what I was doing.
A good tip can be to try paper trading on a demo account before you try with real money.
It's not the same, but it will give you an understanding of leverage and you'll see how fast you can lose/earn money in crypto.
The volatility in crypto is out of another world compared to the stock market.
Yes, you can get lucky by betting all of your money on meme-coins & Ponzicoins, but 9/10 people actually lose their money. You never hear from them.
You only hear the sunshine stories.
Find like-minded people
Alliate with people in the space that are naturally curious and that have the same goals as you do. Look for people with high intelligence, the hunger to succeed, and relentless energy.
Make friends with founders, builders, and other people who know more than you do. This is how you learn. Meet once a week over Zoom or Google Meet to discuss ideas.
This will give you 5x as many ideas and may shorten your research process.
However, always DYOR. Never trust someone blindly.
Think twice before you alliate with someone for a business opportunity in the space.
One bad outcome and your reputation can be destroyed.
Small bets
Compared to other markets, crypto is not a very efficient market. You can make good money by being early in new projects.
But the narrative in crypto changes so fast that what is trending today, could be a bad bet tomorrow.
Take risks, but be careful. Never go all-in.
Instead, take lots of calculated bets. You don't want to end up losing it all.
If you can't explain in two sentences where the yield in the Defi platform you're in comes from, you are the source of the yield.
This makes true for a lot of the shady DeFi protocols.
If you want to make it in crypto, you need to be willing to change your mind quickly.
Don't be that maxi who supports an ecosystem no matter what happens.
If the narrative changes, you should change as well.
Crypto doesn't work as a stock market index fund.
An index fund can never be worth zero, but your altcoins can.
Swallow that camel and sell at a loss if you have to.
Always remember opportunity cost.
Content creation
The easiest way to let other people notice you in the space is to grow an audience on Twitter.
What's the best way to do that?
By creating content:
1. Youtube-videos
2. Twitter threads
3. Podcast episodes
4. Blog writing
Choose the medium you're mastering the best or the one that you want to be the best at.
It's better to master one medium very well than be half good at all of them.
The most important thing though is to be consistent. You need to show up every single day.
Get specific knowledge
Everybody has something they're naturally good at. Double down on this and use it to your advantage.
I'm good at writing, that's why I've been prioritizing writing more threads compared to doing Youtube-videoes or starting a podcast.
If you get specific knowledge people will check out your content because you're the one who wrote it.
No one can compete with you because you've built a reputation that people trust.
If people ask you if you want to do a meeting, say no 90% of the time.
Most meetings are pointless, and almost everything can be solved by text.
Your time is spent better by creating.
If you need to have a meeting, always set an agenda.
Always think about opportunity cost
This leads us to opportunity cost: This applies to so many areas.
Some examples:
1. Portfolio allocation: I've talked to a lot of people, and one thing that is a common trait among almost all of them is how hard they stick to anchoring bias.
"I'm down 80%, but I will sell my token once it's back at $1".
The opportunity cost (and the better option), is to sell it at a loss on eg. $0.20, and invest it in something with stronger fundamentals/trend.
2. 9-5 vs. full-time crypto: when you come to a certain point it may be more beneficial to prioritize crypto full-time than to work a normal job.
Make sure that you have a solid capital base to lean back on. Don't quit your job if you don't have a plan.
3.Outsource as much as you can: I remember being a part of the FIRE-movement (Financial Inependence Retirement Early) where everything focused on being as frugal as possible.
While it's good to save money, being overly frugal can be at the expense of your time.
Cooking food vs. ordering food. Cleaning the house vs. getting a maid once per week.
If you have specific knowledge you have to protect your time at all costs, you don't want to end up spending it in areas which doesn't add any extra value to your life.
If you want to join a crypto start-up make sure to work on what you're good at.
You may think that startups only need developers, but that's not true. Marketing is equally important.
A good protocol no one has heard about won't go far.
One opportunity I see as unfilled in the space is copywriting. Both the docs and the protocol's threads are too advanced for most people.
It could be a business opportunity to start a marketing agency that basically writes ELI5 threads for DeFi protocols.
Share your ideas in public: You'll be surprised by how many people want to read your thoughts.
99% of people are consumers, while 1% are creators.
If you think that what you want to write with is saturated, think twice. There's no one that writes with your unique angle.
The end goal
Set yourself a goal for how much money you want to make.
Having goals makes it easier to be consistent and focused.
Remember, you don't have to make it all in 1 year. Play the long game.
Also it can help to have some milestone goals along the way. Eg. when you're 25% on your way to the goal, buy yourself a nice gift (eg. a watch).
There are endless ways to make money in crypto. Trading, DeFi yield farming/staking, and NFTs are 3 popular ways.
You don't have to stick to one only, but the more you focus on one of them the better you'll become. Remember specific knowledge.
I focus mostly on DeFi & trading, but there was a period I tried to become a pro in NFT too.
I remember spending way too much time on rarity.tools and Discord, and at the end of the day, I hadn't made much progress.
When you finally make it in crypto, you realize that it wasn't what you wanted in the first place.
You have money, but you're still the same.
Make sure to have more goals in life than money goals, otherwise, it's easy to end up getting depressed.
But that's for another day.
Thank you for reading!
See you next week :)
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Great write-up, thanks!
Great stuff as always. Thoughtful and insightful.