Timeless crypto advice

Avoid FOMO and ruin.

At the start of the crypto bull run of 2020, I promised myself I would not write or tweet about crypto. Today, I am breaking this promise as a way for me to keep some peace of mind.

I started my crypto journey some time ago and witnessed the 2017 bull run from start to finish. 4 years later, I have just enough hindsight to understand many things that happened back then… and that can happen today and in the future.

The reason why I avoid writing about crypto is because most of what is written about crypto is noise, scams and shilling. And I don’t want to add to the noise as I do not consider myself an expert.

However, I want to try to give some timeless crypto advice, especially regarding investor psychology, that can be applied at any moment:

  • Never put in money you cannot lose.

  • It is best to remain uninformed than to refresh Reddit or Twitter every 5 minutes.

  • Assume everyone is a shill (even me).

  • Stick to your original strategy.

  • It is best to be quiet about your holdings.

  • Take out some profit every now and then.

  • Don’t obsess over hourly gains or losses.

The reasons why I consider them timeless is because I have the hindsight to say that they applied before 2017. They applied during the 2017 bull run. And they apply for the current bull run.

As always, everyone is quiet when in red, loud when in green. Just as I am being right now.

Rough seas make a good sailor, so let’s ignore the hype and focus on some easy rules of thumb or concepts we can apply independent of the market cycle.

Never put in money you can’t lose.

During bull runs you hear stories of people who mortgage their house to buy crypto. People who take in leverage they cannot afford to buy crypto. People who put in all their savings to buy crypto.

Then the bull run comes to a halt, and the suicide hotline stickied onto all subreddits, Telegram chats & Twitter accounts.

No matter how many success stories come up during every bull run, there is a real chance of ruining your life gambling with money that you cannot afford to lose.

For you, crypto may be 10% of your portfolio. For others, it may be 1%. For others, it is 100%. No matter what strategy you want to follow, don’t put in money you urgently need to cash out and suffer heavy losses.

Everyone hopes and dreams of becoming the person who became rich off of crypto, nobody thinks they could end up ruined. Assume you can lose it all, so invest what you can afford to lose.

It is best to remain uninformed.

This advice is subjective due to my own experience. Being informed about crypto coins, their developments, the markets, etc. is very, very hard. Almost a fallacy, I would argue.

I will explain more about shills and scams below, but there are many excited and emotional people in crypto spaces. Add in the fact that nobody truly understands crypto to the mix too.

You can’t blame people for being excited, it is technology that could change the world. However, due all content on crypto being very exciting, it is very easy to develop a shiny object syndrome and end up making investing decisions you wouldn’t have made with a less emotional approach.

When everything is hype, it is best to remain calm and somewhat detached. For me personally, it goes through preferring to remain uninformed about whatever new coin has come out and is “totally going to revolutionize the way we do X”.

It is impossible to keep up with everything. If you’re following my advice of putting in the money you can afford to lose, there won’t be much reason for you to worry about all the developments happening 24/7.

Assume everyone is a shill, even me.

A shill is someone “who discreetly advertises a project without specific merit by spreading ‘buzz’, when in fact they are potentially being paid for their services”.

Regarding crypto, a shill is someone who hypes up a certain coin they are invested in so they can profit, without disclosing their relationship to said coin.

Most shills are shills without even realizing, because it is normal to talk about your portfolio investments. But if you never disclose why you are talking about X or Y, there is room for exploitation and manipulation.

That hot new coin that is everywhere all of a sudden? It is best to assume those promoting it have a position in it and are looking to inflate the price so they can take in some profit.

A good old pump and dump.

Of course, all who hold crypto have a vested interest in it gaining value. I know I am. However, there are relationships and agreements made which aren’t always publicly disclosed which can make you lose a lot of money.

If you’re new to the crypto space, be warned that there is a lot of noise and hardly any signal.

Stick to your original strategy.

Due to the above, it is best to stick to your original strategy and reevaluate at longer cycles than the information cycle.

Information flows 24/7 and there are many scams and shills in crypto. Zooming out to gain some perspective is almost always a wise decision to make.

If you do your research, select a few coins, prices of entry, time holding, etc. stick to it. Investing psychology applies not only to crypto.

Remaining somewhat detached from your investments is a good strategy to follow. The moment you make emotional changes on your original strategy, the higher the chance you lose.

It is best to be quiet about your holdings.

Tell no one you have crypto. Because if it becomes everything the crypto dreamers want it to be, do you really want to be the go-to person to get robbed because everyone knows you hold crypto?

Especially if you hold a large amount.

There is no value in showing off your wealth, contrary to American culture. Only because it is mostly safe now doesn’t mean that it will continue to be in the future.

It is still safe in the future, good. If there are ways to hack your wallets and keys in the future, it’s best to not be an easy target because you left breadcrumbs everywhere.

And if you think that you cannot get robbed because cryptography is safe, your cold storage wallets and the notebooks you write your keys on can be robbed.

Take out profit every now and then.

Contrary to popular advice of “hodl”, which is to buy and never sell, take out some profit.

Tomorrow your portfolio’s worth could go down 99% and take years to recover. It may even never recover. It may multiply in worth a thousand times.

Nobody knows where crypto will go. Where it will end. Which coins, if any, will be worth it.

In any other asset of your portfolio, a 2x return is considered a huge win.

Crypto’s volatility makes 2x returns seem like nothing, and it is surprising how the excitement and the volatility makes rational people make irrational and emotional decisions.

There are people who’ve increased their initial position 100x and can’t realize that they already won in life. Take some profits out. Remove the principal. Zoom out and gain some perspective. Enjoy the smart decisions made.

Trying to squeeze out every last satoshi or cent before taking out some profit is when you wake up to a 30% loss overnight and regret not taking out a bit.

Every bull run ends.

Don’t obsess over hourly gains or losses.

New bull run, new people doing the good old “refreshing their portfolios every hour to dream about the houses they will buy, the supercars they will drive and the beaches they will travel to”.

If you’re in it for the long run, act like it.

Constantly checking prices is how you end up falling into FOMO (fear of missing out), making stupid decisions, believing shills, not sticking to your original strategy, etc.

Seeing your investments grow (or fall) so quickly can be very exciting. For this precise reason you should avoid it. Remember that it is always best to make investing decisions with the least emotions involved.

Final thoughts.

My intention with this email is simple: avoid ruin. Crypto’s volatility doesn’t suit my investor psychology for more than a 10% of my portfolio.

It is the strategy I made some time ago and I stick to it, because it is an amount I am comfortable with losing.

The 2017 run was my first experience with shills, scams and hype. It was also my first time experiencing FOMO and making emotional decisions and changes to my more objective strategies.

Because I lost money I was comfortable with losing, it was a great learning experience.

Many of you may have started to get interested in crypto these last 12 months. First time experiencing shills, hype and FOMO. Hopefully, this email will help in bringing some common sense and ground you closer to reality.

Be smart with your money. There are risks to all strategies and many times people lack a proper hedging against risk.

Enjoy the ride.