🎁 [SPECIAL EDITION] Wrapped: The Weekly Web3 Newsletter (2021 Review) - #13

2021 was wild. 2022 will be even wilder. 

In order to prepare for what is to come, I took some time to reflect on what I learned in 2021. I hope this helps you in your journey!

I thought BAYC was a CryptoPunks ripoff when they first came out. Surely Punks’ OG status meant they were untouchable, right? I finally saw the error of my ways and bought an ape for 18 ETH over the summer. Last week I sold it, locking in my biggest NFT gain so far (don’t worry, still holding mutants). Does this mean CryptoPunks are bad? Of course not! I love my Punk! But I’m no longer under the illusion that they deserve to be the most valuable NFTs of all time. 

Being ‘right’ about an asset today doesn’t mean you’ll be right about the same asset tomorrow. In 2021 we watched BTC dominance dwindle, ETH lose market share to alt-L1’s, and Bored Apes flip CryptoPunks. I’ve learned this lesson the hard way, but my best decisions have come from letting go of sacred cows. Develop conviction in the web3 forest, but don’t get hung up on any individual tree. 

I bought a floor ON1 for .69 and flipped it at the picotop for 6.9 ETH. I was feeling pretty good about myself. I started thinking I had the midas touch, and got lazy in my due diligence. I quickly snatched up all sorts of garbage PFP projects, which I’ve since sold at breakeven prices or losses. 

If your NFT just pulled a 10x in value, you got lucky. Don’t flatter yourself. The moment you start thinking you’re a genius is the moment you’ll get greedy and make enormous mistakes. 

Speaking of mistakes, I’ve made them all:

Mistakes are an inevitable part of the journey. Maximize your experience by learning about your own psychology along the way. Figure out what you’re good at, what your weaknesses are, and how your own mind works when making decisions about whether to buy/sell. Learn from good decisions, but learn more from bad ones. Let’s see if our 2021 mistakes can protect us from 2022. 

I remember doing my ‘due diligence’ on BAYC when they were trading at 1 eth. The reality is I didn’t do anything besides taking a brief glance at the website. The only thing I noticed was the ability to create graffiti in their digital bathroom. Seemed pretty stupid at first glance, so I moved on.

BAYC is a perfect example of an iceberg project. There was much more going on beneath the surface if you were paying attention (I wasn’t). Unfortunately, now more than ever we are being inundated with ‘mirage’ projects. These projects are nothing more than landing pages with absolutely nothing under the hood. Find the icebergs, avoid the mirages.

I clearly remember thinking I was too late to learn the guitar at age 16. How ridiculous is that? In 2008, I started training for triathlons, but thought ‘I’m probably at the tail end of this fad’. In 2012, I thought I was too late to the world of ecommerce & Amazon.  In early 2020, I worried I was ‘too late’ when I started really learning about ethereum. In Feb 2021, I felt I was late as I bought my first NFTs. 

Forget about feeling too late. It’s never too late to get involved in something you enjoy. If you love web3, find a way to get involved and stay involved. 

*One giant caveat: Investing is a different beast. When it comes to buying and selling NFTs & crypto, timing is everything. Markets are cyclical, bubbles form & burst, and narratives change quickly. So while I don’t think you’re ‘late’ to web3, that doesn’t mean you should be throwing your life savings into everything at this very moment. I believe many of the biggest projects have yet to be launched, but 90% of projects are currently overvalued.

I started my journey with a heavy BTC & ETH bias. It worked well for about a year, but then I started missing out on some incredible returns because I was married to my bags. I’d highly recommend watching this entire episode of Cobie on UpOnly. Cobie has the gift of being able to separate what he wants from what is actually happening. He allows the market to inform his decisions, rather than allowing his personal biases to dictate his investments. 

If your goal is to be an activist, then by all means buy whatever you feel most passionate about. But if your goal is to make money, then let go of your ego and learn to objectively observe the market. 

Let’s keep the wisdom flowing from Cobie:

Have you noticed that chasing everyone else’s moves leads to more stress, poor decisions, and increased insecurity? Many of my worst moves came from copy-trading some random twitter anon. It’s a quick and easy way to become someone else’s exit liquidity. Of course we all need to get our alpha from somewhere, but remember to take the time to form your own thesis and make your own decisions. Conviction cannot be borrowed. 

You also must take into account your own unique circumstances & understand how they differ from everyone else on Twitter. Your unique situation requires you to craft a unique portfolio and investment thesis. Here’s some questions you should ask yourself:

So, why did I sell my bored ape? My ape had ballooned into a substantial portion of my net worth and it was stressing me out. This is a tell-tale sign that I have too much at stake in web3. I have a beautiful family to take care of, and I’ve been living a ‘risk-on’ investment strategy for all of 2021. The reality is that my stress levels were having an adverse effect on my relationships and overall health. Cashing out provided me with a sense of relief, security, and freedom. If I was worth eight figures I would have held on to the ape, but alas:

🚨DISCLOSURE: I own NFTs! I own punk #2971 if you’d like to dig around.