https://twitter.com/punk6529/status/1477259809493819393

1/ On how to make it in crypto as a normal person.

There is one rule only: SURVIVE!

普通人参与的话，在Crypto 里面活下来比什么都重要

2/ Survival means four decisions:

a) Should you invest?

b) How much you invest?

c) In what should you invest?

d) Are you levered?

All of these are hugely personal, relate to your view of the world, your financial situation and, most of all, your psychology

活下来要做四个方面的决策：你应该参与投资吗？投多少？投什么？要加杠杆吗？

这些因人而异，和你的世界观、你的财务状况还有你的心理承受力有关。

3/ The purpose of this thread is not convince people who are not invested in crypto to invest in crypto. Nor is it to convince you to invest more in crypto. On average, anon, I am trying to get you to invest *less* in crypto so you can survive over the long-run

4/ The other purpose of this thread is so I can refer to it when people ask me what they should do in crypto. My short answer is: "let's talk about the ballgame" (most people are still not mentally ready to not rekt themselves in crypto)

5/ If they insist, the slightly longer answer is: "Buy a bit of BTC and ETH every month and forget about it for a decade" If they really insist, this is my longer answer, so I want it for my reference and maybe it will be useful for others too.

6/ Anyway, let's get back into the theory: Crypto is a bet on a form of digitization, that we will represent value digitally and decentralized in the future. That value can be digital gold (BTC), smart computing (ETH), cultural objects (NFTs) and many other forms of value.

7/ Today about 0.5% (~1/200) of global asset value is represented by decentralized digital crypto assets. We have about $360T in global assets (including real estate, but not including intangibles). The real total is comfortably above $400T. Crypto market cap is about $2T

8/ The details of the market cap calculations do not matter so much. I think of it as $2T/$400T, but you can substitute whatever numbers you prefer. I think you will struggle to get the crypto % above 1% or below 0.1% right now

9/ For me, the macro question is: "In 2030, will the % of global asset value represented by decentralized digital assets be more or less than 0.5%?" For me, the answer is: "probably yes from a technology perspective, but maybe not because of regulation / the centralized system"

10/ My first form of analysis is an "expected value" analysis. e.g Say there is a 50% chance that crypto % of total assets goes to 1% and a 50% that crypto literally ends and goes to 0%. In this case, we should be neutral. 50% x 1% + 50% x 0% = 0.5% = where we are today.

11/ My view is that chances that crypto doubles are significantly higher than it goes to zero, which means the expected value is positive. Therefore I would like to have an investment in crypto, even today. [I first did this analysis when crypto was 0.005% of global market cap]

12/ "But 6529, this is the dumbest expected value calculation ever, you should draw the whole distribution curve of outcomes, with probabilities at each level and sum them together" Answer: No, you don't.

13/ The point of this analysis is "do I want crypto exposure at these general levels?" My dumb expected value calculations answers that question just as well as your super-fancy distribution curve

14/ The second question is "how much should I invest in crypto?" and that is a very confusing question. I think of it this way: [your total off-chain net worth]/[total offchain assets ($400T)] vs [your total crypto net worth]/[total crypto assets ($2T)]

15/ If you are neutral on crypto's chances from here, these numbers should be the same. If you are positive, the crypto % should be bigger If you are negative, the offchain % should be bigger. No-coiners, for example, are the extreme case of the negative position.

16/ For me, the crypto % is much bigger but: a) My off-chain net worth is fine. Crypto can go to zero and I will still have a nice life b) I spend some time professionally on crypto topics, so it would be strange if I did not have skin in the game c) I can take the volatility

17/ So the first stage is to answer for yourself, via some form of expected value calculation, if you want any crypto exposure in the first place. If the answer is "yes", we go to the second question which is "how much?"

18/ The correct answer for most people is "not so much that your life is impacted if crypto nukes, but enough so that it improves your portfolio performance if it does not" e.g. you invest 2% of net worth. If it goes to 0, you can take the loss. If it goes to 4%, happy times

19/ The longer answer has to do with my "Levels" framework

https://twitter.com/punk6529/status/1435229502708322313

If you are L1, you are not in this discussion L2 is really tricky bc you need the money to pay the bills

20/ Most people asking this question

25/ The biggest risk to the average person's long-term returns in crypto is "crypto nukes for years, they freak out and sell the bottom" Of my 2013-era friends who invested in BTC, almost all of them today own no crypto for this reason.

