E69: Tangent Co-Founder: How I Made My First $1M in Crypto

35:07So you basically doubled down from 60 to 120, right? That's very interesting. Yeah.

35:15Do you double down on a winner like you've done, right? Or do you go look for a smaller cap coin that follows the same narrative but hasn't pumped yet? And let's take two cases here. The first one is you missed the winner. Let's say you missed Solana. Yeah. Do you buy Solana and then double down? And then the second case, you hold the winner. you're already holding it do you buy do you double down or you say ah this other cash portion I have here I'll find AVAX right or maybe if you look at meme coins hey I mean

36:03for example WIF is a good example oh yes WIF is a very good example certain market cap but you're like okay do I go into like let's not talk about the 5 million or 10 million market cap meme coins because this is like a complete casino. But do I go to the ones that have some traction on base, right? Two, three, four, 500 mil. Or do I double down on whiff, which has 4 billion market cap, but seems to be one of the big trades of this cycle, right? So I think I'm definitely guilty of trying to find the next thing. It's only human. Do you think it's ego-based? do you think it's it's not ego based I think it's just it's human psychology of like rejecting the pump you see something too much you know there was that there was that Ivan on tech he was like you must embrace the pump into your life yeah yeah absolutely so I think it was related to sell token actually oh okay I just remember that meme or maybe yeah absolutely it's a great one it's a great one so I think he's like naturally if you see something go up way too much what you do is you naturally reject it this has gone up too much what am I going to do?

37:15I'm going to find the next one right? So that's just normal human behavior but what I've typically realized

37:24in certain market regimes like let's say a full bull market regime doubling down on the first mover almost always outperforms even if it's much larger in market cap? This is where it depends a little bit on a risk-adjusted basis, it will, absolutely. And that's what you're looking for if you're a smart investor is risk-adjusted return, not... But I would caveat it by saying that this only works in specific market conditions. If you are in a sort of choppy market condition, do that and you get killed. So a great example is if you try to long every Pepe breakout in 2023, you would have died. You're talking about leverage trading here?

38:15Are you talking about just buying a spot bag and waiting? Yeah, just buying, right? But let's say if you try to put on a long Pepe trade with an invalidation below 20%, for example, as a normal trade, you would have lost money like 10 times out of 10 if you tried to long every breakout, right, in 2023. But the one time in 2024 where it signals a different paradigm change. That one time you do it, the returns you get from that one move outweighs all the losses that you made from the last 10 because it's a different paradigm. So I think it's very important to know what kind of market you're in as well.

38:56And I usually use specific events that I typically would not expect to happen as signs to me that tells me that the market is still changing. For example? So the first one was very clear to me. The first one was in October, 2023. Solana breaking$40. I think at that time, Solana had like done like a 50 % move. And that time it wasn't like full bull market yet. You know, Bitcoin was flirting with 30K, you know, breaking a little bit. so Solana breaking$40 and going straight to$70 that to me showed me that this market risk or proper risk on sentiment is returning to the market because in every other situation Solana should have topped that$40 so that was a huge sign to me that was in October 2023 once I saw that I basically put the whole book long all altcoins okay because to me once that's possible in Solana then it's game on right but until i see something like that i'm a bit more conservative i when i don't really know what the market is going to do i'm not going to bet so large on things right the second one to me that really showed me that the pendulum has swung to really full bull market mode was pepe breaking up of that one year range that it had.

40:26And that one hit really hard because I was shorting Pepe. I saw the range. It was at range high. I remember it's... I don't even know what it is, but it's basically two, right? It was 1.7. I started shorting it. It went to two. Now, for reference, now it's like eight, right? Yeah, yeah. I was shorting two because Pepe just moved 30 % on a day when everything else hadn't really moved. and I thought this is insane, right? This is like meme coins moving this much. This should be the end of the cycle. And so I put on a short. 24 hours later, I got stopped out. I lost 40 % on that trade. And over the next week, Pepe went from two to 10.

41:12And when you see that kind of thing happening, you know once again, you've moved. This is no longer the same market, right? and then you start adjusting. So once I started seeing Pepe do that, we started looking at different other coins. Started looking at WIF. All of a sudden, what's the ceiling for WIF? Is it a billion dollars? Is it three billion dollars? Is it 10 billion dollars? Because the last cycle, Doge's ceiling was 95 billion. So then you start having these conversations again, you see. And this is what I think a lot of people are going through right now with meme coins especially. Absolutely.

