Podcasts

The State of the Crypto Market

Cryptonary
Cryptonary
The State of the Crypto Market
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In this episode of The Cryptonary Podcast, our new host Stan interviews Karim in order to decipher what is currently happening in the market and we can expect in the coming weeks.

  • Who is Karim? (0:20)
  • The two learning paths (2:55)
  • Market Tuition (4:00)
  • Where are we in the current cycle? (5:58)
  • Is a correction on the horizon? If so, would it be a full-on bear market? (11:15)
  • Protecting Profits (18:20)
  • Building a resilient mind (20:20)
  • The importance of Research & Vision (23:00)
  • Acknowledging flaws and staying rational (27:15)
  • Easy way to judge DeFi projects (28:22)
  • The flaw of marrying bags (30:00)
  • Ethereum vs Bitcoin Revenue (35:00)
  • Conclusion & Final Words (37:00)

Transcription of the podcast

Stan 0:00

Welcome here at the Cryptonary podcast. I’m here with Karim. And we’ll be talking about the current state in the market. And if there will be an upcoming correction, Hi Karim, Introduce yourself.

Karim 0:17

So I’m a Karim, part owner here at Cryptonary. I’m 23 years old, I entered the market first got interested in it, then like around summer 2017, I was just hearing about it. Then I invested that around October, November 2017. I was your typical retail new retail player, trader, investor, I don’t think I deserved the title trader, investor at that point retail noob, newbie, whatever you want to call it, I remember I put in like $1,000 at around October, November 2017 in random coins. And like, by the start of January, I had like 10,000. So I was like 10x the money. And obviously, we all know what happened afterwards. So I did lose, it didn’t take profit. I remember the greed kicking in. And I was like 19 or 20 at the time. So I remember thinking, look, like gems and the marker anyone any sort of project that even considered it now it’s everywhere, but it wasn’t at the time. So sort of like grew my fundamental analysis. Knowledge alongside the market. It was quite an interesting journey. And it was hard. No, I’m not going to say it was easy, took a lot of time, a lot of dedication, but eventually becomes like, very rewarding. So yeah, that’s like kind of my story. Nice. Yeah, basically,

Stan 2:30

Nice. Yeah, basically, I’m 19 now. So this is my first bull market. So I’m like the same situation as you were at your age, but I’m happy to be at Cryptonary and not just on my own.

Karim 2:44 

Yeah, I think there’s two ways people learn, right? So the first way, which I think is the most common one is to learn from your own mistakes, which I certainly like took that path. I don’t know, there’s something about when you make the mistakes yourself. You just remember them too vividly to redo them. But you can also learn from other people that takes a bit more effort on your end, believe it or not, but you can get there a lot quicker, right? So instead of like two, three years, that it takes most people you can do it in a year or like even six months as long as you have like access to the right information. But yeah, so I think if you choose that path, you’ll have like an advantage over others. But again, it comes down to your own will and like dedication to it and how important that is to you and how seriously you take it Yeah, I’ve made mistakes as well even when at Cryptonary so you can’t avoid mistakes you always keep making them. Like my advice to everyone anyone who’s new is literally try out pretty much everything in the market, you’re probably going to end up paying your tuition to the market just like I did. But the thing about the market is like it’s different from university, universities you have like a fixed tuition fee that you have to pay and honestly at the end it’s not that rewarding. But the markets like financial markets as long as you’re passionate about them, you can come in you can choose what tuition you pay, right, you can play around with like $1,000 and say look this is my budget until I can like prove consistent profitability or proven edge in the market. And so you could choose your own tuition I didn’t I paid a bit more to the market. But that’s like a big advantage. But slowly like the rest of the world is starting to realize this I think like was like coin base going public. Brian Armstrong obviously becoming like a billionaire or Sam being worth like near 10 billion those numbers are starting to pop off around, so people are slowly realizing it, but you got to look, and you got to try everything you choose the tuition that you pay, try everything and find where your strength is to me. Like I found my personal strength is first of all swing trading, but like the biggest strength that I have is thesis based investing, right based on fundamentals. Once you find it, you just go like all in on it, right? And you focus fully on it, and then it just becomes really rewarding.

