December 10, 2024 | Read Online

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"It's not supposed to be easy. Anyone who finds it easy is stupid."

— Charlie Munger, on investing

Crypto investing advice: Embrace the JOMO

We are now in the part of the investing cycle in which people start making bad decisions — chasing winners, buying things they don't understand, borrowing conviction from overconfident people they don't know, and becoming overconfident themselves.

In many cases, this newfound confidence will be an overcorrection by those who missed the rally because they were under-confident when things were going down.

Some of the biggest offenders in this will be people who feel stupid for missing out while seemingly everyone else is getting rich.

Having missed most of the recent crypto rally, I am at risk of being one of those big offenders.

I feel silly for having done so, seeing as I am one of the still-small group of people who choose to think about crypto on a near-daily basis.

But I've been here before, in both crypto and equities, so I know that now is the time to guard against all of the behavioral finance pitfalls that follow from a bout of FOMO.

This time, I'm trying to embrace JOMO instead: The joy of missing out.

To that end, today's comment is a reminder to myself that I had good reasons for not buying crypto at its lows, which I think will help me avoid buying it at its highs.

I'm hoping this will be helpful to anyone else who similarly regrets missing out, but also to those who didn't miss out and might now be thinking "this is easy" — because that, too, can be dangerous to your net wealth.

Below, then, are a few of the reasons I didn't buy a few notable cryptos in this latest cycle.

Some of these reasons might even be intellectually correct, but we're here to make money and not win debates, so they are all, of course, very wrong.

But they're also perfectly reasonable, so I offer them as a reminder that 1) it's not easy and 2) if you also missed out, you shouldn't feel stupid.

This is investment advice — all of it bad

SOL: Solana co-founder Anatoly Yakovenko says SOL isn't money and Solana's most prominent investor, Kyle Samani, says fees should trend toward zero over time. If it's not money and there are no big fees for a DCF valuation, I can't really blame myself for not having bought it.

ETH: There's a growing consensus that for ETH to be a good investment, it has to accrue value as money. But how do you put a valuation on that? After playing some catch-up recently, ETH is worth $420 billion. Unscientifically, I'd say there's already quite a lot of moneyness priced in — possibly even enough that I don't feel bad about selling way too early.

BTC: Bitcoin is meant to be an escape hatch from a rapidly depreciating US dollar. However, the dollar has been an appreciating asset all year (because money market yields are well above inflation) and it's likely to stay that way for the foreseeable future. The Fed won't be printing money again any time soon, so what's the big rush to own bitcoin right now? I know, I know, there was an election. But bitcoin was already SEC-approved, so I thought a change in the US regulatory outlook would benefit everything other than bitcoin. I also failed to realize that people would take the idea of the US government buying bitcoin as a strategic asset as a serious proposal — they are, but I still think they shouldn't.

Memecoins: No explanation needed because memecoins are still ridiculous (but fun!). Also, the memecoin cycles come and go so quickly, missing one is like missing a bus — it shouldn't be much of a wait until the next one comes along.

Value coins: Some cryptos have recently rallied because they're making money — weird, right? I feel worse about missing those because I can't blame crypto irrationality for my oversight. But even these are usually only inexpensive by crypto standards. AAVE, for example, seems to trade on about 27x price-to-sales (even now, when things are booming). That may sound like value relative to other cryptos but AAVE is a bank and I can buy the best bank, JPMorgan, for 14x earnings, so I'm not going to kick myself for not paying 27x for a crypto one.

MicroStrategy: A popular trade at the start of the year was to short MicroStrategy shares (MSTR) and buy bitcoin against it, on the logical assumption that the spot bitcoin ETFs would make MSTR redundant. That turned out to be very wrong — MSTR is up 445% year to date, vs. bitcoin up just 118%. But I still don't know why it's wrong.

Hyperliquid: The biggest airdrop of this cycle has made a lot of active crypto traders rich — but not me. I had heard about Hyperliquid early on and also heard that people were using it in expectation of an airdrop. But I didn't bother using it myself because it wasn't obvious to me that crypto needed yet another perps exchange. Turns out it did. The HYPE token is trading at a $13 billion FDV and some people think it could be the Solana of this cycle. Others, however, think it's not even crypto. Hyperliquid is "a centralized exchange that says it uses a blockchain," according to Jonathan Reiter. "There may be a blockchain in there, it's not clear."

It's hard to know who's right!

Learnings

My mistake in Hyperliquid was that I didn't use the product.

If I had, I might have recognized that the slick user experience would far outweigh the long road to decentralization it still has to travel.

I made the same mistake with the memecoin launchpad pump.fun, which I was aware of early on but never used (because the frenetic landing page makes my eyes hurt).

If I had done, I might have been ahead of the curve on both the surge of Solana revenue that drove SOL higher and the renewed interest in memecoins that it kicked off.

So one takeaway from this cycle is simply that, unlike in equities, you have to use the products — find something that's interesting enough to care about and enjoy missing out on things you don't care about.

Another lesson is that there's still a lot of demand for "crypto" stories — maybe even more than ever.

I put that in scare quotes because, after the last cycle ended, I thought the era of buying tokens just because people are excited about "crypto" in some unspecific way was over.

It's not — crypto is still exciting enough that people will buy almost anything in a bull market.

Finally, I think we've learned that speculation is a bigger use case than anyone thought.

It's easy to dismiss all of the recent developments in crypto because they're mostly just new ways to trade crypto — and crypto for the sake of trading crypto seems uninspiringly self-referential.

But this cycle has shown that people really want new things to trade — and old things, too (see: XRP, ADA, HBAR).

Crypto is uniquely good at providing those things and crypto investors are uniquely good at getting overexcited about them.

The joy of missing out on this crypto cycle, then, is knowing there's another one right behind it.

— Byron Gilliam

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Aftermath Finance: Building a CEX Onchain, Sui MEV and Eggs

Aftermath Finance co-founder Kevin discusses the decision to build on Sui, capturing memecoin activity and liquid staking with afSUI. Tune in for insights on what the next 12 months will have in store.

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Toni Wahrstätter ⟠ @nero_eth

2024 saw the highest nr. of EIPs proposed, with >20 more than 2023.
The avg. EIP length has stayed consistent since 2021, with a slight rise.
While EIP count doesn't directly reflect dev effort, 2024 was notably productive for Ethereum.
2025 will be an important year (again).

tw profile: Christine Kim Christine Kim @christine_dkim

so pectra is still the largest upgrade in ethereum's history by number of eips, at now 11 eips, the second largest was the byzantium upgrade containing 9 eips.

it's still a risky upgrade no matter how you split it, which is why the more testing and eyes on it the better.

8:43 PM • Dec 10, 2024

27 Likes 5 Retweets

3 Replies

Eric Balchunas @EricBalchunas

$MSTR is likely to be added to $QQQ on 12/23 (w/ announcement coming 12/13). Moderna likely to get boot (symbolic). Below is best guess of adds/drops via @JSeyff. Likely a 0.47% weight (40th biggest holding). There's $550b of ETFs tracking the index. S&P 500 add next yr prob.