How to make it in crypto. Part 2
Read first part here
2. Investment cycles. Is this the right time to invest or not?
Timing is everything, you can find a great company or crypto protocol with an excellent team and product, but buy just at the wrong time and lose 95% of your investment. I have seen this multiple times. That’s why knowledge about investment cycles is paramount.
Below is a chart representing the emotional stages of the market at different price levels. This chart is popular because it gives a colorful description of the emotions investors face when betting their life savings on financial bubbles.
If you squint hard enough you can see similarities between this chart and price patterns of Bitcoin, Ethereum in 2017 mania, and many other smaller projects even from the 2021 cycle.
Let’s begin from the top of this chart.
Euphoria
There are many ways to make money in crypto. You can buy the bottom, you can buy early some new great project, you can build one yourself, or be a part of the early team. You can even be skilful and lucky enough to trade the bull market successfully. BUT YOU WILL NEVER MAKE MONEY BUYING EUPHORIA. If you will read this post and remember only this one thing I will be already happy.
Unfortunately, most people are getting into crypto when “Everyone Is Getting Hilariously Rich and You’re Not”.
I lived through two crypto cycles in 5 years and both times all my friends who didn’t know anything about crypto and investments in general reached out to me at the “thrill” and “euphoria” stages of the market.
I get it, it’s really exciting, your friends making money by buying ponzies they heard about 3 days ago, people on TV talk about newly made crypto billionaires, and maybe some of your friends even started some pseudo-crypto startup and “crushing it”. How can you stay on the sideline? You want this juicy slice of “financial freedom”.
It’s actually really hard to spot the exact top of the market because the euphoria phase can be stretched for several months, but the market tops always in 1–2 days.
Euphoria can be extreme in one particular sector of the market and not be so colorful in another. If you will see just some of the characteristics and sell everything, you might lose weeks of the market going exponentially.
Let me give you a snapshot of crypto at the top, so you might make a better decision when will face another mania.
Role of FED reserve in crypto cycles
But firstly, I need to point out that the 2019–2021 crypto cycle was predominantly fuelled by macro events. Crypto had its final capitulation of the previous cycle when covid broke out and the whole world decided to stay at home, in essence stopping the world economy.
But soon the central bank of America eg. FED reserve publicly started interventions: printing money, injecting them into the market and of course, lowering the interest rate they are willing to give money at. So the whole economy got an adrenaline shot to the chest, and every asset went parabolic. Crypto took notice and from a depressed state just in one month, it was buzzing with excitement.
It started with the FED and it ended with the FED. Inflation in the United States and the rest of the world was worrying the same as the level of fraught, so FED reserve began increasing interest rates and the amount of liquidity in all markets began to shrink.
Furthermore, those who were in charge of FED policies sold their assets publicly to “avoid conflict of interest”. As you might think crypto didn’t like that and headed straight to death valley where we still are at the end of 2022.
Signs of euphoria
Except for heavy FED reserve interventions, market tops between the two cycles were pretty similar. One of my favorite top signal is Tai Lopez coming to crypto in full force.
The guy is the essence of the world “hustle”, a prototype for every influencer selling you a successful image and how to become rich quickly courses. Honestly, I will not judge his core business endeavors, but there are some people for whom meddling with crypto is out of character, when business couches floc there, you need to understand — this is the end. In 2018 (previous cycle top) he was selling $600 investment courses where his mentors were telling how they invested in Bitconnect, the infamous Ponzi scheme, that went to zero just right after they mentioned it.
In 2021 Tai Lopez had some “experience” so he was already selling generic NFTs as many other influencers. However, then he escalated his ambitions pretty quickly and took RadioShack (he bought it out of bankruptcy a year before) and rebranded it as decentralized exchange to launch an ICO called “RADIO”. As if it wasn’t enough, he even took a known Ponzi scheme Olympus Dao and forked it to make some more sweet cash for himself. IT WAS THE LAST DROP, MARKET TOPPED WITHIN DAYS.
