👀 The 3 types of crypto investors

GM everyone. This is 2036.

This week, I came across a chart that explains 80% of people’s problems in crypto.

Here it is:

Pay attention more to the color of the lines than the description of the cycle stage (early/late bull, etc.).

The graph breaks crypto investors into 3 types:

1/ Those who invest for the very long term ⏳

These people follow the black line that cuts through the graph. You see it?

Up and to the right.

These people’s main job is to ride the crypto trend for the next 10+ years.

They don’t try to ‘time the market,’ so they don’t get caught up in daily, weekly, or monthly price fluctuations. Instead, what matters to them is long-term adoption and yearly price increases.

This is the category all true long-term (i.e. multicycle) investors and VCs fall in.

2/ Those who invest for the duration of a cycle 🌀

This is the red line - the bucket most people fall into…‘buy the low of the bear market and sell the top of the bull market.’ Or at least, that’s the goal.

At the onset, most people will fail at this because they either:

• don’t pay attention to crypto at the lows or are too scared to buy

• refuse to sell at the top because herd mentality invites greed

Regardless, these investors shouldn’t worry about short-term price fluctuations either, but as you’ll see in a second, they often do (to their detriment).

3/ Active (day-)traders 👨🏻‍💻

Traders - the dotted blue line - typically get in and out of positions on an hourly, daily, or weekly basis. They must care about short-term price fluctuations because that’s how they make money.

They often employ leverage that amplifies their gains and losses. And they’re often very loud on social media about where they think prices are going next (read: tomorrow).

Now, why is this important?

Because most people:

• should be in bucket #1

• believe they’re in bucket #2

• but act as if they’re in bucket #3

Think about it.

Crypto is the greatest generational wealth opportunity in history. No other asset class goes up by 150% per year for a decade.

We all know this. We tell ourselves we’re in this for the long run.

Yet when prices fall randomly during the cycle, or enough traders (bucket #3) tell us it’s all coming crashing down next, we panic-sell.

And so we derail our plan.

Here’s a tip: almost all your inner conflicts (with yourself) and outer conflicts (with others) in crypto are a function of different time horizons.

Almost everyone agrees prices will be much higher in 5-10 years.

But people will fight hand over fist with absolute certainty over what prices will do next week.

It’s ridiculous because it is much easier to predict the long-term than the short-term.

Yet so much energy is wasted on predicting what will happen tomorrow.

If you’re a long-term investor, you have no business letting day traders influence your long-term decisions.

Remember, most active traders are wrong most of the time. And that’s ok.

You also have no business ‘waiting for the dip next week to buy more’ because XYZ chart says so, or whatever you tell yourself.

I get it. We all crave certainty. And we think some people know what will happen next.

But no one knows - and that uncertainty is why we get rewarded in the long term.

Remember, volatility is the price you pay for high returns.

So, know which investor you are, and tailor your asset choices and information accordingly.

• 🎯 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.