are L3 and L4. I think L4 can afford to take more risk than L3, on average L5 are playing a different non-financial game altogether, it is strictly personal - could be anything from zero to a huge number

21/ Keep in mind that most big crypto personalities, including yours truly, are some version of playing a L4/L5 game. Few of us are wondering how to pay the rent and our actions and comments have to be taking in that light

22/ When people ask me this question, I tell them the following: "Whatever you invest, write it off to zero the next day on your balance sheet and don't look at it for 10 years"

23/ Usually, they look at me shocked and then I say "OK, so invest less until you can say this to yourself and not freak out" It is an excellent test of if you are over-invested relative to your personal situation and personal psychology

24/ The personal psychology aspect of this is huge. I have historically been much more invested in crypto than friends with similar net worths. Both answers are right because I don't mind volatility in my net worth as much as they do.

25/ The biggest risk to the average person's long-term returns in crypto is "crypto nukes for years, they freak out and sell the bottom" Of my 2013-era friends who invested in BTC, almost all of them today own no crypto for this reason.

26/ They bought at $300, felt great at $1,000, panicked at $300 (the second time) and now are no-coiners. The most successful investors from this era are those who did the least. They bought once or they bought consistently over the years and did not worry about the price.

27/ This is much harder than it seems. Everyone is George Soros or

@cobie

in theory. Very few people are this in practice. When the dip comes, the usual answer is not "let me do a detailed analysis of my future options" but more "oh shit"

28/ In other words, your psychology is the KEY factor to survival. You have to know thyself. You have to know how much risk you can handle and you need to keep sizing down your position until it is at a point where you can be long through dips.

29/ When you can look at yourself/your wife/your parents/your kids/your banker/your landlord and say: "BTC/ETH/SOL/BAYC is down 80% and I am cool" then you are in an OK place for long-term survival

30/ What should you buy? I have no idea but if i was pushed by someone to answer, IMHO, the beginner portfolio today is still 50% BTC:50% ETH. The intermediate portfolio is set aside 10-20% of your portfolio for other big fungible tokens.

31/ Which other fungible tokens? Which ones? I have no idea. Will AVAX perform better than LINK next year? I dunno and I actually think pretty much nobody knows.

https://twitter.com/punk6529/status/1477259809493819393

1/ On how to make it in crypto as a normal person.

There is one rule only: SURVIVE!

普通人参与的话，在Crypto 里面活下来比什么都重要

2/ Survival means four decisions:

a) Should you invest?

b) How much you invest?

c) In what should you invest?

d) Are you levered?

All of these are hugely personal, relate to your view of the world, your financial situation and, most of all, your psychology

活下来要做四个方面的决策：你应该参与投资吗？投多少？投什么？要加杠杆吗？

这些因人而异，和你的世界观、你的财务状况还有你的心理承受力有关。

3/ The purpose of this thread is not convince people who are not invested in crypto to invest in crypto. Nor is it to convince you to invest more in crypto. On average, anon, I am trying to get you to invest *less* in crypto so you can survive over the long-run

4/ The other purpose of this thread is so I can refer to it when people ask me what they should do in crypto. My short answer is: "let's talk about the ballgame" (most people are still not mentally ready to not rekt themselves in crypto)

5/ If they insist, the slightly longer answer is: "Buy a bit of BTC and ETH every month and forget about it for a decade" If they really insist, this is my longer answer, so I want it for my reference and maybe it will be useful for others too.

6/ Anyway, let's get back into the theory: Crypto is a bet on a form of digitization, that we will represent value digitally and decentralized in the future. That value can be digital gold (BTC), smart computing (ETH), cultural objects (NFTs) and many other forms of value.

7/ Today about 0.5% (~1/200) of global asset value is represented by decentralized digital crypto assets. We have about $360T in global assets (including real estate, but not including intangibles). The real total is comfortably above $400T. Crypto market cap is about $2T

8/ The details of the market cap calculations do not matter so much. I think of it as $2T/$400T, but you can substitute whatever numbers you prefer. I think you will struggle to get the crypto % above 1% or below 0.1% right now

9/ For me, the macro question is: "In 2030, will the % of global asset value represented by decentralized digital assets be more or less than 0.5%?" For me, the answer is: "probably yes from a technology perspective, but maybe not because of regulation / the centralized system"

10/ My first form of analysis is an "expected value" analysis. e.g Say there is a 50% chance that crypto % of total assets goes to 1% and a 50% that crypto literally ends and goes to 0%. In this case, we should be neutral. 50% x 1% + 50% x 0% = 0.5% = where we are today.