I had been watching this madness already for months when Tai Lopez decided to launch his schemes this cycle. I knew that going all in was already off the table, but couldn’t expect that history would repeat itself so boldly. My mistake, it was the best time to sell. (But more about it later)
What other signals of the top were there:
NFTs were hyped so much that only the laziest influencers were not selling something. People were selling pictures of rocks for millions of dollars and throwing endless parties at crypto conferences. This gigantic ad with crypto punk was also a bit too much.
I was not a fan of NFTs this cycle, but even I got free NFTs from LobsterDAO telegram chat because I was just sometimes chatting in there. Actually, close to a thousand people got these NFTs. I don’t remember how much exactly I got after selling them, but probably around $13k, yep $13K for chatting in a telegram channel.
But my most hated NFT project was definitely the “Loot”, mainly because of how much support and shilling it got from VCs spanning from Multicoin Capital to Paradigm. The idea was simple, NFT collection consists of items or loot you would get in a fantasy RPG game.
It was meant to be that other game developers will take this nft collection and use it in their games, creating actual 3D models of loot for a game character. Smart, but not really. Mostly greedy. Of course, other game developers will not build their game around someone else’s in-game items (only names of items actually) because selling in-game items is often the most profitable part of the gaming business. The project lost 95% of its value by now.
There were thousands of stupid NFT collections, but one I definitely should mention — EtherRocks, yep pictures of rocks, one was bought for $1.3 million. You can call it a meme or an important social phenomenon, but the fact is that we are probably not going to see a such bizarre level of stupidity for a long time.
Proliferation of Ponzi schemes and no new Ideas.
I often say Ponzi this, Ponzi that regarding crypto projects. But the definition of Ponzi is when money from new investors goes to earlier ones, and the scheme itself not generating any profits outside of that loop. If you are imaginative enough you can classify many things in crypto or even in a broader economy as Ponzi schemes with extra steps. However, in two past crypto cycles, literal Ponzi schemes started to suck a lot of capital and attention. In 2017 we had Bitconnect, it was operated as a simple ponzi, investor put their money in to get 1% daily. Bitconnect was saying they had a great trading bot so that is how they can generate such a return, but in reality, new investors just paid for the old ones.
During this cycle, people became smarter and began to add additional steps to ponzis, Olympus DAO and Luna were striking examples of this.
First, let’s talk about OlympusDAO, their strategy was to create an algorithmic stablecoin and to build one they needed to generate enough collateral to get enough liquidity and stabilize it. To get that collateral they launched a pretty complex Ponzi scheme where new investors yet again, in essence, were giving money to old investors.
If no one is selling (they literally memed it to reality) and new investors coming in, then everything is great. But the problem with all ponzies is that as soon as new people stop coming in, the whole thing collapses. Furthermore, a ton of other projects copied their strategy for their products, and people were actually excited about all of that.
Copycats were even more obnoxious in their marketing strategy and overall stupidity, which all brought them even closer to the inevitable collapse. As I said before, even Tai Lopez launched one of these schemes, which was the last nail in the coffin of the bull market.
Ponzi schemes will never stop being popular because to generate real profits from valuable products you need time, smart people, and a huge amount of effort. During bull market mania investors are so greedy, that they can’t wait for all of this, they want to make money right now. So, other greedy people launch ponzi schemes to cover that demand fast.
That is exactly what happened in late 2021. People already invested in everything around that is somewhat valuable and 20 other soulless copies of it. A new founder who came into the space and wanted to make their investors excited about their ideas had only two things left for them. Either launch a really risky product that leveraged toxic debt positions or build a literal ponzi scheme.
Dogecoin
Of course, I need to mention Dogecoin, the king of mania and memes, every cycle it finds more fans and concentrates billions of dollars under its dome. This time it caught the attention of Elon Musk — the richest guy on the planet, hundreds of forks launched, and billions of dollars changed hands purely based on hype and greed. At one point the total volume of dogecoin surpassed even Bitcoin, which was too much even for crypto. The past two cycles it was a great indicator of hype around crypto, probably next time it will surprise us with something even more bizarre.
