Beginner Mistakes

Yesterday I met someone who sought my help to review her crypto portfolio.

Her portfolio consisted only of 100% high risk assets (obscure & outside Top 100) and they are down -80%.

This is very common for a crypto beginner starting out. Your capital is small and you are in a rush hence you try to spot alpha and take high risk bets. You hope that with enough 100x wins, you can quickly achieve your financial goal and then start reducing risk after that.

Unfortunately, the road to success in crypto is actually quite the opposite.

Crypto is already high risk so your goal should be to reduce risks as much as possible and every risk you take is a calculated risk.

At the present mindset, even when you achieve your first 100x, there is a high probability your mind will lull you into thinking you can score 100x easily. This is not abundance mindset at play but a trap that will lead you into a cycle of taking unnecessary high risks. And that’s why this strategy is dangerous and has the reverse effect in helping you achieve your financial goals.

Additional IRL Observations

When you hear people say they place 10 bets in hopes of 1 bet doing a 50x, pay attention to how they do it also. Usually, the 10 bets only constitute 1~10% of their portfolio. This means even when all 10 bets go to zero, it does not decimate their entire wealth.

The people who genuinely do well in crypto hedge their bets. Some do get lucky, but statistics have shown those who get lucky in the casino lose all their money in the long run because the mindset is wrong.

At no point am I saying you cannot make high risk bets. But when you do, it should not be more than 10% of your crypto wealth. This approach helps you maintain emotional stability, even during extreme volatility or market downturns. Because when a bet goes down -90% but only represents 10% of your crypto portfolio, the emotional impact is manageable. Conversely, if that 10% achieves a 100x return, the joy is still immense. This way, you minimize the pain of losses while enjoying the potential upside of crypto.

Only 1% of people experience this and you should start being one too.