💡 A (simple) trick to outperform

GM everyone. This is 2036.

This cycle, I expect crypto to go from $1 trillion to $10-15 trillion in market cap.

(by 2030, I hope that number is closer to $100 trillion)

On the way there, our job as investors is to capture the upside without going to zero.

Luckily, every single cycle, the market gives us a potential 10-50X on the most liquid coins in the space.

In the last cycle, it was ETH (driven by DeFi and NFTs). This cycle, it’s SOL (already up ∼16X).

Naturally, we then skate to where the puck is going. And to the extent that we can, we leave our emotions at the door.

In other words, to “make it” we:

1. do the work to identify the next thing

2. buy

3. make sure we’re not wrong

OK. Not that hard in theory.

Yet…

Almost every day, I hear people say things like:

• “XRP is the coin for the bankers!”

• “Cardano is the future”

• “ETH is ultra-hard money”

… but this violates rule #1 above— “identify the next thing.”

You see, most of us get stuck in past narratives because:

• we listen to the wrong people

• we forget to sell and desperately need our coins to go back up

• we aren’t paying attention to what’s really going on in the market

But in crypto, we have to be adaptable and look at reality for what it is, not what we want it to be.

I don’t always love it either, but it’s the game we play (I bought a sh*t ton of EOS in 2018, so I know the pain.)

Old narratives from previous cycles are generally hard to revive because narratives need momentum.

If they haven’t taken off by now, there’s a chance they never will.

I’ve said it before, but here it is again. Momentum today is mostly found in:

• Solana and its ecosystem

• Some corners of DeFi (on both ETH and Solana)

• Potentially in newer Layer 1s (SEI, SUI, TIA, etc.)

So don’t f*ck up this bull market holding dinosaur coins that won’t go up.

With that in mind, there’s a simple trick you can use to make sure you’re not deluding yourself: benchmark all your coins against SOL.

All coins besides BTC and ETH are further out on the risk curve than SOL. As a result, if you take more risk, you must get higher returns.

In other words, every altcoin you own must outperform SOL.

If not, from a risk-adjusted return perspective, you’re better off just holding SOL.

This sets the bar high and forces you not to own garbage and think thoroughly about every investment you make.

That’s why I talk so much about Solana memes like WIF and POPCAT.

They’re category winners that should outperform SOL. But if they don’t outperform on the way up, they won’t be worth holding anymore.

Remember, every dollar of capital comes with an opportunity cost.

Your opportunity cost is owning the most liquid coin already up 16X this cycle.

Don’t be an ideologue. Be a profit maximalist.

• 🎯 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— now available again for the first time since February (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.