Several different types of investors in different markets
Today I'll be covering:
- Various Crypto investing styles • How to find what works for you • What I recommend for most people • My personal style
Here's your edge 🗡️
/1 Maxis
They're "all in" on a single project, with the most common being either BTC or ETH.
Life and taxes are simple.
This gives them the time and energy to spend all day preaching on Twitter about how superior their way is.
/2 Seed Round Investors
They have access to projects at the early stages - from being a part of a VC firm, well connected, or being an influencer.
They get to purchase at rock bottom prices before being released to the public.
/3 ICOs / IDOs Investors
Early-stage investing for retail investors.
Instead of VCs, some protocols prefer to fundraise through the community.
Some Sites: • @impossiblefi • @CoinList • Ecosystem launchpads
They may be restricted in some countries.
/4 Microcap Hunter
What's going to be the next 100x play?
You can hunt for the small caps that have potential.
Microcap hunters use different tools and signals to try and find these gems.
/5 Narrative / Meta Traders
In any sport or game, there tends to be a dominant strategy at any given time.
The Warriors are dominant in the NBA because they started the 3-point shooting meta.
There's profit potential from identifying and investing in narratives early.
2021 Narratives Included:
- The Ethereum Killers: Solunavax • The Rise of Frog Nation • OHM Fork Season
Some Metas can go wrong, such as Solidly earlier this year.
Make sure you read 's article "Trading the Metagame"
/6 The Fork Hunter
(1) Find a successful Dapp (2) Find an upcoming Layer 1 or Layer 2 (3) Find a great team that's trying to fork the proven Dapp on the "new hot Layer 1"
Ex. Balancer did well on ETH.
Beets brought Balancer to FTM, and it did well.
It's kinda like investing in a new town.
So you identify a new up-and-coming town (Alt Layer 1).
You know they're going to NEED specific infrastructures.
- DEX • Lending / Borrowing • Balancer Fork • The Stablecoin plays (Abracadabra / or Curve)
So you invest in those.
/7 On-Chain / Whale Wallet Watchers
You're using tools like , , , and other tools to analyze on-chain activities.
You're not looking for the guy that bought Ethereum at $15 and held it for years.
You're looking for people who are better traders than you.
Maybe the whales have inside information, or they're better analysts.
You're "reverse engineering" to see who's successful and copy trading some of their moves.
h/t
/8 New Listing Traders
Projects tend to get a price bump whenever they're listed on a large exchange such as Coinbase or Binance.
You buy the rumor and sell the news.
This isn't as popular as it used to be during the 2017 bull run.
/9 AirDrop Hunters
Protocols give out AirDrops (free tokens) to reward their community and bootstrap growth.
Some airdrops have been lucrative, like and those in .
Hunters try to predict who will give out airdrops, and what behaviors are needed.
/10 Arbitrage Traders
You take advantage of the difference in prices.
(1) Exchange arbitrage. You need tons of cash, bots, and good algorithms.
(2) Seniorage. Some coins have a seniorage model (especially algo-stables). They encourage arbitraging to maintain a peg.
Fun Fact:
made his bones from arbitrage trading via the "Kimchi Premium."
There used to be a massive price discrepancy between Bitcoin in USA and Japan.
And he'd arbitraging the difference daily.
In January 2018, he was doing $25m a day.
/11 DeFi Yield Farmers
You provide liquidity to a protocol and typically get inflationary tokens as a reward.
Rarely does the "300% APY" translate to a 300%+ return USD after a year.
Watch Out For:
- APY's dropping as more people enter the farms.
- Tokenomics: Particularly around emissions / fully diluted value
- Token prices drop - the inflationary nature of tokens, people rotating to new farms or market cycles.
/12 NFT Flippers
"Buy low, sell high"
You mint new NFT pieces or buy NFT pieces you believe have potential.
You're looking: • founding team • community • roadmap • the art • utility • story • hype
I don't do NFTs - how's the framework I made up?
/13 Passive DCA'er
In TradFi, buying index funds is popular.
Instead of picking individual stocks, you buy the whole market like the S&P500.
For now, the closest equivalent in Crypto would be a 50% BTC / 50% ETH portfolio.
Index fund approaches are coming.
/14 Value Investor aka the Warren Buffet
You're trying to buy tokens trading at significant discounts relative to their intrinsic value.
One way could be to measure through revenue fees or p/e ratios.
/15 Evil Influencers / Venture Capitalists
Some people have built a large enough following to start moving markets.
And they can use that to profit unethically.
a) Pump & Dump.
Influencer buys X coin. Hypes it up and the prices go up. Sells X token at a profit.
b) The Dump & Pump.
Spread FUD about a solid coin to lower its prices. Buy at a discount. 😈
c) Undisclosed shilling.
Influencer hypes up a coin and makes it feel like an organic recommendation.
Doesn't disclose they received compensation to do so.
/16 Technical Analysis
They analyze charts and indicators and look for patterns.
- RSI • Moving Averages • Candlesticks
Some people swear by them - others think they're the Crypto version of horoscopes.
/17 Day Traders
- Swing traders • Scalpers • Position traders • etc.
There are so many types of day trading styles out there.
It's a deep rabbit hole, and I want to focus on more Crypto / DeFi-specific styles.
Advice on Finding Your Style
You might be wondering which style is the best?
You'll hear different people preach their styles. Remember, if all you have is a hammer, everything looks like a nail.
I believe in understanding your own psychology and risk tolerance.
First, how much TIME do you have?
If you have a full-time job and two kids, it will be hard to keep up with everything.
Daytrading wouldn't work well, and neither would trading the meta.
I recommend for most people:
1. 50% BTC / 50% ETH
2. Focus on increasing income
3. Dollar-cost average with fiat every month
4. Feel free to play around with 5-10% of your portfolio to scratch that itch.
Second, what season are we in?
We're in a bear market now:
- I'm buying ETH • Looking for value plays • I'm doing some safe stablecoin yield farming.
I'm NOT trading the meta. I'm NOT fork hunting.
The optimal strategies change during market cycles.
What Are Your Strengths?
Every style makes money, but it has to be aligned with YOUR strengths and capabilities.
I like numbers. I'm not strong in analyzing "Culture."
I prefer DeFi over NFTs.
By the way, you don't have to use a SINGLE style.
Think of yourself as Aang from Avatar.
There are all these styles - You can blend them together to create your own.
"Ser, what is your style?"
- Meta / Narrative • The Fork Hunter • Value investor • Yield farmer
Protocols are starting to invite me to a few seed rounds, but I haven't found any that excite me.
I do zero technical analysis, day trading, NFTs, etc.
Action Steps:
1) How would you describe your investing style now?
2) Which other styles seem interesting to you and you'd like to learn?
3) Write down your favorite influencers. What styles are they?
4) For the styles you want to learn, who are the best people to follow?
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