While the crypto industry incinerates to hell from the ENRON-like collapse of FTX, I thought it prescient to list my regrets, wins, and how to sniff out B.S. during the next bull run. Crypto is not dead, but it has been savagely wounded by ambitious, greedy men (and women). Charlatans masked as entrepreneurs duped every kind of investor this time, from the noobs to Sequoia Capital. I’m angry, and so should everyone else. And there is no better time to learn than at your lowest moment.
Human greed is undefeated. It will never go away. The smartest guys in the room who tweet the most, appear on CNBC consistently, and build a cult-like following are the people you should fear. This cycle’s winners are Sam Bankmen-“Fried” (FTX), Su Zhu (3AC), Alex Mashinsky (Celsius), Anthony Pompliano (BlockFi & Sponsors), and the yield-bearing platforms like Voyager, Crypto.com, et al.
“Crypto traders” on social media are content creators. It’s their job to entertain you, not offer sound investment advice. Their market insights, reactions, and “not financial advice” advice are no different than NFL pundits spewing fantasy football nonsense about a game they never played. Next bull run, listen to fewer crypto podcasts and spend less time on CT. Create your own investment philosophy and stick to that.
Speaking of investment philosophy… take profits. All the time. Find reasons to sell, or the market will lose money for you. Maybe you need to buy a home or save money for a wedding (YOU, IDIOT); just be content with side pocketing money for the future. You don’t need to be all in all the time. A good rule of thumb is to sell after making a 2x or 3x profit (in crypto). If it goes up another 4x or 5x, great! Sell some more.
The most improbable outcome will likely happen. Consensus opinions are dangerous. Be fearful when everyone agrees on a similar outcome. Be greedy when the herd isn’t paying attention.
Hold your crypto in self-custody wallets and use the exchanges exclusively for trading. Kraken, Coinbase, and Gemini are fully regulated and show proof of reserves. Stick with those, but start experimenting with DeFi - that’s the future.
Avoid platforms with yield-bearing products offering higher returns than U.S. Treasuries. They’re using leverage and positioned with an “up only” strategy. Worse, they abscond all responsibility by giving out loans to risky hedge funds in exchange for juicy “safe” returns. This is how 3AC fucked everyone. Despite achieving riches King Tut would envy, they positioned themselves for a future that never materialized. Not worth it.
Avoid platforms that minted their own token (FTT, BNB, VGA), especially if they use it as collateral. Still can’t believe FTX did that. Just wow.
Never take out loans using crypto as collateral, not even Bitcoin.
Always hold 10-20% of your portfolio in stablecoins for buying opportunities.
Don’t push crypto onto your friends and family. They don’t understand the risks or do the research you put in. The only reason you avoided catastrophe was by staying nimble. Moving your coins from one exchange to another after seeing an ominous tweet at 3 am is a dangerous place to be. Keep your investment choices to yourself and offer help if someone asks.
Idolize Shackleton, not Columbus. Taking chances and exploring new frontiers is sexy, but returning home is what matters. Make sure you and your family survive so you can live to make money another day.
Stay curious! As I said, crypto, blockchain, web3, Web5, or whatever innovation comes next still has the potential to reshape the world. Keep investing and learning until true decentralization is realized. Until we can remove the human element from the equation, boom and bust cycles will keep happening. And that, you can bet on.
Stay #SAFU out there.