The Cryptocurrency Trading Journal

An update, markets have been brutal in the last few months, every time thing stabilize, more bad news hit the tape. Its been difficult and painful but I'm not giving up on crypto or NFTs. That was a huge mistake I made in 2018/2019. I bought a bunch of BTC, quit crypto and went back to stocks. Had I stayed in crypto, I prolly would have caught the DeFi boom of mid 2020 and certainly, the NFT boom right from the start (I guess jan of 2021) and made a fortune ($5m-$10m of profits in that NFT cycle is not an uncommon number amongst some people that I know).

So I'm not making the same mistake again, now I'm in crypto for life. I have plenty of non-crypto assets to weather any bear markets and staying power to not panic sell positions that I think are solid
I do wish I had rebalanced my portfolios when BTC was over $50,000 and ETH was over $3,500, in my strategy I had long-term locked BTC and ETH (which cannot be sold) and hot BTC and ETH, I traded my hot major coins poorly, the shit coins (stuff like SOL, LUNA, ADA, DOT, etc) I sold them and was able to profit but I just have too much conviction in the majors so as a result, I round tripped my profits and now I'm back at my entry points or slighly down.

What is interesting about this mistake is that I set a plan back when BTC was at $17K (before the major run), the plan set the BTC target at $60K. I was going to take that 3x and move on. But then I threw the plan completely out of the window, when the frenzy started, it affected me, I started listening to horrible traders like Raoul Pal (who was calling for $200k BTC, $20K ETH) and got greedy. When I look at some of my mistakes in this cycle, I can see them in other players in the industry, like 3AC, FTX, Alameda, etc. They all got too greedy and convinced of the thesis, as a result, their participation affected the market in a negative way (reflexivity), that combined with the Fed hikes was just too much for the market. But at least I never used leverage and actually followed the barbell (safe assets+super risky asses) so I'm still fine. But I can see that even pros can fall for the frenzy and bubble zeitgeist
 
In NFTs, its been a mixed bag, I had some gains, some losses but if i had to guess, i think im down on them (bookkeeping in nfts is a nightmare). But I also round tripped a ton of profits, I probably gave back over $300K-$400K worth of profits that I didnt take. Why didnt I take? I'm not used to collectibles, its the first time I got involved in them, in some instances (cryptoadz) I only had 1 NFT (a rare one) so selling out, feels like I will be completely out of the project and all miss if it continues, as a result I held through the mania and ended up becoming a bagholder.

But I learned from my mistake, these days when I get involved in a project, I sweep the floor (buy the lowest pricest units) and try to have more than 5, this makes it a lot easier to scale out of the position, it also helps if the items are not pretty as it makes it easier to sell them (seriously). I also try to always sell a bit everytime there is a bit of a frenzy
This turns NFTs into something closer to trading altcoins or even stocks. There is a lot more liquidity at the floor, sometimes there are even AMM pools available

So I still like NFTs, it sounds insane, but if you are involved in the industry in discords with people that are good at this, there are a lot of easy money opportunities. Lots of projects you can get in early and flip your mint for a small virtually risk free profit. And occasionally, some of them go into massive runs and you can make 10-100x your money. They are so levered. But its not easy, you can make a lot but you can also lose a lot. All in all, I feel like everytime I make a mistake and learn from it, I'm getting closer to arriving at the right strategy. I did caught a few collections that went into great runs (cryptoadz, world of women, curio cards, and now digidaigaku) I just didnt do a good job of taking those profits. But I feel like I fixed that mistake now and my strategy is sounder
 
On the exchange side, I was fortune enough to have bailed out of FTX before they imploded. I took most of my crypto off after the president of FTX US stepped down like a month ago and the rest after CZ tweeted about dumping his FTT. According to some laywers I spoke, there is still a clawback risk for up to 90 days before the bankruptcy, if the court finds that there was abuse. So I think the withdraws after the CZ tweet(which he used info sourced from a coindesk article talking about the balance sheet) are at risk.
Now I have a minimal amount of crypto in Binance and the rest is all in cold storage, away from any sketchy exchanges. I'm also seeing super shady shit happening on gate.io, huobi and crypto.com, so i would pull money out of them if I had any
There will prolly be a wave of exchange failures so I'm relying in a ledger/trezor for the time being
 
