- 2036
- Posts
- ⚠️ A quick warning
GM everyone. This is 2036.
With China easing financial conditions this morning, it looks increasingly likely that the sideways chop in crypto is about to be over.
So before things get truly wild, there’s something quick but important I wanted to share.
Last week, Arthur Hayes was on stage at a large crypto conference promoting Pendle - a DeFi protocol (with a token, naturally).
Right after the talk, he sold more than 60% of his Pendle holdings for $4.4 million. (verifiable thanks to public, transparent blockchains).
Naturally, this created a bit of a scandal.
Now, this behavior isn’t new in crypto. It happens all the time with serial scammers like BitBoy or celebrities like Jason Derulo or Floyd Mayweather.
These influencers tell their followers to go buy a coin while they dump it behind their backs.
But Arthur Hayes is the real deal, I thought; why him?
Well - because that’s, unfortunately, mostly how crypto works.
Very reputable influencers get offered board positions with substantial token rewards which naturally lead them to talk about projects they’re involved with.
Others simply get paid to do it.
Outside of Bitcoin and stablecoins, most of crypto is still looking for product-market-fit. But many projects are flush with cash from their token sales.
And so to get people to buy their coins, projects associate with influencers.
They’ll pay influencers $10,000-$20,000 per month or more for occasionally making ONE YouTube video or Twitter post about a token.
These deals are often structured as ‘X number of Tweets/videos per month + potentially appearing as an advisor to the project’:
It’s not a ton of work for the influencer, but some of these offers are hard to turn down.
Earlier this year, it was leaked that Polkadot was paying influencers $478,500 per month to promote the token:
In fact, influencer advertising is their second biggest outreach expense:
Ok, so why am I telling you this?
Because almost every project does the same.
By the way, this isn’t a bad thing. Sometimes, influencers shed light on actual useful products. And others can bring enough mindshare to a project that it eventually takes a life of its own.
Plus, everyone’s got mouths to feed. So I’m not trying to diss anyone.
But if you venture outside of Bitcoin, you need to always question people’s incentives. Navigating crypto successfully means understanding the motives of those who give you information.
Now, there are (many) people in crypto who either:
don’t accept payment to promote tokens
or disclose these payments clearly
(and our goal with this newsletter is to fall firmly into that trusted category)
But as the bull market gears up, you’ll see more and more undisclosed paid content all over social media.
You probably won’t know it’s been paid for or has little investable value.
But if a token relies solely on influencers to pump its price, and they move on to the next thing, very little will stand between its current price and zero.
🎯 What does an ideal crypto portfolio look like? How do you spot winners? How do you avoid FOMO? How and when should you take profits?
Get these answers (and many more) in Enter, Earn & Exit, my 2024 blueprint for investing in crypto. Get $100 off using code ‘2024’.
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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.