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📝 What kind of investor should you be?

📝 What kind of investor should you be?

PLUS: Another bank is collapsing

Alex M.
October 05, 2023

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

Here’s what we’re serving up today 🍲: some of you might be thinking - ‘I get the whole crypto thing. But what am I supposed to buy?’

Today, we’ll try to answer that question.

Let’s dig in.

🥔 Today’s meat and potatoes

Get smarter on crypto in 2 minutes

If you’ve been in crypto (or reading 2036) long enough, you know the industry moves in 4-year cycles.

This cycle is centered around the bitcoin halving, during which the bitcoin rewards paid to miners are cut in half (if that’s all Greek to you, read this).

The halving decreases the supply of new bitcoin. And every halving in Bitcoin’s history has been followed by:

a raging bull market that lasts ∼480 days
an exuberant market of excess and leverage that ultimately leads to a big crash
12-24 months of down and sideways market until the next bull market resumes.

the pre- and post-halvings

Now - no fast and hard rule says bitcoin MUST go up after the halving.

But bitcoin is the only scarce commodity in the world that we can’t make infinitely more of (we always find new gold deposits on Earth - and we’ll eventually find a way to mine asteroids filled with gold, too).

So, as more and more people realize:

the potential of bitcoin as a scarce asset to preserve wealth (i.e. digital gold)
there will never be more than 21 million of them

… the price goes 📈

What’s different in every bull market is the magnitude of the highs and lows - which seems to decrease every time.

But what’s the same in every one of them is how we humans react to it.

Let’s look at an example.

The last time we were coming out of a bear market and had both a halving and a US presidential election the following year was in 2019.

Look at the top coins at the time:

You can find the full list of the top 200 coins at the time right here.

EOS was heralded as the Ethereum killer (they raised $4 BILLION), Monero proved the world wanted privacy, and XRP would onboard the banks.

Of course…

EOS went absolutely nowhere (much to my wallet’s regret)
Monero has like 2 developers left
and XRP is still lingering up there for some unknown reason I can’t comprehend. Literally, no one uses it.

In fact, of the top 200 coins at the time, only 15 outperformed ETH in the bull market.

And many of these didn’t even exist when this snapshot was taken - including Solana, which ended up doing nearly ∼300X.

Why am I telling you this?

Because:

the odds of finding cycle winners are pretty low
many of the winners don’t exist before the cycle starts
most of these winners are one-hit-wonders that don’t make it to the next cycle

Yet most of us think we can buy some random coin, sit on it for 5 years and become a gazillionaire.

how most of us feel when we find the “next 1000X”

So here are two actionable takeaways to remember…

1/ If you just want to hold for the long term, your two best bets are holding bitcoin and Ether.

They’re the only time-tested contenders so far.

And they’ll allow you to capture ∼80% of the gains of the cycle while minimizing your downside.

Yes, someone will outperform you because they get in on the right thing. You just have to accept that.

But you’ll be taking a lot less risk while still capturing a lot of upside.

i.e. don’t “sit long-term” on gambles like Bitcoin Cash/EOS/[insert shitcoin] and then have nothing left to sit on in 3 years.

the hedge fund billionaire with a $LUNA tattoo…

2/ If you want to make more calculated/risky bets, you gotta be nimble.

That means:

staying on top of what’s happening in crypto
taking profits into ETH and BTC if your favorite crypto goes to the moon
not falling in love with your coins
keeping it to a small % of your portfolio

At 2036, we’re all for investing in shitcoins once in a while. It’s fun and satisfies our need to take risks.

It’s also refreshing to be a part of siloed cults and degenerate communities that dream of changing the world.

But keep a cool head.

Crypto companies are great at taking your money and their dreams and turning it into their money and your dreams.

So when everyone around you is convinced memecoin #341 will make you all guaranteed millionaires - it’s time to pause and reflect.

degenerate groupthink at its best

At 2036, we prefer taking risks on established projects (like Arbitrum, Solana, Uniswap, etc.) rather than TikTok-shilled influencer pump and dumps that promise to “connect thriving changemakers with synergies in a blockchain revolution” or some crap like that.

But each to their own.

Just remember to:

source your ideas well
avoid echo chambers
be ready to pounce when the opportunity comes along
be willing to take both risks and profits.

And above all, make sure that:

you’re outperforming ETH and BTC by a long shot (or you’ll be underperforming on a risk-adjusted basis) and
you can sleep well at night (or it’s never worth it).

To good investing 🥂