Stan 5:27 

I totally agree with you. It really depends on your strength, just like with everything in life. And talking about this money in the market. You mentioned, what do you think the current state of the market is?

Karim 5:42 

I would like one word to like summarize where we are, I would say like irrational exuberance and mania. Another way to summarize it is I think shit coins are very overvalued and fundamentally sound assets are very undervalued. When I say fundamentally sound assets like throughout this podcast or any podcast later on, what I mean is Bitcoin ETH and DeFi tokens, right There’s also like an awful lot of shit coins in DeFi, but you know, we talk about them quite often about like, which ones are actually legit. And we’ll also like probably do a podcast later on, like how to identify the state of the market right now, I would say, we are, as I said, like irrational exuberance. And soon, I would speculate, we see a correction. That correction mainly comes look, you got to look for the market to keep going up, you need new buyers, right? This is like the fundamental rule. It’s just like first principles. It’s always buyers and sellers, as long as you have more people buying than  selling, then  simply the prices go up, right. But you got to look at how much more money could come into the market right now the money that is boosting the market is retail. And that’s why you see shit coins popping off very obviously not institutions, or corporations putting, like, I don’t know, SHIBA you know, or AKITA on their balance sheets, obviously not that it’s retail pumping this market, like similar to like 2017 ICO shitcoins  popping off again. So you got to think of how much more money can come in. Because we’ll reach a point where you’ve simply reached as many people like this market has reached as many people as it could. And the people interested. They perhaps were interested, like I don’t know, a few weeks ago, they saw prices jump again. And they finally had conviction to enter. And I’ll talk about that conviction in second. They enter it and then you reach a point where you don’t have any new buyers, right as soon as that happens, obviously, you’re gonna have more selling than buying and prices simply go down. The thing is about that conviction there is no way like shitcoins maintain their current valuations, the current market caps that we’re seeing on some of them. And I think like dog coins and particulars in particular. And it’s funny to say this, but like dog coins like SHIBA  INU and like AKITA and like all those other ones. Dogecoin is a bit of an exception, I don’t I’m not saying it’s not gonna like fall down in price. But like Dogecoin has been here for a while, it’s survived multiple cycles. So it’s not, it’s probably not gonna fully die, it’ll drop down in price, but maybe not fully dialed maybe it’s like another cycle again. But like SHIBA INU and like, these other ones most probably would not, I think, with Vitalik sending his allocation, which I am very pro because he put that money to, you know, actual good. That may have signaled the top on these like dog coins. But now we’re seeing like more money rotate into DeFi tokens. There’s a lot of strength, and you can see an AAVE and like SNX. There’s a lot of strength and demand on them. So there’s like a reasonable probability that we do see, like a DeFi season And, of course, alongside that would happen like Solana season. With all the developments that are happening, I would say, obviously, 90% of what’s happening on Solana is like shit coins, trying to siphon money into their pockets. But you know, it is what it is. And like, if you can capitalize on hype, you do it, but you know, risk management is key at the end. But yeah, I think we’re reaching a point where we’re about to peak in terms of how much money can enter this market. So a correction would happen and then you can pair it with I like to confluence different factors. And there’s two more confluences number one bitcoin, right? You look at bitcoins, price action. And I think thinking rationally is like the key to make it in any market literally, it’s common sense. But when emotions take over, such as like greed and fear, usually rational thinking is like, pretty hard to attain. So bitcoins price action, simply set a lower high around 10th of May it wasn’t able to cross above 60k. So set a lower high and like, two days ago, it set a lower low. So that’s a change in market structure. And I don’t think it’s something to ignore. That’s another confluence that says we’ll see a correction sometime soon. And the third one is like the analysis that we shared, I think on May 11, or 10th, I’m not sure of the exact date, we took like average weekly returns from 2014 to 2020. Just to sort of try to deduce which weeks would be like the most profitable for the market. Obviously, it’s not like 100% precision, it’s just like an approximation, and when a correction would likely happen, and usually q3 is usually like, either flat, or a correction time. Right. And simply because of how hard this market has rallied, I wouldn’t say with possibly see a flat sort of price action most probably we’ll see correction through Q3.

