THE PHENOM CRYPTO LETTER

GM,

Welcome to the weekly update. Meme coins continue to outperform and celebrities are getting back into the mix. This week Caitlyn Jenner launched and proceeded to get rugged w/ her own meme coin 🤣. What a time to be alive. On another crazy note, a high ranking US Military Officer made the case for BTC hitting $100m per coin 😮. This seems pretty farfetched but I sure wouldn’t be upset if it happens.

Speaking of memes, Premium Subscribers make sure you check Eric’s buy signal email yesterday!

Here’s what we’ve got this week:

• Market Rundown

• Cognitive Biases in Investing

• US Military Predicts $100m BTC

• How Meme Coins Flourish

MARKET RUNDOWN

Overall, market cap continues to slowly creep higher. However, BTC dominance is also creeping up signaling that we still haven’t kicked off “Alt season” and are in the middle innings of this bull market.

BTC: Semler Scientific announced they added BTC to their corporate treasury. I believe we will see a cascade of announcements of BTC being added to corporate balance sheets over the next year w/ this becoming more of a norm than an outlier.

ETH: Last Thursday speculators were rewarded when the SEC approved a number of ETH ETF applications. The inflows into these once they launch probably won't be as dramatic as the BTC ETF’s however confluence of the supply shock due to larger scale adoption and burn from higher usage during this bull market coupled with the yield associated with staking is highly bullish for ETH.

Top Movers:

• (-)SingularityNet ($AGIX) -14% AGIX cools off on a sell the news event as the an official date is set for the merger with $FET

• (-)MakerDAO ($MKR) -9% Maker pairs gains as it continues its drama w/ Aeve

• (+) NotCoin ($NOT) +77% Notcoin pumps on news of major exchange listing

• (+) Chiliz ($CHZ) +28% Chiliz pumps as whales accumulate 1.6 billion tokens

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Cognitive Biases in Investing

When investing in anything but especially crypto, making informed decisions is key to success. Yet, cognitive biases often cloud our judgment, leading us to avoidable losses. Understanding these biases and learning how to counteract them can significantly improve your ability to invest successfully and realize gains. Here’s a short overview of some common biases in crypto investing and tips on how to manage them.

1. The Sunk Cost Fallacy

   What it is: This bias occurs when you persist with an investment because of the substantial resources already spent, despite evidence suggesting you should move on.

   Example: Holding onto a declining cryptocurrency simply because you’ve already invested heavily in it.

   Pro Tip: Regularly conduct a "clean slate" analysis. Assess your investments based on the latest information. If the current evidence doesn't support holding an asset, consider cutting your losses and moving on.

2. Survivor Bias

   What it is: This is the tendency to focus on the winners while ignoring the many that didn’t make it, giving a skewed perception of success.

   Example: Celebrating the rise of certain cryptocurrencies without acknowledging the numerous ones that failed.

   Pro Tip: Maintain a "reality check" diary that records both your significant gains and losses. This balanced view helps you stay grounded and make more informed decisions.

3. Social Comparison Bias

   What it is: Comparing your results to others, often leading to feelings of inadequacy or envy.

   Example: Feeling dissatisfied with your crypto gains when you see others posting bigger returns online.

   Pro Tip: Set personal investment goals and celebrate your milestones, independent of what others are achieving. Your journey is unique; honor it.

4. Anchoring Bias

   What it is: Relying too heavily on the first piece of information encountered (the "anchor") when making decisions.

   Example: Allowing initial hype about a cryptocurrency to disproportionately influence your investment choices.

   Pro Tip: Regularly review and question the rationale behind your investments, ensuring your decisions are based on updated and comprehensive data.

5. Confirmation Bias

   What it is: The tendency to search for, interpret, and remember information that confirms your preconceptions.

   Example: Only paying attention to positive news about your chosen cryptocurrency while ignoring any negative reports.

   Pro Tip: Make it a habit to explore and consider opposing viewpoints. This balanced approach ensures a more holistic understanding of your investments.

