Two Minute Crypto – Riding the Bull (Part 1 of 5)

Please click below listen to the 39th episode of my weekly crypto podcast ‘Two Minute Crypto.’ These are intended to be short, single-topic ramblings on some aspect of the cryptosphere. Comments and critiques welcome. 

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Two Minute Crypto – Riding the Bull (Part 1 of 5)

Welcome to Two Minute Crypto – the next 5 episodes will examine how you as a trader or investor can seek to give yourself an ‘edge’ during the next crypto bull run. Whether we are currently at the start of a sustainable cryptocurrency bull run is still somewhat debatable. However, glancing at the percentage gains or both Bitcoin and the large-cap ALTS since the beginning of the year would certainly suggest a change of trend. Ultimately, it’s irrelevant whether we enter a bull run now or later next year – preparation on your part remains a necessity.

Let’s assume you already know your intended role in the market. You see yourself as an investor and have ear-marked funds to be invested in crypto over a multi-year horizon. Alternatively, you are focused on short-term trading positions and have a firm trading plan and risk management strategies. If you are attempting to actively wear both hats and hold down a fulltime job – you are already on the backfoot and much more likely to fail at both than succeed. It’s not inevitable but I’m betting against you. Trading and investing require fundamentally different strategies and hopping in and out of the market without an overarching guiding framework will simply exhaust you while bleeding out your capital. By the way, taking a small trade once a week does not a trader make! By trader I’m referring to some-one taking multiple daily positions in the market.  On to today’s topic: information flow.

A Basic First Step is to:

Assemble reliable sources of information that reflect the role you wish to play in the market. Cast a firm eye over your subscription list and purge anything that doesn’t serve to improve the likelihood of successful interaction with the crypto market. If you are a trader – technical analysis and analysts should predominate. If an investor – market reports, project assessments and tech explanation or discussions provide the most value.

You need to monitor the underlying quality of the information you consume and also carefully curate the tools or the apps you use to interface with the market. A simple example is a portfolio tracker such as Blockfolio – if you see yourself as an investor why are you checking Blockfolio everyday? I can tell you why – you masquerading as an investor while secretly chasing short-term gains. Lying to yourself rarely produces optimal financial outcomes.

Regardless of the focus of the sources of information you utilize – they should all share a number of traits. They should be knowledgeable, open and hype free.

Expertise is an absolute base requirement – it’s generally easy to spot and reasonably hard to fake. 

Openness in relation to the incentives underlying the information being provided is critical – otherwise you are simply being set-up to buy this – sell that for the exclusive benefit of another.

Hype free – to the moon nonsense is for children -are you a child? It certainly feels like a substantial segment of the crypto community operates at the level of a 10-year-old. XYC or bust, A is better than B just cause..and so on. There will always be a sea of YouTubers and bloggers who are more than happy to sell you hopium, the next Bitcoin, how xyz will make you a millionaire and so on. Some are fools but most are cynical frauds looking to tap into cryptos potential to sell you nonsense.  

Once the next bull run ramps up information fraud will return with a vengeance.

Do your research and ensure you are getting your information from those who have been around awhile and who have over time demonstrated the triad of expertise, openness and analytical sobriety.

Now is the time to do so while the noise to value ratio is in your favour. Mid-bull run is a terrible time to go seeking guidance.

Thanks for listening.

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