Stan 10:56 

Do you also think this correction will lead into a bear market? Or is that an assumption too far?

Karim 10:55 

So this is this is where I think this market is very interesting. Right now, shitcoins are overvalued. But fundamentally, sound assets are still undervalued, I still think ETH even at like 3.8k right now, or like, just rounded up to 4k, even at 4k is like pretty cheap. I would say like, based on like my thesis, I really think ETH eventually gets to like 100k. Obviously, it’s not a straight line up, obviously, it’s not gonna happen over like two, three months, but over like, a few years time I that’s that’s basically my bet. does it lead? Does this correction lead to a bear market? I don’t think so. Look, this market right now is do or die, right? If Bitcoin had a 80% drawdown, it simply would not be fit for any sort of institutional investment anymore. And it becomes like I think Sue says, , Sue Sue from like, Three arrows Capital, one of like the leading hedge funds in crypto right now. He said it where like, if, and I agree with him, if like Bitcoin has like another 80% drawdown, it most probably becomes like a niche asset. And like, the interest is not going to be as broad as we think it is. And I would say that’s not going to happen, where we’re not going to see like an 80% correction, Bitcoin is probably going to have one of those 30 to 40% draw downs. We’ve seen them throughout 2017. I think the same thing happens. And if you go and look at Amazon’s chart, right, because I think I looked at relative growth. And not only from previous cycles, and crypto, but also from other cycles.  Dotcom bubble sort of like comparable to the 2017 bubble that we had. So if you look at Amazon’s charts, for example, you’ll find a lot of 30% drawdowns along the way, go to the weekly time frame, the daily time frame is just too broad, weekly time frame is pretty accurate. I think this is sort of what happens eventually in crypto now. So we’ll see like a 30 to 40% drawdown on Bitcoin alongside that ETH probably is not going to be immune to it either. It could drop by like 40 50%. But again, you don’t know you cannot pinpoint up which price that happens, right. So ETH could go to like 15k and then correct 40 to 50%. And at that point, that 50% correction brings it down to seven and a half k which is like higher than where we are right now.But there’s, as I said, like, fundamental sound assets are undervalued. And as I said, you need more buyers for this market to keep going. So look at which capital is sidelined is it retail usually, like that’s, that’s where people look, I don’t think its retail money sidelined at this point. What I do think is its institutional capital that is sidelined at this point in time. And they have two assets that they have in mind and that’s Bitcoin and ETH  right? We’re seeing like more more institutional interest in ETH recently, not as much as Bitcoin but I think it crosses it over like a year’s time in terms of interest. Simply because look, Bitcoin is a bet on like digital gold, which is all well and good. And like I’m long Bitcoin, obviously. But ETH is like you’re betting on the literally the world’s financial internet, right, so it’s like you’re betting between gold and tech. Which one do you think is going to have more interest along the way? I would say Tech, plus the fact that it becomes deflationary and eventually scales, it is scaling right now with layer two, but eventually it’ll scale like as like on layer one. And like through ETH 2.0. So that interest would rise. They’re not going to be the only two assets. I think a lot of DeFi would be interesting, but it’s simply not that liquid for most institutional capital. So is it like a full on bear market? No, I don’t think full on bear market would happen. I think shit coins would drop down by like 90% Plus, most of them would die out. You know, those charts from like 2017, they pop off and then all of a sudden they die, and it streamlines next to zero, I think a lot of shitcoins would see that exact pattern again, but not the fundamentally sound assets, because you have, you know, Bitcoin ETH and like DeFi sort of, like undervalued shitcoins dropping down in price would like, at some point, create a market wide correction. And as I said, like 30 to 40%, probably on Bitcoin 40 to 50%, on ETH DeFi will probably take a slightly larger hit simply because it’s less liquid. And market caps are smaller, it’ll be like a very big opportunity to accumulate more fundamentally sound assets, more productive assets. There’s like this cliche line of like, This time, it’s different. I really do think it is different this time, simply because the institutional vision for Bitcoin has happened  ETH same thing. DeFi has revenue, which, unlike that revenue is shared, usually between token holders, like different ways could be to a buy and burn could be through like, you stake your tokens and you earn revenue from the from the protocol, you know, these tokens now have actual value, which was never the case in crypto. So I do think this time, it really is different