Complacency
You watched the euphoria phase for weeks, maybe it even stretched for months, but as I mentioned before, it’s really hard to sell at the top of the market, if you will try to time it, probably you will sell just too early. Because one of the main problems of investing in crypto is even in a bull market crypto is extremely volatile to the downside, bitcoin and ethereum can easily lose 30% of their price in a couple of days, and some smaller projects can retrace 50% and even more, selling every such move will just make you bitter when market rebound, you will wait and buy a local top again out of anger.
A better strategy is to observe for complacency bounce and leave the market then. In crypto, complacency bounce comes after majors lose more than 40%. The feeling when you lost so much in a week is fucking disgusting. You literally going crazy, want to sell and can’t believe your portfolio shaved so much, probably more than you could have earned on a normal job working for years.
Fortunately, the market never goes straight to zero in one candle. It will be green again, people will think that this was a healthy move to cut some froth in the market, the sky is blue again and we can continue to make money. Crypto gurus will scream “hodl”, “do not sell” and you honestly will want to believe them, it’s only 15–20% before your portfolio highs. Maybe you will even hope to make multiples on your portfolio again — a huge mistake. The next move can erase another 60% of your portfolio. So you need to sell right there, where you feel a bit unsatisfied with your performance and greed is at peak ape levels. If you can manage to do that, close your charts, get yourself a nice car or a house, go for one year vacation, and do whatever you want with your money, but DO NOT BUY BACK for at least a year.
In 2018 I sold pretty much the perfect complacency bounce on Ethereum (red circle).
I was not feeling like I did the best I could have. I even felt a bit embarrassed to say to my girlfriend that I sold everything, because maybe I could have made another 2–3x and it would make us rich. But it was the best financial decision of my life, as I saw numerous influencers in crypto losing their minds in real time, selling out for schemes, cheap promotions, and unfortunately, some of them even overdosing.
Anxiety — Panic.
All the following stages of the crypto cycle are not so great to watch if you have any crypto exposure, because shit is getting destroyed on all fronts.
The most hyped projects everyone loved will be decimated in 2–3 months, losing 70% of their price, and their founders who many thought were savants of investment engineering and product strategy just greedy dudes with no understanding of risk and in many cases severe drug problems.
There will be heroes who will say the market already bottomed after a 70–80% down and most of them will be rekt, even people who traded well before will look like total brainlets, jumping in front of a moving train. But it will get even worse.
I will bring a twitter thread that Crypto Cobain wrote in December 2021 in anticipation of what is coming next.
“95% of these trendy alt L1s will fail to maintain ecosystems & anything that will struggle with funding will disappear — eg Sushi maybe. And all the coins going full ponzinomics for growth purposes will die, like a bunch of the Avax ecosystem. Most NFT roadmaps will be abandoned.”
“Tokens that require constant emissions to maintain system operation will potentially collapse as liquidity exits important parts of the system or the emissions are twap dumped by the last remaining farmers. Tokens that pump on some narrative (eg MEV coin) but actually have a weak product will be decimated. Some may try to pivot or use treasury to stay afloat. Regulatory pressure will cause many governance tokens on DINO projects to issue burn for treasury claim or completely winding down.”
“Warchest treasury projects are not guaranteed success. They’ll become complacent with their primary focus becoming trying to preserve the treasury or figure out how the team can personally claim some of it. Young, hungry teams with eyes on the prize will be much more effective.”
“60% or more of people that made life-changing money late into this cycle will simply lose all of it in a similar amount of time by bagholding too late, doubling down on dips that keep dipping, and eventually trying to “make money both ways” and dying on leverage.”
“Crypto YouTubers will keep shilling “best altcoins for next month” and IDO projects with lofty targets, they’ll be the last to realise the top happened because their business model requires them to sell the dream of wealth to the desperate. YouTuber coins will be odd markets.“
“Projects with unrealistic FDV will go down 99% after going down 99% & investors will request attention from the regulators and the police. Good projects will go -90% & get their first real stress-test. Great projects with less retail & more long-term thinkers will still go -80%.”
