Can you really make money with cryptocurrencies?
Yes and many, myself included, have. There are three points you need to consider though, otherwise you’re just FOMO-ing to positions and it’ll be pure luck if you make any money.
1 Patience
My initial goal with The Art of The Bubble was pretty straightforward:
trade bubbles so that over any 5-year period, the look-back compound annual growth rate would be 100% a year.
Now, that excluded fees, transaction costs, and taxes — which are variable for an individual.
Still, with those exclusions, you’re looking at 32x in 5 years.
Here’s an example of what that looks like. Suppose you start with $10,000.
-4% ($9,600)
-5% ($9,120)
800% ($72,960)
400% ($291,840)
10% ($321,024)
That amounts to 2 negative years, one regular year, and one bubble that lasts about 18 months.
In short, you are going to have lackluster performance 60% of the time. And that’s 3 years out of 5. Three years.
Most people do not have that kind of patience. If you started with $100,000, you’d have $3.2m in potential returns. It is life-transforming, but that transformation isn’t magic.
2 How Cryptos Fit In
Well, cryptos appear to have 4-year cycles following BTC’s halvening. It happened in 2012, 2016, 2020 … and the next would start (if the cycle holds) in April of 2024.
In the last bull run, for example, I made most of my money by holding ETH rather than BTC, and then trading from ETH into smaller coins at the end of the run.
So, the bull run has 3 phases:
Large Cap movers
Midcap movers
Crazy hype
Since it’s really hard to time an entry point perfectly, I focus on the midcap movers. The fact that they’re smaller more than makes up for my late entry and I can be more certain that the market is in a bull run.
Midcaps still make money during the crazy hype period, but you need to stay disciplined and not lose your way chasing monkey
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