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42:26The more subscribers, the better the guests. Thank you so much for your help. And now on to today's episode. I don't know. There's too many ways we can take this discussion. Where do you want to go? We're talking about meme coins. So let's talk about the meme coins one. All right. What's your honest take on meme coins? They present or they reflect the financial nihilism that has been, that the market has felt over the last 18 months, I think. I think the last very meaningful technology that was introduced to crypto was DeFi. sort of in a way you could do something net new that you hadn't been able to done before I think gaming you had a nice experiment with Axie that sort of unlocked what could be but not really in a sustainable way yet and so ever since then people have been waiting for what's next and we have been on the venture side we've been trying to find things that can express what is next but nothing has really come to market yet I think you had very small snippets of Frontech which introduced social fire to an extent, how to trade social tokens, but that never really took off.

43:42And so what has happened now, it's manifested in a sense where people want to be risked on, but people know that there's nothing really interesting or paradigm breaking in crypto this cycle. And so what do they do then? They go straight into stuff where there's absolute brutal honesty. There's no lie here telling you this is the future of finance, the future of gaming, the future of anything. This is a valueless token backed by memes and vibes and then you play. So it's, I would say that it's,

44:22it's a net positive in the space because it gets people thinking about speculation in crypto again. But I think if we don't see any net new experiences in crypto soon,

44:45the addressable market of crypto is likely going to be a lot smaller than we think it is. Meaning it's only going to be catering towards a decentralized casino. And I think it's been echoed quite a bit, Which it's been for many years. It's pretty much that, if you think about that. Brutally honest. And I got like really, there's a guy on Twitter who basically called me an idiot because I was just saying, obviously I understand decentralized exchanges, atomic swaps, all that stuff. But why has all this stuff been built for people to trade and gamble up until now? So the only real applications are, I mean, I would say Bitcoin, stablecoin.

45:30stablecoin I would even put it as okay cross-border remittances but also wealth preservation for third world countries that need access to the dollar fine and then it's exchanges casino house basically so it's a lot smaller it's a lot smaller so if you're thinking about the dream of crypto right how does crypto become a 20 30 trillion dollar asset class you're going to have to have things to do where you are unable to do this anywhere else crypto is not going to become a$20 trillion asset class maybe it will stay at$5 trillion maybe even at the height it goes to$10 trillion but it's never really going to rival an entire asset class like real estate, like equities, like bonds you're going to need something new and so it's all fun it's all fair game right now trading the whiff, I hope it goes to$10 but it's a shorter term game I think it's just really just attention it's not it's not why I'm in the space for it's not building the future it's not building the future finance and decentralized internet yes I mean Alex Van Evie was on this podcast twice actually the second time he said all this speculation and you know meme coins or NFT investments are kind of first funding innovation right yes and second you know if you can he was saying if you can collateralize a Pudgy Penguin in the future you'll be able to collateralize something else on the blockchain which is much more meaningful yes I'm not saying Pudgy Penguin are not meaningful but I'm saying right so in all this speculation and kind of mania there is some good the problem is it's very noisy and it takes a lot of it's very destructive do we say basically all the attention that should be put on building real stuff right now, it's kind of gone because everybody's just chasing this money, right?

47:33Or this latest chain coin. And even I would say from what I've seen, even in the builders, I mean, you're closer to the builders than me, but what I see is a lot of people who have the right values to build the right things, they realize that they're not in the right narrative. So then they're like, fuck, man, how do I capitalize on that? I'll change my thing. I'll think more short term because I can't even raise money for something that makes sense. But some people send 30 million in your soul to random dude online, right? Yes, correct. So I think this is where the crypto founders really have it difficult because you could be building something that new, something actually creating value for a certain stakeholder, right?

48:18But if it doesn't fit with the flavor of the month in crypto, you're just not going to get any attention. And I think building a business or a service and catering towards the attention span of the crowd in crypto are two completely different skill sets. And the most successful crypto founders today are able to do both really well. Right. But I think there are very, very few of them today. I think actually one example of someone I think has done a phenomenal job is Guy from Athena. He's going to come on the podcast in two or three weeks actually. Perfect. So he is one of the early angel investments that Hanjin made.

49:07It's actually the only investment that we doubled down on. So we did the scene and then the follow on because we really loved Guy's execution. he brings to the table the first sort of innovation in DeFi we've seen really since the last cycle which is through USDE and he knows exactly what the crypto crowd runs. Regarding the meme coins and this entire idea about fundamentals in crypto right so my approach in the beginning of this cycle like about a year ago right was I'll build my portfolio and I'll have what's the next ETH? What's the ETH of last cycle? Of this cycle, sorry. So what's the chain that got really wrecked and that might have some crazy activity like we had with DeFi Summer and then NFT.

