“The desire to have valuation models have never been higher” - Su Zhu / UCC
Where does our incessant yearning for certainty comes from? Volatility of life is my best guess.
Why so? - 1
Because nothing is absolute and everything is relative or is that so? Are the laws of the earth independent of dependent? also, are you absolutely sure?
Relating it back to crypto, you would’ve probably made more money buying Cardano in 2020 than all your other coins.
Why looking at different angle is important? - 2
Are we applying the wrong approach in determining a sound investment?
If we would to take a comparison of general crypto knowledge (2021 vs 2020), people were generally for POW than POS. Does this reflect commitment bias? - close mindedness towards learning stuff that would impede our learning curve (thus, investments).
A podcast done on UpOnlyTv w Raoul Pal, detailed why he was bullish on Cardano. (paraphrased); The lack of understanding among the general population of POS with regards to price when a high amount of circulating supply were being staked gave him an edge.
https://www.youtube.com/watch?v=UA-KZxHKVZA
Why is it not reflected now? - 3
“Known vs unknown”
The shift in general knowledge of POS is seen clear with the expectations that everyone have on EIP1559 (a step closer to POS) to be one that is bullish. This resulted in a hand-holding behaviour by the community = overcrowded position.
Over-crowded positions often result in a lower than expected/negative outcome (LTCM 1994).
Applying this to Cardano, everyone expects a higher run up in price but what people have failed to recognised is the edge of such knowledge have already been decayed. So why then are people still long it? what is it that they know that i don’t?
Cockclusion
Institutional investors / retailers are all similar in one way or another, the preference of a baynesian approach, where historical data is used to project the probability of an expected outcome.
However, the greatest (non-linear) returns are one that lies beyond the ideas of expected outcome.
Ending this with a read and a podcast that have sparked this article