“Founders that ever/often tweet about their token prices have the wrong incentive structure and will leave or go insane. Founders that publicly buy their own token to support price/sentiment will be rekt. Founders and teams that are price-agnostic will survive, motivated by more.”
“Essential projects that spent time on critically thinking about how to structure their product will survive. Projects with multiple strong, well funded teams that are playing multi-decade games will still be here. Tokenomics that look “bad” in a bull market start to look good.”
“Projects that are built to make sense in 10–15 years will attract capital & talent. It will flee those that were built to raise or make money from bubble (we are cloning X on Y chain) w/o long-term considerations. New projects will take smart money & high conviction risk-takers.”
“Open-minded and nimble teams will be able to adapt well to changing environments, such as their home L1 failing. Future-seeing high conviction founders will stick to their vision and force through. Bad DAO structures become toxic and hostile, good DAO structures move quickly.”
“Projects that can rug will rug & some CEXs will die. Many will marry a bag and go down with it, losing their mind in the process. LedgerStatus will hit networth goals only to slip back -33%, he’ll capitulate on his flufs. I will be simply vibing knowing none of it matters anyway.”
It’s okay if you don’t understand specifics of this thread, we will talk about them later, but I can say that by December 2022 most things already happened from this legendary post.
Another great example is what Ethereum experienced in the last cycle during anxiety — panic stages.
Sentiment around this asset is so interesting because Ethereum went from being a vapourware machine in 2017 to a real settlement layer ranging from money and equity to NFTs with huge real demand for the native eth asset in 2021.
Let’s dive into the first part when it was seen as vapourware. In 2016–2018 Ethereum found its first use case. Finally, you could launch an ICO with Ethereum smart contracts and eth the asset was used to buy these new ICOs. The idea itself was amazing. It was the first time you could launch a stock of your company on the internet without asking permission and anyone in the entire world could buy it.
However, there were two big problems. First, these ICOs were really bad companies, mostly just marketing machines to sell you a token and get as much money as they could. It happened because the tech was really new thus not many good entrepreneurs knew how to launch an ICO and for vast majority, the idea did not make much sense anyway. So, ICOs were launched often by bad entrepreneurs, I would say by people who knew little about the outside world but yet knew how blockchains worked. In many cases, these blockchain-savvy people were merely helping with technical support to literal scammers, who were the faces of fraudulent ICOs.
The second problem people were not recognizing tokens as stocks ever. For most, they were more akin to the currency you could only use to get services provided by ICOs. A good example would be if Uber launched a token and said you could use this token to pay for trips. The value of such token is at best vague.
Everyone had high expectations of Ethereum, but it just provided an ERC20 standard so in the future we could build a stock market on it, people tho, wanted this all working here and now. Unfortunately, this dissonance between reality and expectation brought a devastating market collapse.
Next eight months, average people lost most of their crypto holdings, even “professional” funds were 70–80% down, blockchain companies were firing people on mass, crypto exchanges were exit scamming because their businesses were not making any money.
Here I should stop on the recent crypto cycle 2020–2022 and show what actually happened during Anxiety — Panic stages.
I bring this tweet from the end of 2021 (the first stage of the bear market) because that is what I saw in the last cycle. Every person who risked immensely and was praised as a trading savant, genius of crypto even — was annihilated in a year.
So I was expecting many things to crumble, but honestly, not to this extent. I just couldn’t imagine the bear market would cut crypto so deep, not after we thought our industry became somewhat legitimate in the eyes of institutional investors and regulators.
As I write this in December 2022 not everything is understood, but I will try to explain the chain of events that brought our industry to the verge of collapse, again.
Luna
The collapse of this algorithmic stablecoin was a story in most magazines, you have heard something about it, right? I will not dig into the details of this protocol because this information you can easily find elsewhere, but I’m gonna show you red flags which were obvious to me from the beginning. Red flags many investors, unfortunately, glossed over and in the end, such negligence brought disastrous consequences for the whole market.
