Academy Discount is LIVE! (+ The Next Bull Run)
Level 1 - NGMI
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If you haven’t heard, the DeFi Academy anniversary sale is now open.
We’re offering a $100 (20% off) discount until November 9, 2023 for the first 100 members who join. The whitelist perk will also close forever once these seats are filled. It likely gets filled up before November 9 from what we’re seeing!
Grab your seat here -> Enter the code defi100
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On to today’s post.
Last week we released a tweet about preparing for the “next bull run” that captured some attention.
We wanted to give DeFi Ed readers a deeper look into our thoughts, minds, plans, and goals.
In addition, we’ll answer some questions that came up as a result of that post.
Is a bull run a foregone conclusion?
What about macro?
What about other risk assets?
Should I drop everything and work on crypto now?
Let’s dive in.
Where we’re at
Two years have passed since the top of the last bull run in November 2021.
One year has passed since the bottom of the bear in November 2022.
We’re five months away from the next Bitcoin halving in April 2024.
We are in the tail end of some of the largest crypto bankruptcies, with both BlockFi having emerged from bankruptcy and Celsius currently undergoing final plan confirmation hearings. FTX is projected to wrap up late 2024.
Sam Bankman-Fried was found guilty on all counts and the FTX estate is selling off crypto holdings to repay customers.
The Genesis and 3AC bankruptcies seem like they will drag on for a while longer.
Su Zhu of Three Arrows Capital has been jailed for four months for failing to cooperate with liquidators. His co-founder Kyle Davies has been sentenced to the same, though apparently his whereabouts are unknown.
CEO and founder of Luna Do Kwon is currently serving a four month sentence in Montenegro for “forging passports” as he attempted to evade South Korean authorities.
Key TradFi institutions have maintained their focus on entering the crypto market.
Crypto is not completely in the clear yet, but we are in a much better position compared to one year ago.
Once again, crypto did not die. Yes, U.S. regulatory challenges remain. Growth in the U.S. will be difficult unless a new administration comes in.
But you can’t wait for perfection. Those who took a chance on crypto’s recovery were handsomely rewarded in the last twelve months. Bitcoin has doubled, and we’ve started seeing more activity in altcoins.
What about macro?
There is always a reason not to buy. Always. Since as long as we can remember there has been some overhang or risk touted by everyone who has an opinion on markets. Whether it’s “North Korean nukes”, “Russia/Ukraine War”, or “macro”, people latch onto some reason not to buy and years go by.
You will never reach complete certainty.
Is macro a risk? Yes.
Is the macro picture as good as it could be? No.
Do we care? Also no.
We’ve been buying over the course of the last year and got in at better prices. Fundamentally we think crypto is the strongest it has been since the bear market began. There are also a handful of catalysts on the horizon. All of this has to be taken into account together. Saying “there will not be a bull run because the macro environment is bad” is a cop out.
Is a bull run a foregone conclusion?
Of course not. We don’t have a crystal ball and don’t pretend to. We use a combination of thinking probabilistically and our guts.
The Bitcoin halving has historically been a catalyst for a bull market, but it is also true that all halvings occurred in low interest rate environments (good for risk assets). The consumer is likely considerably more “spent” in current conditions than past halvings. However, institutions may play a bigger role now, particularly if ETFs are approved. Regulators have come down hard on the industry, but we have also seen examples of them overstepping and losing battles.
The halving is going to happen, and there will be people who speculate on the price of BTC. People will argue that this is “priced in”, yet provide no justification for why it wasn’t “priced in” the last three cycles. The U.S. regulatory environment is tougher, but there is a lot of interest in Asia.
A bull run is not a foregone conclusion, but we believe it to be more likely than not that we do have a period of speculative activity in crypto brought to us by rising asset prices.
If you can’t tell by our energy over the last month or so, we’ll spell it out: we are operating as if we are in the early stages of a bull run. We can’t definitively say if we are in one now, but there’s a chance that we look back at this period as the beginning.
We know what some of you are thinking: no way. That’s good. We completely get it. That means it’s still non-obvious. The difference is that while people are reacting to their fear, uncertainty, and doubt by staying put, we see an opportunity to get ahead. That’s the kind of stomach it takes.
Should I drop everything and work on crypto now?
This is the other side of the “what about macro” coin.
There’s no way to give a data-driven response here. It’s a gut feel. It doesn’t feel like that time, but it does feel like serious preparation is in order. Markets operate on expectations. By the time it feels obvious, it will be too late.
Don’t quit your job or shut down your business to trade crypto full-time. We’ve never recommended that in the history of DeFi Education and we never will.
What we do recommend is finding the time. Create the hours. Take some discomfort. Sleep a little less. Go through the Academy. Read and learn on your commutes instead of listening to music.
Squeeze some time out of your schedule, but don’t uproot your life.
Focus on the Big Three.
Skills + Capital + Mindset
The Big Three involve some introspection and a lot of action.
Anyone from crypto enthusiast to crypto expert should revisit their strategy and goals.
Identify and equip yourself with the right skills, enough capital, and get your mind in the right space to accomplish whatever goal you might have.
We will stick to purely the practical advice.