for fundamentally sound assets. And I do think we’ll reach like a point where you know, we’re reaching maturity and valuations would become a hell of a lot higher than what we have right now. The market basically becomes more mature after the correction. Yeah, because you’ve shaken out at that point, you’ve shaken out a lot of money that came in simply because they’re investing in shitcoins, right? And like, if you’re putting a lot of money into shit coins, and you lose it to some degree, like a market participant, that does this sort of deserves it, right? You’re gambling, you’re not investing, you’re not doing any sort of research. I’m not against gambling on shitcoins, every single pro member knows this. We do it ourselves with like, everything that’s happening in Solana, but we do it with like risk management, right? Whatever amount we’re betting, it’s like, similar to going to a casino, you know, the odds are not really with you. But if there’s hype, odds  I would say are  are higher than what we have in a casino, obviously. But if there’s hype, then it’s like an exceptional sort of time. And it’s not an issue to bet like amounts of money that we can afford losing. But if we were to bet like, I don’t know, 10 15% of our entire portfolio, then yes, that I would say that was that would be very unwise, anything higher is like insane. And you’re just simply would be asking for the market to take you take it away from us. So yeah, I think a lot of people are going to have like a big opportunity soon, not saying it’s gonna happen right away. I think the next two, three weeks are going to be quite bullish for the market and could be longer, right? You can’t really pinpoint these things just depends on how fast that happens. Could take longer than two, three weeks, it’ll be like, most probably very profitable time securing some cash would be one of the best ways to later on like, you know, again, a cliche, but buy the dip and Kareem like how do I protect my gains without losing out on Money I’ve put in because sometimes I want to cash out. But I’m worried that it maybe goes up more, you know, yeah, look, no one, no one really sells the top, no one really buys the bottom, all you got to do is like catch like the meat that sits in between, right? If you catch the middle, you’re making a very decent amount. Anyone who’s like trying to be too perfectionist and like I tried this, obviously, when you start out, you want to buy the absolute bottom and you want to sell the absolute top, it happens sometimes it has happened to me quite a few times. But I would say like, maybe 5% of the time you’re able to pinpoint it. And it usually  is when you have like very clear indications like the team is selling or, you know, there’s like a fundamental catalyst that could change what’s happening in the market or like this particular asset is lagging while the rest of the market really crashed, that kind of stuff. But you know, you’re not going to catch the top, you’re not going to sell the top. So forget to prepare yourself emotionally for the fact of saying, look, I sold and if I had held for these two, three days, or like another week or two, probably I would have like 50% more money or like 20% more money again, like nothing is guaranteed. But as long as you’re selling through irrational exuberance. Usually the market comes back to your point of exit and lower so it gives you like another opportunity. Assume you sold I don’t let’s say you invested in token x, right? You bought it at $5 and one to $100 right, you decided to sell at $100 then that token went to $150. As soon as it reaches like $150, you say to yourself, well  this is gonna keep going up You rebuy basically, even if price goes to like $170 What’s your point of invalidation? You really don’t have one at that at that rate. Right. So taking money usually out and just sitting on your hands and waiting like it takes a lot of patience. It’s not it’s it’s mentally draining.  it’s quite hard to be fair. But as long as you’re securing some cash, I would say you’d have an opportunity later on. And that also assumes that we reached like complete euphoria over the next few weeks, it might not happen, right? You, we might see a correction in the next few days, like a 10 15% correction, and that would shake out a lot of people. And that gives even more longevity to the market. Right? That’s also like, a possible scenario. I don’t think it’s probable, but it’s still like a potential scenario, if that happens, that simply gives more longevity to the run I am personally, how I’m doing good, I’m ready. I’m getting rid of any sort of shit coins around the start of June, right? I don’t want to hold any of that any cash that I’ve made from shit coins, I’m just keeping, I’m just gonna sit on my hands. , like if we see a correction, I wouldn’t buy right away, I would wait for like panic. And it takes a lot of patience. Look, a lot of people sell, they have cash, and they want to because they’ve just made money, it becomes addicting. They want to re put their money in the market just usually just wait, right?

