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🥳 Congrats. You (probably) did it

🥳 Congrats. You (probably) did it

PLUS: The new social trading app

Alex M.
August 14, 2023

GM everyone. This is 2036, the crypto newsletter that pays you.

Here’s what we’re serving up today 🍲: crypto has been flat for weeks… should you wait for the next -10% dip to buy? The answer is finally out.

Let’s dig in.

🥔 Today’s meat and potatoes

Get smarter on crypto in 2 minutes

If you’re into crypto, you probably have a friend who always says: “I’m not buying crypto today. I think it’ll go down another -10%, and that’s when I’ll buy.”

Maybe you’re that friend.

If that’s you - you’re not alone.

A recent report by 21e6 identified why crypto hedge funds underperform.

You see, crypto hedge funds generated a return of “just” +15% in the first half of the year.

Now - most investors would be happy with +15%.

But bitcoin was up +75% in the same time period.

That means funds could have bought bitcoin on January 1st, gone on vacation, and done 5X BETTER.

Crazy.

But here’s the interesting part: the worst performers were the funds that used algorithms to predict short-term price movements.

These algorithms rely on past patterns and online content to gauge sentiment and make trades… except that:

Most online content is inaccurate, useless or AI-generated
No one - no pattern, chart, “expert” or influencer - has any clue where crypto is going tomorrow

Ok - so what can we learn from this?

1/ If someone wants to sell you on a “trading bot” that uses “algorithms” to “short-term trade” - run as far away as possible.

them: sign up for my algorithmic trading both. you:

2/ There’s no point waiting to “buy the next dip.” It might never come, and even if it does, prices might double before.

Some people didn’t buy bitcoin at $16K in January because they were waiting for $14K… which never came. Now we’re at $30K. They missed a 2X because they were waiting for a -10% discount.

Remember, humans do anything to rationalize their own behavior.

Saying we’re going to buy on the next dip is just a way to:

think we’re smarter than we are
make ourselves feel better about not buying when we should have.

Instead, we believe there’s a better way:

Make your bets with deep conviction.

Traders, by definition, are people who don't have conviction in the underlying asset. Their conviction is a short-term one in market movement.

But it's much easier to predict the long term than it is to pick the short term. It just requires patience.

The longer term you look, the better your judgment gets.

Most people just don't have the patience because they want to get rich quick.

So focus on the long-term picks you don't mind holding through booms and busts because you believe in their fundamental value.

The richest man in the world who's an investor is Warren Buffet. He makes one investing decision a year and probably sells once every few years.

That's the model to emulate.

Naval Ravikant

Looking at the past and current data, is it reasonable to assume that crypto will see increased adoption?

Yes. It’s not 100% guaranteed, but it’s a bet worth taking.

That means that over the long-term, crypto prices are likely to go higher.

In the short term, who knows? And who cares.

Bitcoin and Ether are both leaders and proxies for the larger market.

If that’s all you hold, you’re likely going to do exceptionally well.

So don’t fall into the trap of thinking:

… there is something better out there that’s the next bitcoin. Unlike most other cryptos, bitcoin isn’t a technology company. It’s an element, like gold.

… anyone knows where prices will be tomorrow or in a week. It’s a fool’s errand. Astrology for nerds. Call it whatever you like.

Just take a longer viewpoint. You’ll also sleep better at night.

Stress less and hold for longer, and watch time do its magic.

And if your investments returned more than 15% (many of you did!) - congratulations 🥳. You outperformed the pros.