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- š” Is this the best time to sell?
š” Is this the best time to sell?
PLUS: crypto bounces back
GM everyone. This is 2036.
The marketās taken a breather. Bitcoin is back up around $65K.
MICHIāwhich I talked about on Mondayāis up +105% this week. Congratulations if you participated.
Now - itās too early in the cycle to sell.
But this week, I came across a different approach to selling that I thought Iād share.
It divides investors into two groups: those who need the money and those who donāt.
The approach is based on cryptoās exponential growth.
If you own crypto, thatās great. But if your best friend also uses crypto, crypto becomes even more valuable to both of you.
This is (a simplistic view of) Metcalfeās Law, which governs how many Internet networks are valued.
Extrapolating Metcalfeās Law into the future, itās not totally unreasonable to believe that with increased adoption, crypto could move from a $2.5 trillion market cap to $100 trillion or more.
If you zoom out of monthly and even yearly fluctuations, itās an up-only decade-long trend š
This means you want to invest as much as possible for as long as possible.
But hereās the problem: once you take profits, itās psychologically difficult to re-invest all your profits back into the market ā even at lower prices.
And so most of us stop the compounding.
But if Charlie Munger taught us anything, itās that the first rule of compounding is to never interrupt it.
So, how do you deal with that?
Well, hereās a potential solutionā¦
1/ If you donāt need the moneyā¦.
ā¦donāt take profits this cycle.
Instead, optimize your long-term compounding by doubling down when things are cheap.
Be prepared for the drawdown that will come after the bull market. The next bear market could drag us down 80-90%. Expect it and be ready to deploy capital. Buy the dip.
Last year, I wrote that the only way to make 20-50X in one cycle was to:
invest in private deals (our first Private Investor deal did 25X in ā¼2 months)
be very early to high-risk plays (e.g. like buying WIF at $0.3)
buy the majors at the bottom of the bear market (e.g. buying Solana at $10 in December 2022, which we talked about in the 2nd-ever issue of 2036)
ā¦ well, this is when you do #3.
2/ If you need the money or want to take some lifestyle chips off the tableā¦
Consider this: we donāt know exactly when the top will be or what it will look like.
But we do know itās likely to be either:
sometime in Q3 or Q4 2025, or
in Q4 this year
a top in Q3 (August) 2025
a top in December 2024
We also know that there is usually a big rally at the end of the year after the US presidential elections.
So, instead of taking profits based on sentiment or price, you could take profits based on time.
You could take 1/3 off the table by the end of this year, and another 1/3 between Q3 and Q4 2025 if we get a huge pump to finish the cycle.
This helps you:
take off the pressure, derisk your portfolio, and secure your lifestyle in case the market tops in Q4 2024
maintain a position in case the cycle expands into 2025 and retake profits if it ends in a big pump
keep at least 1/3 of your position permanently in crypto to capture the long-term compounding gains
Honestly, I hadnāt seriously considered a time-based approach to profits before.
Iāve always preferred sentiment and price.
But a time-based approach makes a lot of sense because it:
helps remove some of the pressure to time the market
neutralizes the psychological torment youāll ultimately feel (ābut what if it goes higher?ā etc.)
ā¦ and if it resonates with you, itāll ensure you both take some chips off the table and participate in the greatest wealth creation in history.
šÆ Want to invest in early-stage crypto opportunities before everyone else?
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.