Research Summary
The report provides seven key tips for navigating the cryptocurrency market, particularly during a bull cycle. These tips include betting less but with higher conviction, not rotating out of winners, understanding the importance of ‘pumpamentals’ over fundamentals during a bull run, writing down an investment thesis, regularly reviewing one’s portfolio, keeping an open mind to new ideas and perspectives, and creating an exit strategy. The report also introduces Parifi, a new decentralized derivatives exchange.
Key Takeaways
Investment Strategy in Cryptocurrency
- High Conviction Betting: The report suggests that instead of diversifying investments across numerous projects, it is more profitable to make a few high-conviction bets on the most promising ones. This approach is easier to manage and more likely to build wealth.
- Sticking with Winners: The report advises against selling top-performing tokens to increase exposure to underperforming ones. It recommends letting winners run, as selling a token after a small increase can lead to missed opportunities for larger gains.
- Understanding ‘Pumpamentals’: The report highlights the importance of ‘pumpamentals’ – factors that can drive a fast increase in a token’s price unrelated to its fundamentals – during a bull run. It suggests that retail investors often buy tokens based on simple narratives, social media hype, and strong marketing, rather than strong fundamentals.
Portfolio Management and Exit Strategy
- Writing an Investment Thesis: The report emphasizes the importance of writing down an investment thesis to build conviction, understand the investment better, and identify knowledge gaps. This practice can also help avoid investing based on fear of missing out (FOMO).
- Regular Portfolio Review: The report recommends reviewing one’s portfolio on a bi-monthly or monthly basis, given the fast pace of the crypto market. Regular reviews can help track a project’s progress, on-chain metrics, community strength, and roadmap.
- Creating an Exit Strategy: The report stresses the need for an exit strategy to lock in profits and cut losses. It warns against getting caught up in the euphoria of a bull market and advises sticking to a pre-determined exit plan.
Actionable Insights
- Consider High Conviction Betting: Investors may want to consider making a few high-conviction bets on the most promising projects, rather than spreading investments thinly across numerous projects.
- Let Winners Run: Investors should resist the urge to sell top-performing tokens prematurely and instead let their winners run to potentially reap larger gains.
- Understand ‘Pumpamentals’: Investors should strive to understand the factors that drive a token’s price increase during a bull run, which may not always be related to its fundamentals.
- Write an Investment Thesis: Writing down an investment thesis can help investors build conviction, understand their investments better, and avoid investing based on FOMO.
- Regularly Review Portfolio: Given the fast pace of the crypto market, investors should regularly review their portfolio to track their investments’ progress and make necessary adjustments.
- Create an Exit Strategy: Investors should have a clear exit strategy to lock in profits and cut losses, and they should stick to this plan regardless of market euphoria.
