Lecture on Cryptocurrency Investments

Jul 12, 2024

Lecture on Cryptocurrency Investments

Key Points

Initial Success and Losses

  • In 2017, the speaker became a millionaire on paper thanks to Bitcoin.
  • Bitcoin's value plummeted from $20,000 to $3,500.
  • Speaker describes this period as very scary.

Observations on Market and Behavior

  • Noted that when common people (taxi drivers, grandmothers) start talking about crypto, it's usually the end of the bullish season.
  • Smart money strategies:
    • Hedge funds, market makers, and venture capitalists are already positioned when average individuals start investing.
    • Media manipulation (CNBC, Fox News, Forbes) to attract new and uninformed investors.
  • This leads to liquidity, which is used by smart investors to exit the market.

Specific Transactions and Strategies

  • March 2020: Used Kraken and Binance exchanges during the COVID crash.
    • Orders placed for ETH (below $100), ADA, XRP (13 cents) were filled.
  • Example of psychological aspects in trading: Buy into fear, sell during FOMO.

Experiences with Binance

  • 2017: Bought BNB tokens at $2; later, they soared to $600+.
  • Interaction with CZ from Binance about Binance Smart Chain and PancakeSwap.
    • Recognized the relationship between the growth of the Binance Smart Chain and the demand for BNB not as a direct currency bet but on the person behind it.

Key Investments and Sales

  • Invested $4 million to buy 1% of PancakeSwap supply when its market cap was $25M.
    • Market cap eventually rose to $2.6B, sold at around $36/token.
    • Noted the peak when a non-crypto savvy friend asked about investing in SafeMoon.
  • Decision-making based on market signals and personal assessments.

Cryptocurrency vs. Traditional Expenses

  • Initially influenced by a crypto millionaire who had no liquid cash but significant crypto holdings.
  • Drastically invested in crypto and pulled out profits at $55,000 for Bitcoin and $2,950 for Ethereum.

Preservation Over Exponential Gains

  • Sold crypto holdings when they constituted multiple eight figures (~$40M).
    • Motivated by life security over further exponential gains.
    • Strategy influenced by previous market cycle lessons from 2017.

Federal Reserve Influence

  • Tied market movements to FED policies on asset buying and money printing.
  • Sold assets following FED announcement of selling their own assets to avoid conflicts of interest.
  • Emphasized experience and refined judgment in investment decisions.