Interestingly, Luna was not created to scam people, the protocol worked as it was supposed to, but the mechanism was not ready to face such an aggressive environment as crypto.
First of all, the economy of Luna was unsustainable. At the core level the protocol took a faulty design that did not work for numerous other algorithmic stablecoins and just scaled it to swallow 60 billion dollars, a rookie mistake.
Second, whenever you see people telling you “put money here and get 20% in a year RISK-FREE”, you should run in the opposite direction.
There is no reward without risk, that’s it. Luna’s partners were denying this simple premise. Investors staked their money to get a “safe” 20% return from a big crypto protocol backed by prominent names. The scheme was scaling, the price of luna was going up, then Luna was paid to incentivize new people to repeat the cycle.
It is a striking example of a Ponzi scheme with the extra steps we discussed before. If you want to succeed in crypto you need to recognize such mechanics effortlessly and decide whether you want to risk by putting your money there.
In many cases, if you are early, Ponzi mechanics can work out well for you. But you need to understand them and know how to get out before the inevitable collapse. In the case of Luna, the biggest problem was that it was already a bear market. Furthermore, this exact Ponzi economy was used before, and not once it was sustainable.
Third, the founder. I have a natural talent to see sociopaths, yeah, you see where I am going. In day-to-day life that talent might not be so valuable, ones in a while you encounter such a person at an event/social gathering, you talk a bit, see through all the bullshit, and make a mental note to evade him/her. If it’s a party and the dude happened to be the type, tell female friends to be wary of the guy and NEVER accept drinks from him. Because likely, they will get roofied in no time. That’s it.
In crypto though, to see this type of people is a superpower, because they are EVERYWHERE here.
Why it’s like that? To build anything serious in crypto you need to bend many rules, work outside of the clear legal framework, and often be ready to risk your freedom even. Normal people rarely gonna build here full-time. But working outside of the legal framework for some people means not creating cross-border transparent financial system out of the control of any government, but rather risk insanely with investors’ money or even stealing from your clients. Breading ground for sociopaths if you ask me.
Do Kwon the CEO of Luna was arrogant, entitled, and blind to huge risks when many people in the community screamed about errors in the design of a new mechanic for Luna. However, he continued to scale it anyway not even answering community concerns. You could say sometimes those are just characteristics of a strong leader, but in this case, it was not.
If you raise concerns to a founder about his system and he instead calls you poor, it’s bad.
Crypto is tough, hacks happen, and economic attacks happen, but founders and the team should in-time address concerns, pause contracts, buy out bad debt, and be open to the community.
Do Kwon has done everything the opposite and $60 billion evaporated. Investors’ money went literally to zero, really fast, the scale of the collapse was surprising even for me, rarely do you see so much money on fire.
Contagion
Unfortunately, many perceived smart investors got caught up in Luna collapse, striking example is Three Arrows Capital (3AC). The highly regarded investment fund collapsed excruciatingly and embarrassingly by completely losing the plot and betting on the wrong side of things when it came to the Luna debacle. They have not only invested a lot in Luna, but they also took a massive directional bet on majors such as ethereum and bitcoin. It’s okay if a hedge fund has lost a bet, but the 3AC collapse was a result of both recklessness and likely criminal misconduct. Which set off a contagion that not only forced a historic sell-off in bitcoin and ethereum but also wiped out a wide swath of the cryptocurrency market cap.
Other centralized lenders and market makers such as Genesis and Voyager followed suit as they gave a humongous amount of money to 3AC as most thought they were genius-level traders and for sure will be able to give money back. But at the end of it, all 3AC were just a bunch of degenerates as we all are, skilled and lucky enough to become big to continuously borrow from institutional lenders who did not look at the health of their book.
FTX collapse
I can not stress it enough, if you have decided to invest in crypto, the first thing you should do is purchase a hardware wallet and keep your crypto yourself. If you are lazy to do it properly then just stick with investing in the stock market.