50:03But you don't know in advance, right? So it could be Chainlink or Solana or whatever. I mean, I ended up doing some bets that, I mean, actually, I was very heavy in Solana. But the key question was, so this I kind of got right, like sizing also good. But then you have some beta plays, right? So basically you're saying, oh, if I think this thing goes, obviously I had some ETH too. I'm thinking, okay, I'm going to have some SOL, some ETH, and I want to have some SOL beta plays or ETH beta plays. and I went to look into the projects with great fundamentals. Ah, my favorite. On the ETH ecosystem, right?

50:48So I was like, Lido is amazing. Oh, perfect. Perfect example. We also talked about Lido with Alex Van Evic here. He was saying these fundamentals seem to be bearish in crypto. Yes. So I'm like, oh, if ETH goes up, let's say 3X, Lido probably goes up, I don't know 15x because it's much smaller yes but it's also a safe bet because it has amazing fundamentals they make great money they basically own the majority of the liquid taking of ETH and then what I realized is not only the fundamentals don't matter but coming back to our beloved meme coins it seems that the key meme coins on each chain now is kind of like the best beta play for the ecosystem.

51:39Yes. I think, so, I think first you have to understand what beta actually means. Beta means 11 bet on another coin. And historically, you've seen, for example, during DeFi summer, if ETH were to run, the DeFi tokens would run even harder. Not this time. Not this time. And I think the key lesson here is that beta changes. Coins correlations with underlying asset changes all the time. And so you can't just think because Lido is so closely associated with Ethereum that it's going to be good beta. In fact, I think if you plot the Lido ETH chart over the last 18 months, it's probably just down only.

52:33Yeah. It's a complete mid-curve take, basically saying, hey, Lido has so many ETHs, it's the best beta. Exactly. But it's a fantastic protocol. So many things are being built on it, right? Maybe one day it will get the re-rating it deserves. But I've long ago learned to abandon my value investing principles in crypto of trying to find undervalued tokens like Lido, take a position, wait for the market to realize it. I could basically wait the whole cycle before that happens, if it even happens. So I think this is why momentum in crypto is so important because if the beta changes every other week on the underlying asset, what do you hold?

53:19That's why people rotate so quickly and so often in crypto because everyone's trying to find the right beta. it's a it's a game I wouldn't really advise a lot of people to play because I think if you don't really know what you're doing chances are that you'd lose money that's a good point if you're chasing the narrative you're probably too late and you're going to lose all your money and you better buy and hold especially if you're a normal person right yeah if I would say that if you're not spending 30 hours a week looking at crypto you shouldn't be chasing these things because you probably end up being EL to the people who are spending 90 hours a week looking at these things.

54:00That's my honest advice. I think if you just buy and hold, let's say you're bullish Solana, right? If you just buy and hold Solana. Absolutely. Exactly. That's it. Exactly. You have two decisions. When you buy, sorry, three decisions. When you buy, how much you buy, and when you sell. That's it. Right? You're not looking to, okay, I'm going to trade Sol for BDC. I'm going to trade maybe Seoul for JITO or maybe Whiff, and then I'm going to rotate back into Seoul. These are the things you do when you're really full-time into this, really trying to optimize and squeeze as much as you can out of the market.

54:36But if you're not, if you don't have the time to spend doing this, watching the flows, watching the attention, then you're just going to get eaten alive by the people who are. So it's a cautionary tale. This is very close to, I mean, I have three examples on my mind that are all very different in what they do. Obviously, Michael Saylor just buying Bitcoin, but he's going to massively outperform because he has like a forever kind of timeframe view. Obviously, he has massive amount of money, but just buying Bitcoin itself for a lot of people, if you look at maybe two full cycle, probably you'll do better just buying Bitcoin.

55:16Oh, yes. Because you will make so much money, but you will lose so much that in terms of Bitcoin, you probably have less Bitcoin after two or three cycles than if you just had bought and held the Bitcoin right? Yes. And then if you want to go a bit more down the risk curve you have it's what I'm doing myself right? With the big portion of my portfolio is last cycle was ETH and then Solana and then Luna which massively got me wrecked and then this cycle kind of Solana but you have I mean Raoul Pal who is talking about that don't fuck it up like basically just you need to be early in the trend buy maybe not the biggest one but the second or third one the thing that the one that you have most conviction and then just do nothing and then you have one of the big bulls of Sol Chris Berinsky yes who basically is saying that what you're saying yes three decision right yeah when you buy how much you buy exactly and then when you sell yes done yes and again a lot of new people will come and say, oh no, but hey, look, I can have all these airdrops if I do all this stuff.

