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MANA · 7w

How To Intelligently Invest in Crypto as a Retail Investor (from a VC)

Text from a friend I invest with. A journey of a thousand miles begins with a single step.

You may wonder how applicable my advice is, because I work as a VC, which means early access to information. Well let me tell you that behind the fancy VC veneer, I am a crypto degen. It is how I have made most of my actual money. Spotting these opportunities has almost no correlation with VC investing where your time horizon is 5–10 years out.

I will go through some of my wins, some misses, and sum up the lessons at the end.

1 + 1 = 3

First, working with a friend who is deep in the crypto space is very helpful. 1 + 1 = 3. The space is growing and changing so fast, you need a partner to cover the whole space and spot the best opportunities. I use the term “we” going forward because my success so far has only been possible by having a good thought partner.

Invest Early in the Trend

Invest with the trend, but get in before the trend plays out. You will see cryptocurrencies that do all sorts of things, but only the ones that are part of key trends will rise with the tide, even if they are not the ultimate winners. The non-winners may still rise 2–5x. The winner can rise 100x. This is what happened with matic token in early 2021. Heads I win, tails I also win.

In December 2020, we sensed the next bull market coming and noted down the key trends like derivative protocols, stablecoins, Layer 1s, Layer 2s, oracles, DEX, lending. We looked for all the small caps trading at around $10M–300M in market cap in those sectors.

All of this will take work, so be prepared to get your hands dirty. Being a user of these protocols is the single best way to narrow down the potential winners.

Case 1: Apeswap

In January 2021, we were playing around with Binance Smart Chain (BSC), the newly launched layer 1 competitor to Ethereum. It was amazing. Transactions were instant and cost cents, compared to several minutes and $30+/tx on Ethereum. Forget tha...

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