Here's a good story that should remind everyone to stay humble.
In the world of cryptocurrency, it's not uncommon to hear about people who have made a fortune overnight. While some investors may have a deep understanding of the market and the technology behind it, others may be entirely new to the space. Interestingly, it's not always the most sophisticated investors who are making the most money.
To illustrate this point, let's look at three different profiles: the noob, Joe, and the professor. The noob is someone who joined the crypto world in January 2021 after hearing about a friend's success with DOGE. He had no idea what a blockchain was and decided to invest all his money into SHIB because he heard Elon Musk loves meme coins. He frequently tweeted phrases like "LFG" and "SHIB to the moon."
Joe, on the other hand, joined the crypto world at the same time as the noob but took a different approach. He spent a lot of time researching and learning about the market by reading Twitter and watching YouTube videos. He learned about L1 rotation from Coin Bureau and heard that the bull market was the time to take risks. He got addicted to leverage and made great rotations between ETH, SOL, and FTM.
Lastly, we have the professor who got into crypto in 2019. He was a value investor and fundamental analyst who had a deep understanding of Bitcoin. He subscribed to multiple paying substacks, read Willy Woo for on-chain analysis, and watched every YT video from Raoul Pal for macro updates. He even developed his own on-chain scripts to monitor revenue from L1 protocols before TokenTerminal was a thing.
Now, let's fast forward to 2022 to see how these different profiles have fared. The noob ended up making a 1000x return on his $10k investment in SHIB and became a millionaire. However, he also nearly died in a car accident while driving his Lamborghini drunk at 260km/h. Joe managed to turn his $5k investment into $1M in just four months by leverage trading L1s, but he got liquidated in May 2021. The professor is still holding his investments and living in a small studio.
The lesson to take away from these three profiles is that sophisticated investors must understand that markets are irrational, especially in crypto, and that retail hype and market sentiment often weigh more than sound analysis. While it's essential to understand when it's time to go risk on or off and adjust risk accordingly, it's also important to remember that the journey is more fun if you learn new things, make new friends, and have fun while investing.
In conclusion, there is no shame in being a noob investor or pride in being a sophisticated investor. It's all about maximizing your profits and finding what works best for you. While some noobs may get lucky and make a lot of money, they are unlikely to reproduce their success, and sophisticated investors must understand that the market is irrational. It's important to have fun and enjoy the process of investing while also being responsible and making informed decisions.