Stan 21:04 

Its like gambling.

Karim 21:05 

Exactly. It’s like the adrenaline rush, you want it again, you want that feeling of euphoria. Again, usually, like from my experience, it’s about decision. So if you wait for, you know if a correction obviously happens. But if you wait it out, you’ll see like a much better outcome from your decision. No matter how much experience you have. There’s no point in time where you’re seeing, like your portfolio getting devalued that you sleep well at night, or you’re happy with it, right? So like, in my case, I’m not going to sell like 100% of my holdings into cash, that would be like a very dumb decision, in my opinion. For me, I’m talking like fundamentally sound assets here, I would simply look to turn that shit coin money into more DeFi tokens more ETH, more BTC later on by probably in August, September, assuming like the scenario plays out. But like, whatever I have in the market is gonna get devalued, right? And it never feels good at any point in time. And you’re gonna have you’re gonna do like these mental gymnastics of thinking, Oh, man, look, if I had sold on like, I don’t know, at 12pm on that day, and I rebougth now I would have like 10% more ETH right, you’re going to do a lot of that sort of mental gymnastics, if you don’t have any sort of like trading experience, usually over the long run over a few years time. holding is like the better strategy. Look, we are in a market that’s severely undervalued, like even a 2 trillion, I would say we’re severely undervalued, like, ETH to me is like a $10 trillion asset minimum, DeFi right now has like a 5% market dominance, which is laughable. It’s nothing. It’s like, they have revenue. Like it’s they’re the most fundamentally sound assets in crypto, yet they hold only 5% of the total market cap, that number I would speculate easily goes up to like 30% plus, over like the next two, three years. So looking back in a few years time, as I look back to whatever correction we may have, you’re not even going to notice it on the chart because of like how small it is. But it takes a lot of balls. To be fair, it takes a lot of patience, and it takes a lot of conviction. And that conviction, the only way you have conviction is trough research like literally research is your friend, right? Unless you have conviction for an asset, you’re probably gonna panic sell at some point, you’re gonna start questioning your investment, hey, why did I invest in this, but as long as you have, like, you know, conviction that is derived from actual research, the market will eventually the market will eventually test that conviction, right? And if you pass the test, usually you get rewarded, as long as your research was good, obviously.

Stan 23:49 

Yeah, I can really relate to that with the assets I hold. I have a strong conviction, for example, in Thorchain and I’m not scared to buy 10% dip on it or hold it when it goes up. 20%. And I think it’s really important to have that conviction in the assets you’re planning to hold long term,

