Winning doesn’t mean playing a perfect game. It means playing a better game than your opponent. On the soccer field, you might miss a few shots on goal. The other side might score once or twice. That doesn’t matter as long as you score enough to come out ahead.

Being a good player, or a good team means having the skills to score more often than the other team, and often enough to win.

My 5T’s crypto strategy works the same way. There are no sure bets in crypto or any other market. The crypto market is a chaotic and brutal frontier, and you should never trade with money you can’t afford to lose. But all that said, it’s the best chance you have at capturing the incredible wealth that this new asset class can generate. It does this by maximizing your chances to win and minimizing your chances to lose.

That way, your gains can massively outrun your losses.

That’s why we need to steer clear of a very natural but very dangerous mistake: outcome bias…

Hypecoin: Don’t Buy It

What is outcome bias? It’s when you mistake hindsight for foresight. Let’s say we have a crypto in mind. For the sake of argument, we’ll call it “Hypecoin.” Now, let’s say we run it through the 5T’s and it doesn’t measure up. It basically uses the same tech as bitcoin, but it’s more centralized, and it produces new coins at a much faster rate. No new technology. No “why” case to justify people actually using it.

And let’s say the dev team awards themselves more of these “hypecoins” whenever they want. Bad tokenomics.

Obviously, it fails the 5Ts. It’s a bad buy, and we should ignore it.

But then, all of a sudden, Elon Musk tweets that he’s buying hypecoins. Suddenly, his personality cult is all in on it and it goes up by 100X. What should we do then?

The answer is nothing. We just shrug our shoulders and move on.

And here’s why; there’s a million hypecoins out there, and for every one that gets lucky and sees an insane rally, the rest all go straight into the trash.

Before it actually rallied, we had no way of knowing which of those hypecoins was going to get pumped. If anybody thinks they did, they’re either a liar or a crook with inside info.

Stupid and Lucky Is Still Stupid

Some of those liars are going to go so far as to try and pretend that they have some kind of magical Davinci code that will let them guess where the next hypecoin rally will happen. They don’t, and they’re probably going to lose money trying to find it.

Or, more likely, they’re going to lose other people’s money trying to find it.

You can even say this about Bitcoin itself. Business has-beens like Mike Novogratz and Hugh Hendry got lucky, put some high-risk capital in Bitcoin before it even started getting big back in 2017, got lucky, and now they’re pretending that makes them financial geniuses. They’re not. Lightning will not strike twice for them.

And someone who doesn’t understand that? Doesn’t account for their own outcome bias? Well, they’d look at hypecoin and wrongly kick themselves for not buying when they read about it on a crypto forum, even though they had no reason to believe it would do well at the time.

They would think they made a mistake that cost them millions, instead of just failing to win the lottery, which is what, practically speaking, always happens when you play the lottery.

And so, the next time some smooth-talking con artist comes along shilling for the next hypecoin, our hapless victim will be overcome with FOMO and make a huge trade on this new novelty token.

Then, that token will get rugpulled, or just crash due to a lack of strong fundamentals. It turns out, not many other people knew about it, and those who didn’t care. Our hypothetical sucker in this scenario is down by however much they put in.

And then, some other meaningless trash token they never heard of spikes 100x. They had better learn the lesson this time, or they’ll make the same mistake again.

And what’s that lesson? Avoid outcome bias. Just because something happened doesn’t mean that it was possible to predict it in advance. And you know what? Anybody who bought hypecoin before its 100x rally is an idiot.

It doesn’t matter that they won. If someone spends their life savings on lottery tickets and wins a $100 million jackpot, they’re still an idiot.

We make our trades based on the information we have at the time. Nothing is ever a sure thing, and nobody can ever be all-knowing (until when general A.I. comes along). We use my 5T’s system for judging the fundamentals of a crypto we gather up as much info as we can, and use that instead of relying on pure dumb luck.

That’s how we make as much money as possible in crypto.


Notify of
Inline Feedbacks
View all comments