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- 📙 A (short) guide to selling
GM everyone. This is 2036.
Jerry Seinfeld had the most popular show on TV. Then he quit.
He quit because the only way to experience the top was to experience the decline.
And he had no interest in doing that.
But Jerry Seinfeld is rare. Most people want to know where the top is. Someone will always be bidding to determine if an investment could go higher.
Someone will always push the limit.
For example, someone bought the previous Bitcoin top of $63,400 in 2021. Someone was that top purchase.
This is important because, for the average investor, the crypto journey goes something like this:
1/ Investor hears about a “new paradigm.” 🧠
Something in the world is going to change. Luckily, this “thing” that’s going to change the world - it has a token.
Investor buys the token. It has a bright future. In fact, it is the future.
The rest of the world catches on. The token goes up 📈
2/ Investor is excited 🤩
Investor believes the token will help them achieve their financial dream (retire, make $1M, etc.). In fact, they need it to. The token, they believe, is their ticket to freedom.
Investor is now so emotionally invested in that outcome that they’ll ignore any red flags like:
flaws that appear in the token’s design
the development team abandoning the project
the community fizzling out
i.e. the investor is blind to any bad news 🙈
3/ Reality catches up, and eventually, the token crashes 📉
Investor is left with nothing.
Two things now happen:
Investor holds onto the belief that in the next bull market, their bag of now-worthless tokens will resume their march to the promised land.
They probably won’t, however. And investor is now too hurt by the fear of losing money that they ignore all future good news in other areas of crypto (like The OC actor Ben McKenzie who lost $250,000 in crypto and decided to write a book about how bad crypto is)
And so the cycle goes.
Many crypto investors who’ve been around for multiple cycles have roundtripped their gains back to zero at some point.
I’ve certainly been there. But that doesn’t need to be you.
Here’s how to avoid that fate…
a/ Expect an emotional rollercoaster - and use it wisely 🧙🏻♂️
Be aware that you’re likely going to feel a bunch of emotions if your portfolio doubles, triples, 10xs or more.
You’ll likely feel the opposite when it tanks -50%, by the way.
These emotions are signals that most people ignore. Don’t.
Remember to be greedy when others are fearful and fearful when others are greedy.
(as I’m sure Warren Buffett would have said about magic internet money)
b/ Never marry your bags 👰🏻
Maybe you’re in crypto for the tech - like this guy:
Or maybe you're in it for the money. It doesn’t matter.
If something doesn’t work - don’t push it.
Whether tech or money, you want to own strong tokens. If your thesis around something fundamentally changes, get rid of your tokens and buy something better.
c/ Take profits intelligently 💰
I’ve got a folder full of saved Tweets on this subject. Here are a few of them:
… and this exceptional banger right here:
You see - most people never sell at all - and roundtrip all their gains back to zero.
Even many of those who sell do so way past the top (I’ve been guilty of all that, too).
You can avoid that by selling your positions as we approach classic cycle-top signals (that I now address in the Friday newsletters 🌀).
There are two easy methods:
Sell your entire position at once (which leads to higher returns on average but also more regret if it keeps going up)
Dollar-cost average out of a position by selling a fixed % on a regular basis (which is easier to manage psychologically because you smoothen out your decision-making over many price points)
As we get closer to the end of the cycle, I’ll cover selling in more detail.
In the meantime, I know we all want to make crypto about number-go-up-only 🚀
But what determines your long-term gains is much more:
your ability to intelligently handle your own emotions and take action despite them (i.e.selling when you’re greedy, buying when you’re fearful)
and knowing when to walk away
In short - being more like this guy - who became a billionaire just last week:
P.S.: here are some more banger quotes for you…
🎯 Want to invest in early-stage crypto opportunities before everyone else?
👀 NEW: You can now find an overview of all our previous investments and the step-by-step process for investing in private deals right here.
DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.