Karim 24:09 

Look at the end of the day, it comes down to vision like, right, so you’ve got to have conviction based on research. But you also gotta see like , Where’s this market going? Like, the reason I hold my ether very close is because I literally see this as being the world’s financial internet. Is it the world financial internet right now? No, it hasn’t reached that status by any means. But do I speculate it does happen? Yes, it’s slowly happening. We’re seeing part of it happen right with all of the DeFi protocols built on it. But  simply, it’s because of the vision of where I see it going. Like for example, Thorchain. Again, I wouldn’t mind buying a 70% dip on Thorchain, On RUNE in particular, because right now, just think about it. If you want to swap from Ethereum into like any asset and Ethereum into bitcoin. The only way you can do it is like you have two ways to do it. Number one, you go to like a centralized exchange, right? Which is like Not really. crypto like not it doesn’t like fall in line with the crypto ethos of like censorship, resistance and decentralization. That’s one because you’re obviously using like a centralized party. That’s one and two, like the other option you have is you buy wrapped BTC, but wrappedd BTC or REN BTC if you want because it’s like the decentralized version of it. Those two they live on Ethereum so it’s not like native Bitcoin, but if you want to go from chain to chain, there’s literally no way to do it right now. Except for like Thorchain, which is not that liquid yet, right, but it is getting there. So the way I see it over a view years time, you want to swap from chain to chain, obviously, some chains have like bridges.  like Solana is gonna have wormhole between Solana and Ethereum. But if you want to swap like chain to chain, you’re gonna most probably use Thor Chain, right RUNE has, like literally one of the strongest economic models I have found in this market. And they’ve done it purposefully. And I fully agree with that model. And it’s very, it’s also very beneficial for anyone, like, who has conviction and wants to invest.Obviously not financial advice. So that’s like an asset. If I see it dip, I’m just seeing it as a big opportunity. Because I see like the rest of the market simply is not acknowledging or is mispricing RUNE at that point. Similar to like SNX right? If you want to open like a brokerage account, you’re gonna have to fill out like  too many pieces of papers, right? You’re gonna have to fill too many forms. And you’re gonna have acount limitations . But if you do it through like Synthetix, you can buy like sTESLA, obviously, it’s not like the underlying, right. It is like a synthetic asset. Most people are speculators. If you are speculating, then that pretty much does the trick. And once they add, like, perpetual futures, which again, I am strong, I’m a very strong believer and seeing rational, even like with, with, like, projects that I that I like, fully am invested in, for example, Synthetix  they’ve really delayed on implementing perpetual futures. Right. Should this should have been implemented in January? I get there’s certain like technical issues, but you got to be aware always have, like any shortcomings. So that opens up the question to will Synthetix hold the first mover’s advantage, or like the biggest market share for perpetual futures? Right now they’re a bit late, a project that could coexist with Synthetix on that point is going to be DYDX. Right?  DYDX have a brilliant product, they’ve rolled up like they are on on layer two, So fees are like, pretty cheap transactions are pretty fast. We’ve talked about this in like one of the journals. Um, they don’t have a token yet, though. But when they do, and I think they’re releasing it in the summer, by the way, I wouldn’t mind rotating some capital out of SNX And like investing in both SNX and DYDX simply because I’ve used the product, right? And that’s the thing about DeFi, you can actually use the product. And you look at just think of yourself, right? And think, would I be a user of this? Do I like the user experience? Like if there’s any issues? Can they be fixed, and you can actually, like, get into the discords of these projects get into like the telegram groups, or even on Twitter, and you can suggest improvements, right? This is what a real decentralized community is, show me any bank that takes actual customer feedback into account, right? Not a single one, or at least like 90% of them. Don’t But in DeFi, developers actually take your feedback into account. And if it is good, then a lot of people like vote for it, then it gets implemented, right? Because it is like the world of decentralization. So you can use the product and think well, would I be users of this? Yes. If the answer is yes, so why wouldn’t other people be users of this? That’s like, there’s use case, right? There’s usage for that product? And then the second question that you asked, how does that token accrue value?, so look at the value accrued, right. And as long as there’s some sort of strong tokenomics, then usually it ends up I speculate it ends up paying well, over the long run,

Stan 29:08 

You have to believe in the product, but also stay rational you can’t marry to the product.

