Crypto
Crypto is the most dangerous and potentially most lucrative asset class. It is an unregulated wild west in which both gold and bandits exits.
In no other asset class are narratives more important and in no other class are you as likely to get rich or scammed.
My involvement in crypto was in particular in the years 2020 shortly after central banks started printing massive amounts of money and DeFi emerged - until 2021. See track record. (Article to be written)
Important Links
Current Assessment of Crypto (Jan 2023)
After inflation spiked and central bankers around started to adjust, the crypto bubble, which has been inflated by cheap money collapsed.
Now we are in a deep winter in which treasure hunters are leaving the space. I didn't see statistics yet but i would guess that 90% of both users and projects are leaving.
The people who stay behind are the most passionate and talented who realized the true potential of programmable finance - which exists besides all the glamor, scams and empty promises - and build because they love it, not because of money.
This tend is encouraging for any serious investor who wants to build a stake in meaningful projects at reasonable valuations and position himself ahead of the curve before the music starts playing again.
When to enter?
The sweetspot is
- When the dust settles and most people capitulated and left the space - Valuation will be lowest
- Monetary policy is still restrictive but about to change soon (Ideally shortly before central banks "need" to pivot for some reason e.g. something in the system breaking)
Has the time to enter already arrived?
Latest stable downward trends in inflation are certainly encouraging. We didn't spend enough time within the space to give a good and sophisticated answer to the question. At first glance valuations seem still be too high to give investors a good margin of safety. I therefore conclude that without considerable time investment entering right now seems to risky (Although valuations are certainly way more reasonable again)
How to prepare?
In the hunt for great investment opportunities preparation is everything. Therefore it is imperative to start building a crypto community right away so that we can position ourselves ideally shortly before the next wave arrives and immediately jump into the best opportunities we identified after certain triggers (e.g. change in central bank policy) hit. Judging by patterns of the past doing that right can be enormously profitable.
Do you have any crypto investment ideas?
Main article: Crypto:Investment Ideas (to be written)
There are some projects that looked interesting at first glance a while ago into which i like to look into more details.
Those are
- Gelato
- Alchemy - Didn't check for a while
- New Blockchains. Blockchains are getting better. Catching new and upcoming ones early can be a great opportunity.
How to analyze crypto projects
The process of analyzing crypto projects is similar to analyzing stocks with the differences that
- You need to be even more critical
- You need to get closer to the team. Get in contact, try to join their dao
- Learn some basic concepts about smart contracts, see if they are audited and make sure there are no exploits. (Article to be written on exploits)
- Understand that narrative and hype play a bigger role in sudden valuation changes
- Understand that there are a lot of bad actors
- Understand the stage of a project. A lot of "projects" are mere concepts. Did the team actually develop something that is working or are they selling promises?
- Understand tokenomics (Who is getting rich, lockups etc.)
- Understand the utility of a token
- Understand supply and demand
- Understand how you can track money flows onchain (Article to be written on that topic)
What is similar to investing in stocks
- Look for great real life use-cases with large markets. There are indeed revolutionary and brilliant technologies. Try to understand which technology has the potential to make a real impact. Focus on technologies which are easily adopted and make things simpler opposed to more complicated/impractical.
- Look for great teams. Those are people who are in the game due to passion, not for the quick buck and proved their capabilities, are open and transparent and work well together.
- Look for moats. Why is one team/project winning over the other? How can a certain market be defend?
- Look for sustainable finances and ways a token might generate money (e.g. utility/burn mechanisms)