FTX collapse is the tail as old as crypto, exchange lost money of their customers, we heard it before so many times. However, in the case of FTX, it’s different because they have spent literally hundreds of millions to market itself as trustworthy by buying commercials with celebrities, bribing its way into Washington, and especially with the democratic party. It’s all yielded results, people really started to trust FTX, not only retail users, but hedge funds, and crypto protocols as well.
I never had any money on FTX, but what they have done personally for me felt like a betrayal, because FTX’s CEO Sam felt like one of us. He was undeniably smart, played hard, was risky, and often sucked too much blood out of the ecosystem, but it was expected from a person who build a crypto empire in just 4 years. Unfortunately, he happened to be a fraud like so many others.
To explain how things went under I need to tell a bit of history. Before FTX, Sam started Alameda, a trading firm that was doing arbitrage between Korean exchanges where the same coins cost more in comparison to western exchanges. Really simple strategy, you buy bitcoin in US CEX for $16K and sell it for $16.5K in Korean CEX, on top of that they were trading on Bitmex (the biggest leverage trading platform before FTX) and consistently were on top of their leaderboard, a major sign of profitable trading strategies.
Sam early on understood that he need to build a trading platform of his own, against many nonbelievers he brought FTX to an already competitive market and won.
Having a trading firm and your own exchange is almost like playing poker and seeing everyone’s cards. On top of FTX being a really profitable business by itself, Alameda traded against users of FTX and knew where orders and where liquidation prices are.
If this was not enough they had a whole Solana (Ethereum copycat) ecosystem and VC arm where there were buying seed rounds and farming protocols on an industrial scale. It was all built specifically to extract as much money as they could.
But even such strong money making network of entities in reality couldn’t withstand directionally wrong trades done by Alameda.
We still don’t know what exactly happened behind the scenes, but the fact is that at some point Alameda just took the money of FTX customers to trade on crypto and lost it. People couldn’t believe in it, why a seemingly highly profitable crypto empire could become so desperate to steal billions from their customers and risk going to jail. I still don’t know the answer. I guess it’s damn hard to beat the market.
In the previous cycle we had a similar picture but on a much lower scale. By the end of the cycle, I wasn’t even sure that crypto will be able to survive in the form of the publicly tradable market with open-source protocols that were launched by the community. Many, including me, thought crypto might become just another private VC market where all deals are reserved for elites. Believing in Ethereum as a platform of open finance was my form of esoteric religion because there was basically nothing to support that vision.
Overall, it all felt like 7 am after an insane party, with only a couple of people left. They all looked like shit, bruised, hungover, and not having fun, not even knowing that the worst part is not even over and they will be mugged by a psycho in the valley on the way back home.
Capitulation
I am sure you heard of this quote “The time to buy is when there’s blood in the streets.” In crypto, it couldn’t be more true.
Ethereum lost 80% there was nothing to be passionate about crypto and especially Ethereum, to lose another 60% within a month.
Some people might tell you the break happened because the fork of Bitcoin called Bitcoin Cash forked again and that broke the market. But I would argue that not many cared much about that coin, crypto crash was mainly initiated by a wide macro crash when FED increased yet again its interest rate.
NASDAQ crashed and crypto crashed. A long time ago we hoped crypto could work as a hedge against legacy finance and not follow all the booms and busts of stock markets, but unfortunately, we couldn’t be more wrong about that.
I should also say that sometimes prices fall just because there are more sellers than buyers, simple as that. There is some truth to that regarding the crash in late 2018.
Already by August 2018, I did not even want to touch majors, there was no volume, no volatility, and it was practically dead. Probably many people felt that way and decided to sell a bunch of crypto into a highly illiquid market by November. As they started to sell no bounces followed, it just stagnantly fell even more, until the market cap of Ethereum was laughable, around $8 billion. In comparison, Juul at that time had a valuation of around $38 billion by selling vapes to teenagers, kind of hilarious.
