A tough article to write, but I thought it was needed for me and hopefully for you too, wherever you’re at in life.

I’ve not made it, even being in this space for close to 2 years.

This article is meant for me to reflect and share what I could have done better, it includes specific econometric approaches, mental models as well as illogical thinking that have led me here.

2020: A millionaire to be… so I thought

Honestly, I can’t remember what made me take Crypto seriously. I was first introduced to it in 2018 by my brother and it wasn’t a good introduction - it left me an impression of it being one of his many HYIP (high yield investment product) investments.

The only two things that I can vividly remember was 1. A close friend of mine joined a crypto market making firm and got paid above average of what a fresh-graduate would get, 2. Another close friend of mine told me to read about Nik-Patel’s work (An Altcoin Trader's Handbook) and told me how much money could be made in this asset class.

I honestly love his work, it has a lot of similar approaches to evaluating equities, it takes into consideration to factors that i didn’t know at that point of time matters - Tokenomics, Social Growth, Dev/Team Background and Exchange listing.

This love for his work was mirrored in my crypto portfolio ( I only invested approx $2k into crypto at that point of time), where I mirrored those that > 7 in his excelsheet (Golem, Zil, Coti). It was at the same time, I wanted to know if he would leak such “alpha” on twitter and that was when I started my twitter account. Following him, opened up a gateway for me to know shillers/cynics/genius. Before my balls were rubbed hard against the highway, I remembered my $2k became $10k within 1+ months and in that moment of euphoria and “logical” comparison (my $30k REITS portfolio was only paying $3.6k/year) I realised…. fk you traditional asset, imma be rich.

It was definitely a painful lesson - I didn’t know how to tell who were “shillers” or “generous alpha leakers”. Greed had me each time they post charts that reflect how much they made. Each time they do so, I liquidate my equities/REITS positions and convert them into stables, ready to buy whatever they promote…. glad to be part of your exit liquidity, if you ever read this.

If you were in the same boat that bought; anti matter, shadows and equalizer. Remember these guys are still out…shilling.

This painful lesson that I’ve experienced was quickly forgotten, where my other bags that were “generously shilled” by alpha leakers had multiplied like crazy. I couldn’t remember how much I had left (post shill-n-dump event) but all I could remember near the end of the year, I had close to $40k balance. - I made back what I’ve lost and alittle more.

To be honest, I was so delusional that I thought i had 100k balance coming into the new year. What caused the delusion? Unit of account; I was thinking my coin balance worth 5~10x more than what they actually do back then.

p.s you might ask why i didn’t continue following his excelsheet? There wasn’t new update and I realized it wasn’t sustainable.

2021: Compounded delusion leads to retarded-ness

Prior to the May crash, I was in and out of calls from shillers while learning how to evaluate projects. At that point of time I was either at break-even or slightly above it.

During the crash, where BTC was at $58k, I quickly rebalanced my profitable position into projects that I was bullish on, naively thinking that market structure would hold on some imaginative time-frame.

These positions soon went underwater as well as my mental health - my mind filled with depressive thoughts (not suicidal) and a lot of self-doubt. At the same time, FX trading wasn’t working out for me.

The delusion only stopped when a close friend started asking me specifically about my portfolio (entry price/ position size / total value/ reason for entry). He made me realised I needed an investment thesis to figure out what I should do from here. - You might think “here comes the happy ending”…

So then, my investment thesis was “born”.

TLDR on my thesis 2021:

• Charted and compare how the different sub-categories in Crypto moved in 2020
  • Includes: Layer 1 / Memes / Defi Protocols & its sub-category (Insurance / Money market / Derivatives / Yield Optimizer) / CEX
  • Identify 1st-mover and last mover / rotation of orderflow
• Macro Perspective on the space
  • Layer 1s will likely to be the appeal
    • They are like countries; have their own specific appeal for Dapps (people)
    • Layer 1s moved the most (% wise) in 2020
    • Defi protocols face multiple constraint exogenously (ETH chain)
  • Meme coins will continue to go ballistic
    • Unit of account has a very strong memetic appeal
    • Elon and Cuban endorsing Doge leaves a bullish impression
      • Marketing material emphasis on it by shillers (tiktokers)
    • Shiba-inu will pump
      • The nearest coin where retailers can buy
        • Without engaging in DEFI
      • Listed on Binance (largest exchange)
  • Bullish on Insurance, Tranches and CEX
    • Insurance:
      • As more Institutional money flows into the space greater assurance is needed
        • Similar to TradFi
      • Exploitation / Smart contract bug becoming more frequent
        • A good catalyst
      • Insurance covers specific issue that are less likely to happen
        • This makes reduce incentive/ attractiveness as these protocols with such issue are less likely to have such an outcome
        • DAO agreement is required under-write risk
    • Tranches: is a highly-correlated sub-category
      • Risk sharing / transfer
      • Allow protocol to stay delta-neutral by enabling 2 pools of people (risk-adverse and seekers) together
      • Complexity in understanding how protocols work might be a hinderance
    • Centralised Exchange (CEX)
      • The only way to on-ramp fiat is through CEX
      • CEX have the best liquidity depth
      • Better UX compared to operating a Metamask wallet
        • To navigate through DEFI protocols
        • Finding trustable protocols
      • Value accrual of token is straightforward
        • Cashback
        • Fee reduction
        • Airdrop
        • Participation for ICO
      • Overcrowded long

In this process of building my investment thesis, I, too, realised that my focus was on everything; trying to improve my edge in trading, finding alpha, improving my research process, learning new mental model and applying what I’ve learnt.

Trading was chosen to be of priority, where dedication to understand price and market structure was of the utmost importance. This then put research in the back seat. You must be thinking, why can’t I do both? Self-awareness after my poor mental health heightened, I realise what I need, to make things more sustainable and me, productive.

“Sustainable and realistic” became my pillars of systems have I’ve placed in my life.

Where am I at now - Dec 2021:

I’m better mentally but not financially - big bets were placed on CEX and Insurance which happen to not appeal to market, which resulted in a -60% on my portfolio.

I got rugged twice, 1. Honeypot and 2. IDO rug.

Still, I’m hopeful about the future, not because i’m delusion (i’ve put 90% of my portfolio in stables) but because I’m actually applying what I’ve learnt, though with a very small balance left ($10k).

Key Learning points:

• Investment thesis is not needed
  • Deep diving fundamentals may result into commitment bias
  • You’re forced to anticipate and rationalise a future need / product market fit
  • The risk is higher than buying into a product which have proof its product market fit
  • Macro perspective is way more important than investment thesis
    • Fat protocol thesis wasn’t relevant till DEFI
• Understanding what’s the Narrative of the current market
  • It reflects smart-money* orderflow
    • *smart money doesn’t mean smart choices but often leads to ur bag being pumped
  • Price reflects narrative
• Current innovation will be superseded so will the next..
  • Don’t get married to your current bags
  • Everyone is still working out the best form of tokenomics
    • bond / rebasing tokens still get dumped on
• Focus on your edge (prioritising)
  • A tough one to swallow but realistically speaking
  • Your mind can only focus on one main thing at a time
    • Not saying that having multiple thoughts / ideas are bad but only when you start centring them on one specific topic (your edge), it will actually elevate it (your edge)
      • Betterment of self, encompasses being open-minded to ways and ideas but still at the idea of self
• You need to have an exit strategy
  • Factors to consider:
    • Your entry price
    • Market structure (BTC / ETH)
    • Narrative around the asset
      • 1 one of a kind project
      • Forked project
    • Tokenomics
    • FDV

Onwards and upwards!