Skills
What skills to focus on? In no particular order, these are the highest value skills you can obtain in this market.
Research
Coding
Trading/Investing
Marketing
Access (i.e. “networking”)
Which of these skills are you already furthest along? Double down on those and maybe add one more to your arsenal. Being GREAT at one or two is better than being *mediocre* at all of them.
We created the academy to get people out of their hands and into practical application and growth. If you’ve gone through it, you should have a good idea of what parts of crypto you like and are best suited for. Trust your instincts and go for it.
The time for casual, leisurely attention is at its tail end. We had over a year and half of that.
If you’re starting from complete scratch you’ll want to break down the above skills into much smaller parts (e.g. Coding - learn Python, then Solidity, etc.) otherwise it’s easy to get lost in the sauce, so to speak.
In general, you are always better off building a “sellable” skill like coding or marketing because these will still be high value outside of crypto hype cycles. You won’t regret learning these skills no matter where you end up. Research is a mixed bag. If you want to specialize in it, you’ll generally want to stay within the financial sector and finance careers. Thankfully, the finance field is massive!
At DeFi Education, we generally don’t recommend trading as your “main squeeze” especially as a beginner or someone with low capital. You can do trading outside of job and business hours since crypto is 24/7. Furthermore, we are not believers that “anyone can be a great trader.”
Not everyone can be a great trader, just like not everyone can be a great pianist, or doctor, or pet owner. Most people should own spot on a hardware wallet and avoid leverage, short selling, and active trading - fees will eat you alive.
The path you choose is an intensely personal decision. We’ve provided the resources for you to make an educated decision. Employ self-awareness and choose to the best of your ability. Picking anything and acting is better than doing nothing.
Capital
As for capital, the more you have the better (no surprise).
If 2-3x your capital will not make you free, you don’t have enough. That’s going to be most people.
Having a good capital base lets you come from a position of strength instead of desperation.
Strength means being able to take risk without it destroying you.
We’ve been telling DeFi Education paid subscribers to start DCAing into the majors and size up on pullbacks for a full year now. These readers are now in a position of power. They took some risk, and now they get to calmly and patiently decide if they want to take profits, rebalance, etc. Those who remained sidelined because they didn’t build a strong foundation of knowledge may start getting some FOMO.
You get the same psychological benefit when you have a lot of capital to begin with or have high cash flows to support your risk-taking.
As such, building capital is a key piece of the Big Three.
Mindset
The final piece of advice is a bit “woo-woo” but stay with us. We would not include it here if we didn’t believe it to be valuable.
You need to get your mind right. You have to vividly envision yourself succeeding, down to the details. You have to get determined.
Think you’re too good for this exercise?
In his book Mamba Mentality, Kobe Bryant talks about visualization as a crucial part of his success.
Here’s a direct quote from Kobe when he had to adjust his form after an injury: “I had to mentally download the software that was the new form, and then drill it in.”
He would visualize winning in every NBA arena. He would drop points in his head while lying in bed.
For Kobe, it always started in his mind. Then he brought it to life with an insane work ethic.
Hammer on your skills. Stack capital. Get your mind right.
What If I Don’t Want To?
Some of you are already set and simply like keeping an eye on the industry. Some have been casually DCAing into BTC/ETH for years and only care about the major moves. Others are happy with their existing careers and crypto is a casual hobby.
This post is just how we’re thinking. Crypto is what we do. We have the wins to play in the stomach-turning volatility of the crypto market.
It’s not for everyone. If you’re ready to get serious about the bull run, become a paid subscriber and join the ride.
P.S. To continue the basketball analogy — it’s still pre-season, not the playoffs. Don’t burn out. Don’t get injured.
As a reminder, use the code defi100 for a discount on the Academy until Thursday, November 9, 2023. Limited to 100 seats. Click here to join.
Disclaimer: None of this is to be deemed legal or financial advice of any kind. These are opinions from an anonymous group of cartoon animals with Wall Street and Software backgrounds.
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Just wanted to clarify on the positioning.
On the last Q&A just a month ago, Iguana mentioned he is "Not fully invested; plenty of dry powder. That would only be allocated in a proper "risk on" environment though. This is still a bear market (although likely close to the end of it). To your question, DCA is probably fine around these prices if you can hold long term. A dip would be a gift but we've had a ton of those in the last 2 years so think its more likely "boring sideways" until the next bull rather than any dramatic 10-15% downdays."
What caused the change in terms of not being fully allocated with plenty of dry powder a month ago to being well allocated here? What could DeFi Education readers have done to learn how to position themselves for such a move?
Great piece! For developers looking to get started in crypto, this is the path I'm taking for myself:
1. Learn basics of Solidity & software design (eg. https://refactoring.guru/design-patterns/catalog)
2. Follow some code audits to familiarise yourself with how projects are structured. These first flight challenges are great for that: https://www.codehawks.com/first-flights
3. Build portfolio projects (you'll get ideas automatically from the audits)
4. Find ways to contribute to open source projects.
Hopefully this helps some other budding developers get started. I'm working on step 3 at the moment and hope to get involved with real projects as soon as possible.