The FTX collapse has sent shockwaves throughout the entire crypto industry.
It has changed my perspective on crypto forever.
π§΅: 10 lessons Iβve learnt that can help you avoid disaster in the future. π
It has changed my perspective on crypto forever.
π§΅: 10 lessons Iβve learnt that can help you avoid disaster in the future. π
1. DON'T HODL BLINDLY
Re-evaluate your thesis on a regular basis.
For example, every month go through your portfolio and ask yourself:
A: Why am I holding this token?
B: If I wasn't holding, would I buy this token right now?
Re-evaluate your thesis on a regular basis.
For example, every month go through your portfolio and ask yourself:
A: Why am I holding this token?
B: If I wasn't holding, would I buy this token right now?
If you answered no to question B, then you should probably sell.
Remember, holding a token is the same as buying at that given moment (opportunity cost).
Remember, holding a token is the same as buying at that given moment (opportunity cost).
2. NOTHING IS TOO BIG TO FAIL
As we saw with LUNA (and now FTX), even the biggest players are prone to failure.
The echo chamber of Crypto Twitter is strong. Don't let other's overconfidence affect your beliefs.
As we saw with LUNA (and now FTX), even the biggest players are prone to failure.
The echo chamber of Crypto Twitter is strong. Don't let other's overconfidence affect your beliefs.
3. AVOID UNNECESSARY RISK
In crypto, where there's smoke - there's often fire.
If there's ever a slight rumour about an exchange going bust - always withdraw your funds.
You're better off withdrawing preemptively and redepositing than running the risk of losing your tokens.
In crypto, where there's smoke - there's often fire.
If there's ever a slight rumour about an exchange going bust - always withdraw your funds.
You're better off withdrawing preemptively and redepositing than running the risk of losing your tokens.
Treat FUD as true initially, and work to disprove it rather than instantly dismissing it due to a preexisting bias.
FUD is always just FUD until it isn't.
FUD is always just FUD until it isn't.
4. NOT YOUR KEYS, NOT YOUR COINS
Although a little clichΓ© at times, this saying holds merit.
Do yourself a favour and store your crypto on a Ledger/Trezor so you can sleep comfortably at night.
It's ok to trade on a CEX - but do your business and move your profits off ASAP.
Although a little clichΓ© at times, this saying holds merit.
Do yourself a favour and store your crypto on a Ledger/Trezor so you can sleep comfortably at night.
It's ok to trade on a CEX - but do your business and move your profits off ASAP.
5. START TRADING ON DEXS
If you want to avoid CEX risk completely, then consider using a DEX.
There are great places to trade derivatives like $GMX, $GNS, $APEX etc.
You don't NEED to trade on a centralised exchange.
If you want to avoid CEX risk completely, then consider using a DEX.
There are great places to trade derivatives like $GMX, $GNS, $APEX etc.
You don't NEED to trade on a centralised exchange.
6. CONSIDER THE RAMIFICATIONS
Whenever a black swan event like this occurs, think deeply about the effect on a) the related tokens (e.g SOL), and b) the industry as a whole.
Events like these are industry-shaping, and require you to think critically to re-evaluate your bias.
Whenever a black swan event like this occurs, think deeply about the effect on a) the related tokens (e.g SOL), and b) the industry as a whole.
Events like these are industry-shaping, and require you to think critically to re-evaluate your bias.
From every collapse, there are also positive ramifications for certain sectors/narratives.
For example, DeFi trading volume is experiencing a boom right now.
Look at where the capital will rotate to next and act on it.
For example, DeFi trading volume is experiencing a boom right now.
Look at where the capital will rotate to next and act on it.
7. ACT QUICKLY
When FTX started to collapse, there was a huge opportunity to profit via shorting affected tokens.
If another event like this occurs, don't just sit on the sidelines in shock.
Adjust your thesis and trade pragmatically based on the available information.
When FTX started to collapse, there was a huge opportunity to profit via shorting affected tokens.
If another event like this occurs, don't just sit on the sidelines in shock.
Adjust your thesis and trade pragmatically based on the available information.
8. LOOK FOR FLAWS
Too often we look at the positives when researching a token/entity.
β’ "FTX is a massive exchange, they won't go under."
β’ "SBF is too smart, how could he fail?"
Instead, ask the difficult questions FIRST, then look for positives to counter weaknesses.
Too often we look at the positives when researching a token/entity.
β’ "FTX is a massive exchange, they won't go under."
β’ "SBF is too smart, how could he fail?"
Instead, ask the difficult questions FIRST, then look for positives to counter weaknesses.
9. SEEK TRANSPARENCY
If a project/entity doesn't specify EXACTLY where their balance sheet/treasury is allocated - take this as a major red flag.
With CEXs - look for proof of reserves/liabilities.
In DeFi - look for proof of treasury reserves.
If a project/entity doesn't specify EXACTLY where their balance sheet/treasury is allocated - take this as a major red flag.
With CEXs - look for proof of reserves/liabilities.
In DeFi - look for proof of treasury reserves.
10. ALWAYS KEEP CASH AVAILABLE
Just as its not ideal to be fully out of the market, it's not optimal to be fully invested either.
Always keep some cash to take advantage of new opportunities.
Those who did are in a great position now to accumulate at more attractive prices.
Just as its not ideal to be fully out of the market, it's not optimal to be fully invested either.
Always keep some cash to take advantage of new opportunities.
Those who did are in a great position now to accumulate at more attractive prices.
Most of these lessons I've been preaching for quite some time, but it's a timely reminder to revisit given what's happened over the last week.
So you never forget these lessons and can easily revisit them at any time, save the thread via bookmarking the tweet below.
If you enjoyed this thread, please retweet + like the first tweet below. π
Also follow me @milesdeutscher for more content like this if you aren't already.
Also follow me @milesdeutscher for more content like this if you aren't already.
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