14th April

Stages of cycle — as to who is buying, and who is selling?

“What are people gonna like, that are currently deploying money?”

Frontrun, before they know that they want that shitcoin.

Then exit, when they think they’re a genius.

As the cycle goes on, and more retail comes in, it’s moving from a 70 IQ to a 50 IQ. Because most retail coming in will be 50IQ, and that’s where the money flow is going to be, and that’s where the pumps are going to happen.

Many coins, they will be too sophisticated for retail to understand. Fundamentals don’t matter in latter stages of the cycle.

Because the smart money that understands these projects enough to invest in them, they have already deployed their money.

The new money, that’s coming from unsophisticated retail. And so the question is, what is retail going to buy, with their unsophisticated way of approaching the markets?

It’s about picking 50IQ investments.

In fact, the longer the cycle continues, and the more that retail arrives, the more to focus lower IQ investments.

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Skeletons on a rollercoaster ride. And then there’s the first-time traders thinking “this is amazing!”.

This is before 90% drawdowns.

~~~

If you told a close family member how you lost all your money, would they call your a fukin idiot?

Can you justify it to them?

Can you back your own thesis?

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Percentage of book long term vs short term trading?

80/20, long hold vs short term trading.

~~~

Crypto is a human centipede game.

It’s like birds on wires shitting on each other.

If you hear some information, like “yo, go into this project, it’s mainnet tomorrow”, you have to consider, “where in the human centipede information train am I?”.

If you’re last, you’re the bagholder.

If you don’t know who the marginal buyer is, then you are the marginal buyer, and you are the person who gets stuck.

You’re always going to be the fool sometimes, but you just gotta try and work out who the fish is on the table, and if you don’t know who the fish is then it’s probably you.

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If you believe that it’s a supercycle, then you don’t manage risk.

Moreover, the way that people price assets within a market, never goes through a supercycle. It always goes through peaks and troughs of excess and depression.

The thing that gives people strength in these markets is their emotional memory of going through previous cycles.

The way that everybody feels now is very reminiscent of 2017 or 2013.

That makes him want to pump the breaks a little.

~~~

Coinbase is going to look like a dog in 2022.

Going into the IPO, you have to be as close to neutral as possible.

~~

You can trade based on human nature and emotions. Others may trade ideas.

~~~

Su Zhu sees the Coinbase IPO as the true bridge between the tech markets, the US equity markets and the crypto markets. Because normies buy $COIN, then they say, ahh well, I’ll change it around, I’ll buy Bitcoin instead, and then they might venture into some alts.

~~

The two things that you really don’t wanna do with venture is:

• be price sensitive
• sell too early

~~~

Everyone in crypto defaults to looking at charts.

But there are things that operate within these markets.

It’s like Plato’s analogy.

Charts are like the shadows that are projected on the walls of the cave.

“I want to cut leaks”.

Asia thinks about these things are crops to harvest.

The west thinks about these things as assets that are investible.

~~~
How do you take advantage of the downturn?

Use reddit forums as primary sentiment gauge for retail.

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Trading shitcoins at this stage of the cycle is not a game that you will win.

Because when the rain starts, and things look bearish for that project, the decision of whether to hold, or whether to sell will be gauged upon your belief in the project. This makes it a lot harder to hold onto.

Jumping from alt-to-alt, this is not a game that you will win.

It’s much better to find projects that you believe in, and to stick with them.

~~~

Thinking about the value of your portfolio in dollars is very dangerous.

Because then after you see that your portfolio is over a certain amount then you’re like “I can buy this, or I can buy that, and then you take your money out”.

But what are you going to do with the money anyway? Is it going to make you happy? No.

There’s been so many chances for non-believers. Well you can exit, and now you have all this stuff, but is that going to make you happy? No.

~~~

The scoreboard is the scoreboard.

More houses are just more work.

~~~

How do I go from the back half of the crypto centipede, to the front half of the crypto centipede? How do I level up?

You’ve just gotta survive in crypto. There’s so many guys that fell by the wayside, and left with gains, or they got torched for being too greedy. The best thing is always to survive.

Just keep being there, and you will fall into success.

It doesn’t make you any happier to make more number. It’s always been about the friends that you make along the way that make you really fucking happy.

It was always about the game, for anyone that ever succeeded. Every person who has made a shit tonne would love to go back to having only a small amount to play with, and seeing where they got. Because it was about the game.

Every person is the chat there could tell you that they could 100x within the next 6 months, from now.

You don’t have to be the best asset selector. But if you are the best at diamond hands, then that is an entirely different sport that you can usually win at.

The type of people that don’t usually make it are those that lose interest between bull markets. So they rebuy the all-time high of the previous bull market.

They basically get interested, enjoy a pump, then it starts getting bearish, and they clear off and say “This shit’s over, I’ve got life commitments”, and then they rebuy when things are getting frothy again.

Find a way to be at the same level of interest when you check the chart now, that you have every day — you need to have the same level of interest when everything’s really boring.

Because right now, it’s like everyone’s interested — like old friends or family get in touch to ask what to buy, “is Cardano good?” etc — but none of those people are interested in the bottom. None of those people are interested when it’s going sideways for 6 months.

And if you tell the people, “now’s the time”, when it’s going sideways for 6 months, they ignore you, like “nah, it seems a bit risky, it’s not for me, I’ll look at it later”, and then they hit you up in January of this year, like, “is it too late to buy in?”.

and you’re like “no, just immediately market buy, it’s like 25K or 30K” or something, and they’re like “no, I’m going wait for a dip”, and at 60K they’re like “is it too late to market buy like you said?”.

And you’re, “bro, I have no advice for you anymore, I told you at 4k to buy, I told you at 6k to buy, I told you at 11l to buy…”

So the main way you have to make it, is try and perpetuate your interest through the boring bit.

The boring bit is where the opportunity is, when all these “moonboys”, and marketers, and all the larpers, they all disappear from twitter and they don’t participate anymore, their accounts just stop tweeting — that’s the bit when you’re supposed to be interest and you’re supposed to be taking your, like, next three years of positions.

Most people that don’t make it, they just stick around for the fun bit, that’s it.

Stick around for the boring bit.