Karim 29:13 

100% because at the end of the day, your point is to make profit.That’s a topic for another day. But you know, there’s also the question, what do you want to accumulate right? Up until like, last year, I would have said, You US dollars are like a fiat currency because that’s what we use to pay for everyday things. But now it is sort of questionable. Given like the the surplus of supply, and like the monetary environment right now. But yeah, that’s a topic that we can actually discuss later on. But it comes down like your point is not to get married to any project to get married to any project. Usually you’re too emotionally attached. You’re too emotionally attached. you don’t think rationally you don’t see clearly. And it’s just like you become sort of like blinded by love, right? You don’t see any sort of flaws. And when you actually should as an investor, you should, you should look at everything in a very rational way like Thor chain, for example. What’s its current problem, right? It has a very grand vision, I see that vision, I’m invested speculating that that vision would happen. But what the current what is the current problem? Well, the  current problem is liquidity. It’s not very liquid, right? If you swap, you’re probably going to lose a bit to slippage. Ethereum, what are the current problems? Gas fees? Right? I can tell you like problems with every single project that I’ve invested in. Solana, right now  is not very liquid. If you try to swap even like 10k over and Raydium, usually, you lose some money to slippage, right? So it’s not the most liquid place yet. So you got to be very aware of any sort of shortcoming of any project. Because look, shortcomings can be fixed. But if you don’t see them, and they get too big, then you end up being a bag holder.

Stan 30:54 

Yeah. And that’s basically how you can combine the state of the market with your convictions.

Karim 31:00 

Let’s take the example of like SNX, for example, right? And like this is purely hypothetical. Say SNX goes to like $60, right over the next few weeks. Again, hypothetical scenario. So it goes to like $60, right. And although like, this is our target for SNX, I do think it goes higher, eventually over a few years time is just fitting our timeline is like $60.At that point, I’m looking at the market and I’m thinking, well, market is mispricing SNX , it’s really undervaluing it should be higher on the market cap rank or should be higher in terms of usually its market cap rank, right. And, like, market cap in general, the market cap is a bit low or under estimated by the market right now. Well, let me buy that dip. And like, express my opinion in the market, you express enough good opinions in the market through investing the market rewards you and you can see this with like, the most successful investors like in the world, for example, Naval he’s expressed, like using money is like sort of like an expression of an opinion, right? You put your money where you think the world should go and where you think it is going anyway, right? You invest in those projects. And the world uses these projects. And it rewards you eventually for your sort of early backing.

Stan 32:26 

Yeah, that’s a really great insight. I didn’t actually look at it that way yet, but it actually explains it very well.

Karim 32:34 

Yeah, like again, that’s why I’m like not big on shit coins by any means. Like the hype is fine. Like when there’s momentum  Look momentum can really drive a lot of profits very fast, which is why like we’re doing this entire Solana thing But again, risk management is like very important. But the reason I’m not like a big fan of shitcoins or I wouldn’t buy in like into Dogecoin or like SHIBA INU or that kind of stuff, although they’ve made a lot of profits simply because I don’t want to express that opinion in the market, I want to back where I think the market should be going, where I think the market goes is simply DeFi dominating a very large part not only of crypto, but like in the entire world. Pretty much everyone is interacting with it in some sort of way. They may not know it like in like 10 or 15 years, I would speculate the UIs are too good. And like people will not know what like what particular protocol they’re interacting with simply because front ends would be like very easy to use. But they would be using DeFi like they will be like the underlying technology for a lot of like different financial applications. So I want to express that opinion in the market, where I think this is where the market is going. And like it’s it’s also like fundamentally sound, in my opinion, simply because of revenue, right? I’m just looking at equities investors value like the highest companies that they they value them, like the highest with the highest revenue, right? The higher the revenue, the higher the valuation usually is. So when I looked at a  lot of shitcoins that have zero revenue, I think well, how much? How much do I really want to back that or would I want to put my money where the most revenue is likely to come in. Right? And right now, by the way, fun fact, Ethereum as a network is generating more revenue than the Bitcoin network.

Stan 34:23 

Also, because of the Dapps on the network?