6. The Hot Hand Fallacy

   What it is: The belief that a streak of good performance will continue into the future.

   Example: Assuming a cryptocurrency that has been rising will keep climbing without considering potential risks.

   Pro Tip: Treat each investment decision independently, evaluating it on its own merits rather than past performance.

7. Disposition Effect

   What it is: The tendency to sell assets that have increased in value while keeping those that have dropped.

   Example: Quickly taking profits from successful investments but hesitating to sell underperforming ones.

   Pro Tip: Develop and adhere to a predefined strategy for buying and selling, focusing on logic rather than emotion.

8. Bandwagon Bias

   What it is: Following trends simply because others are, often without conducting your own research.

   Example: Investing in a cryptocurrency just because it’s popular, not because it has solid fundamentals.

   Pro Tip: While trends can highlight opportunities, base your investment decisions on thorough research and analysis.

9. Outcome Bias

   What it is: Judging a decision based on its outcome rather than the quality of the decision at the time it was made.

   Example: Regretting not investing in a now-successful cryptocurrency, even though it was highly speculative at the outset.

   Pro Tip: Evaluate your decisions based on the information you had when you made them, not just the eventual outcomes.

10. Herding Bias

    What it is: Making investment choices based on what others are doing, often driven by FOMO (Fear of Missing Out).

    Example: Jumping on a cryptocurrency bandwagon because it’s trending, without doing your own research.

    Pro Tip: Develop an "individuality index" to measure how much your decisions are based on independent analysis rather than following the crowd.

11. Endowment Effect

    What it is: Overvaluing what you own, regardless of its actual market value.

    Example: Pricing a token you own higher than the market rate simply because it’s yours.

    Pro Tip: Regularly reassess whether you would still buy your current assets at their current prices to ensure a fair valuation.

12. Bias Blind Spot

    What it is: Failing to recognize your own biases while easily spotting them in others.

    Example: Believing you’re immune to the biases that affect other investors.

    Pro Tip: Actively seek feedback from others and stay open to identifying and addressing your own biases.

Study these common biases so you can recognize them in yourself and implement strategies to counteract them. If you do, you will make more rational and informed investment decisions.

READING CORNER

Overwhelmed by all the content you could be reading? Don’t worry, We’ve got you covered. Each wee we narrow down a few newsletters, articles or videos we think are worth your time.

BLOCKBUZZ

Quick Hitters from the week

• Bitcoin as Defense Strategy Catalyst: A US major predicts that recognizing Bitcoin as a part of the weapon system could drive its value to a staggering $100 million, according to Lowery's theory.

• Mt. Gox Mobilizes Bitcoin Reserves: Shifts $2.9 billion in bitcoin, marking its first major transfer in five years.

• Grayscale’s Ethereum ETF Faces Potential Setbacks: Analysts from Kaiko predict a daily loss of $110M in its first month, potentially impacting ETH prices.

• Harsh Penalty for Former FTX Exec Ryan Salame: Receives a 7.5-year prison sentence, surpassing government recommendations, in a landmark case following FTX’s downfall.

• Crypto’s Role in U.S. Elections Intensifies: One-third of U.S. voters consider candidates' crypto policies important in elections, with a significant majority expecting presidential candidates to be knowledgeable about cryptocurrency, according to a Harris Poll funded by Grayscale.

• FTX Bankruptcy Misconceptions Challenged: Empire Newsletter argues the perceived success of FTX’s bankruptcy proceedings might be overstated, questioning the real value recovered.

• Trump’s Crypto Advocacy at Libertarian Convention: Vows to pardon Ross Ulbricht, oppose Central Bank Digital Currencies (CBDCs), and champion cryptocurrency self-custody.

• Normie Memecoin Faces Critical Decision: After a smart contract exploit leads to a 99% price drop, the team contemplates acquiescing to hacker demands to salvage the token.

THE TWITTERVERSE

A collection of the most interesting stuff on Crypto Twitter this week

WAGMI

For the (crypto) Culture

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