22 Crypto Lessons Learnt in 2022 : Miles Deutscher

  • DeFi is becoming increasingly important as a decentralized and transparent alternative to traditional financial systems.
  • The size of a project does not guarantee its success in the volatile world of crypto.
  • It's important to thoroughly evaluate the mechanisms of a project before investing, and to regularly re-evaluate your portfolio to ensure it aligns with your investment thesis.
  • Algorithmic stablecoins have a history of failure, and it's important to understand a stablecoin's design before investing.
  • Self-custody is crucial to ensure the security of your assets, and it's important to avoid relying on centralized exchanges and lenders.

Cryptocurrency has had a wild ride in 2022, with numerous major collapses, the rise and fall of various projects, and the continued evolution of decentralized finance (DeFi). Crypto analyst Miles Deutscher shares 22 lessons (Twitter Thread) he has learned in the tumultuous world of crypto in 2022.

22 Crypto Lessons Learnt in 2022 : Miles Deutscher
Source: DYORspot.com

DeFi is the Future

DeFi is the only way forward. Many of the collapses in the crypto world this year were due to human error rather than technological flaws. This highlights the need for DeFi, which offers a decentralized and transparent alternative to traditional financial systems.

Nothing is Too Big to Fail

Nothing is too big to fail. This year saw the downfall of several large projects, including LUNA, FTX, Celsius, BlockFi, and Genesis, proving that size does not guarantee success in the volatile world of crypto.

Broken Mechanisms Don't Work

If a mechanism is broken, it won't work - no matter how big it gets. It's important to thoroughly evaluate the soundness of a project's mechanism before investing, rather than being blinded by its market capitalization.

Don't HODL Blindly

Don't HODL blindly. It's important to regularly re-evaluate your portfolio and consider whether you would still buy a given token if you weren't already holding it. Holding a token is effectively the same as buying it at that point in time, so make sure it aligns with your investment thesis.

Algorithmic Stablecoins Don't Work

Algorithmic stablecoins don't work. So far, every attempt at creating a stablecoin using algorithms has failed. It's important to fully understand a stablecoin's design before investing.

Self-Custody is Key

Not your keys, not your coins. The importance of self-custody has been underscored this year with the failures of many centralized exchanges and lenders. To avoid losing access to your assets, it's crucial to store them on a hardware wallet like a Ledger.

Timing the Market is Impossible

Timing the top (or bottom) is impossible. It's impossible to predict the highs and lows of the crypto market with any accuracy, as it is influenced by a wide range of macroeconomic factors. It's better to focus on risk management and stick to a long-term plan rather than trying to time the market.

Chase Real Yield

Chase real yield, not fake emissions. When evaluating a project that offers high yields, it's important to consider the source of the yield, whether it is sustainable, and whether the strategy behind it is delta neutral or involves a directional bias.

Beware of Single Points of Failure

Beware of single points of failure (systemic risk). Some projects rely on a single variable for their success, and if that variable fails, the entire project can collapse. It's important to identify these single points of failure and understand the associated risks.

Don't Worship Cult Figures

Don't worship cult figures. It's easy to get caught up in the hype around certain individuals in the crypto world, but it's important to remember that no one is untouchable.

Rotating Isn't the Same as Taking Profits

Rotating isn't the same as taking profits. It's important to define a profit-taking strategy and stick to it, rather than rotating into new projects without properly realizing gains.

Ecosystem Diversification is Vital

Ecosystem diversification is vital. Just because a project is part of the same ecosystem as another project you are invested in doesn't necessarily mean they are diversified. It's important to identify related parties and ensure true diversification in your portfolio.

Don't Lock Tokens

Don't lock tokens. Unless you have a very long time horizon, it's generally not worth locking your tokens for extra yield. With the rise of liquid staking, there are now more viable alternatives to consider.

Liquidity is King

Liquidity is king. It's important to prioritize liquidity over yield, as being able to quickly sell your assets can be crucial in times of market volatility or when you need to access your funds for other purposes.

Don't FOMO

Don't FOMO into a token just because it's pumping. While it can be tempting to jump on the bandwagon when a particular token is skyrocketing in value, it's important to carefully consider the fundamentals of the project before investing.

The "First Mover" Advantage is a Myth

Don't fall for the "first mover" advantage myth. Just because a project was the first to enter a particular market doesn't necessarily mean it will be the most successful. It's important to consider the quality of the product or service being offered, as well as the overall market conditions.

Low Liquidity Can Be a Red Flag

Be wary of projects with low liquidity. It can be difficult to buy or sell tokens with low liquidity, which can make it hard to exit a position if needed. It's important to consider liquidity when evaluating potential investments.

Don't Trust Third Parties with Your Assets

Don't blindly trust third parties with your assets. While using services like exchanges and lending platforms can be convenient, it's important to be aware of the risks involved and to only entrust your assets to reputable and secure platforms.

Don't Trust Social Media Hype

Don't trust social media hype. It's easy to get caught up in the hype surrounding a particular project on social media, but it's important to do your own research and make informed investment decisions rather than blindly following the crowd.

Only Invest What You Can Afford to Lose

Don't invest more than you can afford to lose. The crypto market is highly volatile, and there is always a risk of losing some or all of your investment. It's important to only invest what you can afford to lose and to carefully consider the risks involved.

Use Traditional Forms of Analysis

Don't neglect traditional forms of analysis. While it's important to stay up-to-date on the latest trends and developments in the crypto world, it's also crucial to use traditional forms of analysis like fundamental and technical analysis to make informed investment decisions.

Stay Informed on Regulatory Developments

Stay updated on regulatory developments. The regulatory landscape for crypto is constantly evolving, and it's important to stay informed about the latest developments and how they may impact your investments.

Overall, 2022 has been a year of lessons and growth in the crypto world. By staying vigilant and staying informed, investors can navigate the volatile market and come out ahead.

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