Karim 34:27 

Like miners revenue right now it’s like extremely high. Obviously.Like, that’s, that’s like that’s the current revenue Ethereum, right? This is how the revenue works. It’s not Yeah, this is how it works like later on with ETH 2.0. Yes, like staking, can be shared, like revenue could be shared in between,you know, different stakers. So you just need to be sort of like a token holder. To some degree, it’s a lot easier, more accessible than proof of work. Like that’s how its measured, like miner revenue. Anyone who has interacted with Ethereum knows how high the revenue probably is. Because like, I don’t know, if you’ve ever paid like, more on gas fees than gas in real life, but I most definitely have.

Stan 35:16 

Me too, even more than the actual transaction.

Karim 35:19 

Yeah, yeah, at that point I, I wouldn’t say it’s like, an optimal decision. But I mean, a lot of us who have interacted with Ethereum have at some point paid like 100 or $200, just to get a transaction through. And to be honest,  it’s usually like, you don’t want to you, you don’t want to ever pay that kind of money for a  transaction, but it gets fixed over time. But it also shows you that, you know, people are still willing to use Ethereum, despite the fees, because of like, what value it is  offering through all of the decentralized, like finance applications and protocols. My only advice is like, Look, stay rational. Never think that when you’re new, you’re probably like, very, you know, there’s like a good chance that you may fall into like these certain pitfalls, but learn from people who have been here and not necessarily us, but learn from people that have been through different cycles, right? So you can think rationally you can think and look at the actual facts, the data, don’t let Don’t let price sort of manipulate your emotions at any point in time. It’s fine. Like when you’re making money hand over fist, like in one day, if you have like a 50% return on your entire portfolio. You can’t help it and feel euphoric. Everyone does it  Everyone feels that same way. But analyze that emotion. Right. Realize, alright, I am euphoric. The reason is the market pumped up way too high. Now, where do we go from here? Right? Is there too much money in the market? Is it like, are we like at any point of overvaluation? So simply stay rational. It’s like common sense, and just don’t allow emotions to overcloud that common sense.

Stan 37:03 

Yeah, I understand what you mean  you really have to stay on your feet basically, don’t get too much conviction in something that isn’t there.

Karim 37:15 

Yeah, and like another very important point, which I think we sent a message the other day over on Discord. Look, if you started out with like, again, hypothetical example. So you started out with like, $1,000 right in the market, maybe a year ago. And that used to be like a, you know, decent amount of money for you. It just like hypothetical example again. So So you started out with like, 1000. And now you’re sitting at like 100 grand, right? You’re at a point where you have too much money in the market relative to your like entire net worth assuming you know, other income sources have not grown. Usually taking out some profit, first of all, you’re securing yourself, you can reward yourself, you can help out family, you can actually put that money to a lot of good causes. But even like taking 5 or10 percent, maybe 15%, you can really alleviate actually, a lot of the stress that you may be dealing with in the market, right? If you’re over stressing with every move, and you can’t really think rationally usually it is because you are oversizing over betting and you can’t make like optimal decisions. So rational thinking also comes down to sizing right if you have too much being bet on the market, you can’t really think clearly. So taking some of can, you know, optimize your performance for one and for two you can actually like reward yourself and like as I said, help out family donate or whatever else.

Stan 38:39 

You can basically secure your profits, but stay rational in the market you like you don’t have to take everything out, but you don’t also have to keep everything in.

Karim 38:49 

Yes, specifically if you have like too much in the market relative to how much like your entire net worth is.

Stan 38:55 

And the next episode we will be talking about Solana ecosystem and Solana season. I’m very interested in that topic too.

Karim 39:04 

So, Solana right now like SOL that token like native asset of the Solana blockchain is not like a long term holding yet. The reason I say yet is we haven’t made like a full decision yet. But we’ll be discussing next time What could make or break Solana and like what we’ll discuss, like all details like in the next episode,

Stan 39:23 

Thanks for listening, guys. See you guys in the next episode.

Karim 39:26 

Thank you, everyone. Take care.

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