Lessons I learned from this cycle
-Build a plan for the cycle before the frenzy starts, stick to that plan, ignore hype. I plan to even use GTC orders in exchanges to make sure I sell automatically as my targets are hit
-Even pros can fall to emotions. This I learned back in 2009 when you had all these pros bearish at the lows and then fighting the rally. Unfortunately, I forgot that lesson
-When people start to write big threads about an investment on twitter or display full conviction that they are right about an asset, sell (this is a pretty good rule for NFTs but it also includes stuff like BTC laser eyes). Raoul Pal changed in twitter PFP to a Bored Ape at the pico top of the NFT market. Now I'm watching him to remove that as a signal NFTs are close to a bottom.
-Never put all your money in 1 exchange, diversify, use cold storage/multisigs.
-Making money is easy, the hart part is keeping it
-Pay attention to my own emotions and body better. Depending on how I'm feeling, I can tell if its the top or the bottom. Usually, the hardest sells are the best ones and the hardest buys are the best ones. When I'm feeling max greed in my gut, sell at least 1/3 of my position. Effectively, I'm fading myself
-Buy lots of floors in NFTs, dont buy mids or rares (unless their price is completely wrong)
-ABC, always be closing partially your position if you are in profit and there are signs of excesses
 
-The barbell strategy is great, leverage is a sure way to blow up. Its just so comforting to have safe assets that can help you handle a collapse in risk assets, and those risk assets are so levered in the first place that there is no need to use actual leverage. Nobody using the barbell has blownup, but lots using leverage have ruined their companies/lives
-Risk management. Lots of hot shot traders posted huge P&Ls in the bull market, but also gave back a bunch during the bear and some lost most or all of their money due FTX. They were risk hungry and used to ignore low probability concerns, eventually the black swan will bite you in the ass, its just a matter of time
-Surround yourself with people that are better than you (this is what I'm doing in NFTs)
-If you are making massive amount of profits, consider taking a deep breath, and taking a break for a day or two to assess whether its time to cashout, even if partially
 
-Never get family and friends involved in an investment. I got a few relatives to buy BTC and ETH plus an NFT and now they are all down on it. They ask me about it from time to time, which is not fun. I'm convinced they will all make money in the end (and I would cover their losses if they did not) but its going to take some time meanwhile the subject keeps coming up from time to time. I never did this before and prolly will never do this again. I was just convinced that BTC at $17K and ETH at $1.2k was a no brainer buy, and I was right. I even told them I expected them to make 3x their money. But then I threw the plan out of their window and got greedy
What I should have done instead was bought more for myself, profited more and bought them a gift instead
 
Daal said:
An update, markets have been brutal in the last few months, every time thing stabilize, more bad news hit the tape. Its been difficult and painful but I'm not giving up on crypto or NFTs. That was a huge mistake I made in 2018/2019. I bought a bunch of BTC, quit crypto and went back to stocks. Had I stayed in crypto, I prolly would have caught the DeFi boom of mid 2020 and certainly, the NFT boom right from the start (I guess jan of 2021) and made a fortune ($5m-$10m of profits in that NFT cycle is not an uncommon number amongst some people that I know).

So I'm not making the same mistake again, now I'm in crypto for life. I have plenty of non-crypto assets to weather any bear markets and staying power to not panic sell positions that I think are solid
I do wish I had rebalanced my portfolios when BTC was over $50,000 and ETH was over $3,500, in my strategy I had long-term locked BTC and ETH (which cannot be sold) and hot BTC and ETH, I traded my hot major coins poorly, the shit coins (stuff like SOL, LUNA, ADA, DOT, etc) I sold them and was able to profit but I just have too much conviction in the majors so as a result, I round tripped my profits and now I'm back at my entry points or slighly down.

What is interesting about this mistake is that I set a plan back when BTC was at $17K (before the major run), the plan set the BTC target at $60K. I was going to take that 3x and move on. But then I threw the plan completely out of the window, when the frenzy started, it affected me, I started listening to horrible traders like Raoul Pal (who was calling for $200k BTC, $20K ETH) and got greedy. When I look at some of my mistakes in this cycle, I can see them in other players in the industry, like 3AC, FTX, Alameda, etc. They all got too greedy and convinced of the thesis, as a result, their participation affected the market in a negative way (reflexivity), that combined with the Fed hikes was just too much for the market. But at least I never used leverage and actually followed the barbell (safe assets+super risky asses) so I'm still fine. But I can see that even pros can fall for the frenzy and bubble zeitgeist
More...

Is it time to have a third and expanded addition of your excellent book: Traders of the New Era?
 
777 said:
Is it time to have a third and expanded addition of your excellent book: Traders of the New Era?
More...
Thank you but that is very unlikely. Its a lot of work to write a book. I would love to see another ET writing an trader interview book with folks from DeFi, crypto and NFTs. Lots of great traders there, with big p&ls. I could even refer some people but I'm unlikely to want to put the work in for that, I dont enjoy writing unfortunately
 
  • Like
Reactions: 777
Daal said:
Thank you but that is very unlikely. Its a lot of work to write a book. I would love to see another ET writing an trader interview book with folks from DeFi, crypto and NFTs. Lots of great traders there, with big p&ls. I could even refer some people but I'm unlikely to want to put the work in for that, I dont enjoy writing unfortunately
More...

Thank you.

Would be cool to hear if Bot Destroyer is still a crusher.

Regards and best wishes.
 
You must log in or register to reply here.
Back
Top