TL;DR

It’s Q4 2024, $BTC is at $80k. Altcoin season has finally arrived. You’re tempted to rely on your gut to time the peak. But is there a better approach? “Failing to prepare is preparing to fail”

2/ Pitfalls Of Price Predictions

Relying only on price targets for managing investments is a common mistake.

Such targets are often subjective, driven by emotions or influenced by social media.

Accurately predicting prices and timing their changes is extremely difficult.

3/ The Mind’s Tactical Advantage:

As portfolio your grow, fear & greed amplify.

Each dip & rip escalates the battle for rational thinking.

Goalposts move, confirmation bias grows and discipline wanes.

It’s you against yourself, and the difficulty rises with the stakes.

1. The Power of Thesis Investing:

Besides price and emotion, what other strategies exist?

There are many to choose from: sentiment, technical indicators, or on-chain analytics.

However, a strategy centered around a thesis often proves most reliable.

4/ Creating A Thesis

A thesis is a reasoned argument for a project’s potential over a defined time frame.

The factors shaping this thesis are versatile and aren’t always tied to price.

A good thesis should be testable, allowing for precise and adaptable management.

5/ The Rationale For Thesis Investing

Thesis investing is great for several reasons:

• Scales with your growing portfolio

• Eliminates emotion & sentiment

• Provides clear validations & invalidations

• Eliminates the noise of short-term PA
  

6/ Example 1:

Let’s imagine you’re optimistic about a particular L1.

Rather than setting its past ATH as your target, you could look at:

TVL, Trading volume, or the # of active wallets.

Take it a step further by focusing on relative metrics like market share or mind share.

7/ Validation & Invalidation:

Next, set validations based on your chosen key performance metrics (KPIs).

This helps check if the L1 is following your predicted path or diverging.

For instance, you could use the 30D growth of KPIs as the basis for managing your thesis.

8/ Example 2:

Consider a new project with AI agents.

Instead of price, you could focus on a KPI such as the # of agent transactions.

Depending on your conviction, you set a benchmark, e.g. reaching 1M on-chain transactions.

9/ White papers / MVPs

Exploring lesser-known, volatile coins?

Many only have a minimum viable product (MVP) or lack a live product altogether.

In these situations, focus on roadmap checkpoints or milestones.

10/ Navigating Events:

Your thesis may focus on event execution rather than metric growth.

“Buy the rumor, sell the news,” as they say.

Sometimes, exiting once the date is confirmed is smarter than waiting for the event.

Afterward, set new metrics & form a fresh thesis.

11/ Other Strategies:

Is a complex thesis strategy not for you? Consider these alternatives:

Time-based strategy

Fear & greed strategy

Relative outperformance

Let’s dive into each

12/ Time-Based Strategy:

A time-based strategy offers a simpler, more reliable approach.

Consider selling a small % of your portfolio every week or month.

Adjust the timing and amount of sales based on macro factors, liquidity, and your goals.

13/ Fear & Greed Strategy:

Market mood swings, like ocean tides, can push high on greed.

The strategy is to ride the high tide and secure gains before the tide retreats.

Consider a weighted DCA-out strategy based on the Fear & Greed index.

14/Relative Outperformance: Imagine the market as a race with each coin as a car speeding along. Now, focus on identifying which car will accelerate faster relative to others. An way to do take profit is to sell at specific MC rankings. E.g. 10% at #50 MC, 20% at #40 etc.

5/ Final Thoughts:

Crypto is highly speculative, and emotions often prevail.

A risk system that operates independent of price, can offer peace of mind.

Prioritizing thesis over speculation is a hallmark of successful investors.

*Purely educational, not financial advice.

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