11/ My view is that chances that crypto doubles are significantly higher than it goes to zero, which means the expected value is positive. Therefore I would like to have an investment in crypto, even today. [I first did this analysis when crypto was 0.005% of global market cap]

12/ "But 6529, this is the dumbest expected value calculation ever, you should draw the whole distribution curve of outcomes, with probabilities at each level and sum them together" Answer: No, you don't.

13/ The point of this analysis is "do I want crypto exposure at these general levels?" My dumb expected value calculations answers that question just as well as your super-fancy distribution curve

14/ The second question is "how much should I invest in crypto?" and that is a very confusing question. I think of it this way: [your total off-chain net worth]/[total offchain assets ($400T)] vs [your total crypto net worth]/[total crypto assets ($2T)]

15/ If you are neutral on crypto's chances from here, these numbers should be the same. If you are positive, the crypto % should be bigger If you are negative, the offchain % should be bigger. No-coiners, for example, are the extreme case of the negative position.

16/ For me, the crypto % is much bigger but: a) My off-chain net worth is fine. Crypto can go to zero and I will still have a nice life b) I spend some time professionally on crypto topics, so it would be strange if I did not have skin in the game c) I can take the volatility

17/ So the first stage is to answer for yourself, via some form of expected value calculation, if you want any crypto exposure in the first place. If the answer is "yes", we go to the second question which is "how much?"

18/ The correct answer for most people is "not so much that your life is impacted if crypto nukes, but enough so that it improves your portfolio performance if it does not" e.g. you invest 2% of net worth. If it goes to 0, you can take the loss. If it goes to 4%, happy times

19/ The longer answer has to do with my "Levels" framework

https://twitter.com/punk6529/status/1435229502708322313

If you are L1, you are not in this discussion L2 is really tricky bc you need the money to pay the bills

20/ Most people asking this question

25/ The biggest risk to the average person's long-term returns in crypto is "crypto nukes for years, they freak out and sell the bottom" Of my 2013-era friends who invested in BTC, almost all of them today own no crypto for this reason.

are L3 and L4. I think L4 can afford to take more risk than L3, on average L5 are playing a different non-financial game altogether, it is strictly personal - could be anything from zero to a huge number

21/ Keep in mind that most big crypto personalities, including yours truly, are some version of playing a L4/L5 game. Few of us are wondering how to pay the rent and our actions and comments have to be taking in that light

22/ When people ask me this question, I tell them the following: "Whatever you invest, write it off to zero the next day on your balance sheet and don't look at it for 10 years"

23/ Usually, they look at me shocked and then I say "OK, so invest less until you can say this to yourself and not freak out" It is an excellent test of if you are over-invested relative to your personal situation and personal psychology

24/ The personal psychology aspect of this is huge. I have historically been much more invested in crypto than friends with similar net worths. Both answers are right because I don't mind volatility in my net worth as much as they do.

25/ The biggest risk to the average person's long-term returns in crypto is "crypto nukes for years, they freak out and sell the bottom" Of my 2013-era friends who invested in BTC, almost all of them today own no crypto for this reason.

26/ They bought at $300, felt great at $1,000, panicked at $300 (the second time) and now are no-coiners. The most successful investors from this era are those who did the least. They bought once or they bought consistently over the years and did not worry about the price.

27/ This is much harder than it seems. Everyone is George Soros or

@cobie

in theory. Very few people are this in practice. When the dip comes, the usual answer is not "let me do a detailed analysis of my future options" but more "oh shit"

28/ In other words, your psychology is the KEY factor to survival. You have to know thyself. You have to know how much risk you can handle and you need to keep sizing down your position until it is at a point where you can be long through dips.

29/ When you can look at yourself/your wife/your parents/your kids/your banker/your landlord and say: "BTC/ETH/SOL/BAYC is down 80% and I am cool" then you are in an OK place for long-term survival

30/ What should you buy? I have no idea but if i was pushed by someone to answer, IMHO, the beginner portfolio today is still 50% BTC:50% ETH. The intermediate portfolio is set aside 10-20% of your portfolio for other big fungible tokens.

31/ Which other fungible tokens? Which ones? I have no idea. Will AVAX perform better than LINK next year? I dunno and I actually think pretty much nobody knows.