~~~

How do you Zu Szu yourself?

By this cycle, you’re fcking cooked. This is not the cycle that you make infinite money. This is the cycle that you learn from people that have made infinite money, and you come back next cycle.

Everybody wants to make infinite money in this cycle. And that’s okay, but you’re going to get dusted, and you should definitely avoid this cycle, because everyone who is going to make infinite money in this cycle is already prepared for it, like 2 years ago.

They’re like [Vance], they were ready 2 years ago, and they have it.

And it’s incredibly difficult to fight this feeling that you want this now, but you need to hold on, until the next cycle. Right, because this cycle is solely about human beings, and we’re all ecstatic, and that’s not the market that you’re going to make the outsized returns.

Regardless of how bullish things are.

In one year, or 2 years, or 3 years, or 5 years, everyone’s going to be really depressed about crypto. When the price goes down, people are going to reflexively believe that crypto is terrible, and that it turned out to totally be a scam.

And that’s the moment when you’re going to get in.

And if you get in there, then you can become like a [Vance] or an [Andrew] or a [Su], by believing when other people have given up.

But you’re not going to make the outsized returns when everyone else is convinced that the market is booming, and that it’s the right thing to do.

Because, if you put your money in now, very aggressively, regardless of the EV of it, you’re never going to be able to, on a relative basis, outperform other people, because everyone gets that crypto is very compelling right now. But the secret was, back in 2011, everyone thought that crypto was a scam, and it was like a drug-dealer’s ponzi, that’s when you got the money in. And then you rode the cycle up to 2013, and then you get out.

And then in 2017, and then in 2020, everyone thought it was dead, and that it was trash, but then you rode it up to here. But here, the relative outperformance doesn’t exist anymore. It only exists for the people who were already invested like 2 years ago.

Cobie agrees with most of this.

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Adjust your expectations down for now.

The reason $1.2 billion is apeing into FEI, is because everyone is here with the exact same motivation. They want to go from 100K to 10 million, in this cycle, that’s their goal.

What you should be trying to do in this cycle, is set your foundation of wealth, if you’re late, if you were not prepared for this cycle in 2019, 2020.

You set your foundation, earn whatever you can, so that next cycle, you can make your 10 million, whatever. But adjust your expectation down, because whatever your portfolio goal is, you’re going to get 1/10 of that out at best.

Because as soon as you get to that portfolio balance, you’re gonna adjust it upwards anyway, you’re gonna refuse to sell.

~~~

That’s the story of markets right. Because when you’re supposed to be buying, people are desperately selling.

[story about Synthetix, everybody was bursting to sell it, exchanges were refusing to list it, etc, this was the time to get in]

But this goes to show you right, markets are not about fucking assets, markets are about human beings. We trade human beings, right, like when they get really depressed about things, we buy, and when they get super optimistic about things, we sell it back to them.

And that’s what crypto was {or is}, an incredibly speculative vehicle.

~~~

Vance doesn’t agree with anything that light said.

He is not looking at who is rotating money in and out of things. He is looking at the money that is yet to come into the market. It’s a maths equation. There is basically a very fat man that is about to walk through a very small door, which will lead to a very fast, self-propelled fart.

~~

Su doesn’t agree with some. Some have 100x’ed on BSC and Solana, there’s been 100x’s in Kusama and Polkadot, which shows that there’s still lots of activity happening.

You shouldn’t have any ego about buying higher than someone else. You should see it as, you should do the research into some of the things that people tell you about, and then you think, “these are reasonable”.

Su called Rune a scam, and then bought in later when it had already pumped. Same with Synthetix. Being wrong is okay, but being stubbornly wrong is very dangerous.

You should just actually not even invest if you’re stubbornly wrong, you should just get people to invest for you, because being stubborn in the space is very dangerous.

And the idea that, because you missed something, that you missed it forever, is also confusion. Because like, missing something early, but then getting in later after understanding it better is a big plus, because you understand why it will now go 20x.

Whereas the guy who bought it low, if he doesn’t understand why it’s pumping, then he sells it short, on a high, when it ends up being just a blip in the radar.

If it’s pumping, and you know why, and you are the reason for the pump as well, then, that’s actually the perfect storm to do well.

And so Su doesn’t agree with the logic that, in order to do well, you have to be the specific guy, at the specific time, who bought it when it was at lows, in a bear market, to make it.

~~~

The VCs that Cobie respects the most are those that passed on a seed round, and then bought 500x after a seed round, after that thesis had been validated, so we can make a bet on it now, and it’s a safer bet now, now that the thesis is justified.

People that do that make a lot of sense. People that stick to their sound-bite argument about why this is bad, that’s been harped on and repeated since however long, and they refuse to take on new information, and adapt, those people are not going to make it.

~~~

The only reason as to why Andrew bought Pancake Swap was because of the memes. It’s a really good indicator of the community as to how good the memes are. Right, because there’s a lot of stickiness if people have good memes, because they can just spam it all over the place.

~~~

Path thinks Coinbase is a catalyst. Path thinks it’s bullish.

~~~

Whatever you’re inclined to do. Don’t do that.

[Countertrade yourself]

Don’t believe in yourself. Believe in me [light], believing in Cobie, believing in you.

~~~

Path thinks we can maybe hit 100k-200k this year.

He also thinks Tetranode’s 100k ETH prediction is possible. If defi replaces banks then it could absolutely happen.