People were expecting Ethereum to go to $30, and Bitcoin to touch the previous cycle all-time high of $1000. Fortunately, it did not happen. FED stopped hiking interest rates, so crypto and tech sector as a whole had a great year.
I was ready for that crash and was buying the blood, interestingly, it didn’t feel hard, it was natural, and I was thrilled to slam a BUY button.
For many though, it was merely impossible to buy back, they were paralyzed by the loss at that point and wanted revenge, wanting the market to go lower because they just capitulated.
2019 was definitely a trader’s year until the summer market rebounded, even majors made more than 3x. Moreover, the market back then was much easier to trade level by level, so it wasn’t so hard to make even more. Percentage-wise against the market it was one of the best years, at times I felt like a trading savant. Market did not go parabolic so you felt comfortable selling and always had a great zone to buy it all back.
The market began to slow down by autumn and in December strange news started to come out from China. Some kind of virus was starting to spread there. Yep, that’s when it all started.
Covid crash
For me and for many covid started a new chapter in life. If you are in your late 20s and living in the EU, the US, or even in Russia your whole life nothing bad happened on a global scale that touched you personally. There were wars, economic collapses, and even plagues, but somewhere very far away, for you probably it was all just a TV show. Not anymore. Bad things are always there, brewing and at any point can cascade into global cataclysm, we were just lucky to live through calm times for so long.
Covid began with news of a new virus in China. Okay, this was not the first time we heard about it, there was SARS in 2003 and even the Swine flu outbreak in 2009, not pleasant, but also not catastrophic. The News cycle shifted from concerning to apocalyptic pretty fast when numbers of lethal cases from the US and Europe began to show up. Countries began to quarantine one after another and economies came to a halt. Financial markets’ panic did not make crypto wait long and this time market crash stroke me with full force. This was my wake-up call regarding how hard crypto correlated to global financial markets and how fragile it is even when there was no hype left in crypto itself.
I lost 50% of my liquid portfolio because of this crash, an unforgivable mistake for a trader, even though I made it all back in a couple of months I would never be complacent when the market is going against me.
It is easy to look back and say, how come did you not see that markets were about to puke if the whole world went on lockdown? Easy, I am a believer that people can overcome pretty much anything and most of the fear in social media is overblown at all times. I am still a strong believer that hardcore lockdowns were a mistake. It shook the economy, mental stability of people and lead to an insane printing of money in the west which further distorted the economy, inflation and brought us to the cusp of a recession.
A crash of this magnitude in a global economy literally annihilated infrastructure in crypto, exchanges stopped working, and those who worked, worked improperly. Bitmex went on a liquidation spiral crashing the bitcoin perpetual market and the liquidation engine was manually stopped to prevent a catastrophe. Many seemingly good crypto hedge funds and traders went out of business.
The sentiment was apocalyptic, people were preaching the end of the economy and that after we all die in pain with covid. However, as we know it did not happen. It was just the bottom in the whole economy, in crypto, stocks, housing, everywhere, because FED started to print money, a lot of them.
I would say It was my hardest bottom to hold. Because covid crash left some sizeable wounds on my psyche and wallet. Furthermore, I knew how crypto worked and can thrive only when there is a surplus of optimism in the economy. But during the first weeks of covid these parameters weren’t met, so it was concerning, to say the least.
Fortunately, all problems will fade away pretty soon because the day market capitulated, the crypto bear market was over, the bull was ahead. That’s the whole beauty of buying the worst market crash possible, there are only good things ahead.
I am a strong believer that most people can’t handle buying crypto in the middle of the bear market and seeing how their holdings lose 70%. If you don’t see “blood in the street” you don’t buy crypto, that’s what it is. You can watch it, and study it, but start buying only when it’s really dark in here, otherwise, you will never make it.
In 2023 I will post next 4 parts covering information about:
3. How to find pro
4. Who are the people behind the development, what their plans are, tech, product, competition
5. Valuation of the project, Investors
6. The overall narrative behind the asset and how does it trade