56:24I can get all these points. I can do all that stuff. But what I don't understand is like the ICOs in 2018 or the DeFi summary 2020 or the NFTs in 2021. Now all these meme coins, I mean, the majority of the meme coins, all these points, all these airdrops is just protocols or founders trying to find narratives to get your liquidity and to get your ease or get your soul now yeah and so if you don't do any of this shit you're probably going to end up with much more soul than if you do all this shit probably so i i will say if you're a normal person correct if you're willing to spend the time and the effort to really learn these things roll up your sleeves and go deep into the trenches then by all means go for all these things because this is where you make a thousand dollars become a hundred thousand dollars i mean there's so many successful airdrop stories but to be able to know of the airdrops in the first place strand strategize and plan how you want to maximize your airdrop a person spending 10 hours a week in crypto is not going to know how to do that right you you just the that person is going to look on twitter one day and say oh look that guy made a hundred thousand dollars on an airdrop wow what is this and then slowly that's how he sort of discovers the airdrop sort of meta right but by that time the game is quite figured out already absolutely you know absolutely the guy who made the hundred thousand airdrops he knew that guy has been in the depths of the bear market grinding exactly what he was doing exactly absolutely absolutely there's no there's no looking crypto and there's no free lunch and if you're lucky once you're probably gonna lose it all because Because you think you're a legend, right?

58:11Yes. So actually, something interesting in my part with Haiki, we're actually going through, you know, how second cyclists think. And something that I think people still don't recognize or appreciate is how much or how well you protect yourself from the downturn. And nobody, I don't think anybody's really thinking about this cycle. but if you are able to draw down only 50 % from the top after the bear market versus someone who draws down 90 % from the top you would be in an infinitely better state than he is going into the next market or even if you want to leave for example if let's say you made 5 times or 10 times your money if that draws down by 50 % you still make 2.5 to 5 times your money right and that's that's great how many people have made a ridiculous amount of money and then lost it all yeah i hear of so many stories it's actually insane people make eight figures 10 20 million dollars lose it all back in the bear market trying to keep longing when the market structure has turned and then restart again at 500k i mean it's still a nice figure but like for someone that went to 20 million comes down to 500k how soul crushing is that it's tough yeah it's i mean maybe thinking in terms of like multiple cycles that's what i'm trying to tell people hey the first cycle the more you have to play with for the next one yeah the better your position yeah but i want to get to that if you have this big goal in your life maybe you can split it in two or three cycles and think in terms of kind of stairs okay i reached you the first step of the stair it's almost impossible to not get to the second one if i'm able to stop now and wait.

59:59Obviously much easier said than done. Very difficult. Very difficult.

1:00:06Do you play the meme coin game? And if yes, how? As I said, I was shorting Pepe. So I got really toasted at the first leg. I have now started trading meme coins a little bit because I've understood basically if you just alienate meme coins, you're alienating so much of a market that is based on rotations, based on momentum. So I have traded in and out of the medium coins. I wouldn't say I'm good at it. I would say that it is probably one of the easier and more exciting verticals to play. But I don't know when it turns, but when it turns, it will be very ugly. So just have that in mind. I think there are a lot of people now considering to put like 20-30 % of their portfolio in meme coins and just never sell it similar to how they're thinking about ETH or SO sure maybe in the next 6 months it's going to work out and you make a ton of money I have no idea but at some point you're going to have to press the red button and I just know that for something like the meme coins you're going to have those 90-95 % drawdowns and it depends on how good you are at pressing the red button if you're not good at it You know, that's how you become exactly quality.

1:01:31Last one on meme coins. Do you think it's because I was basically asking me for you think meme coins are the best beta play for each chain this cycle. So there's these different narratives, right? And for example, if you look at last cycle, NFT was not that long, couple of months. Yes. Even DeFi was couple of months. And then it's next. And then people are thinking, oh, this narrative is going to come back. But it doesn't, right? Or it doesn't necessarily. I mean, maybe the DeFi one did, but a lot of them don't. But it seems, at least it feels like, based on how much MemeCoin kind of pumped and where we're at in the cycle, basically Bitcoin halving, right?

1:02:10It seems that like, and enthusiasm from retail people and how it caters to like, you know, lottery, but more fun. That is something that could last. Obviously, you have big drawdowns in between, but that could last an entire cycle at least. Especially it's not the first time. We had last cycle already, some examples, right? It's maybe something to look at. so i don't want to make the call that memes are going to be the best beta place i think it's going to really depend on what other alternative narratives are out there i think if you have interesting narratives that are out there uh it could supersede the memes for example the Bitcoin halving for example could introduce a narrative by itself which could sap attention away right because if you if you break it down it's just a basic memes are the power of the meme is basically how powerful it is in being able to obtain attention and retain it right how much holding power do you have right so with I think is so interesting because the hat stays on is a ridiculously addictive line to say after a while and so people very easily come back to it and that's why with has been the outperforming meme coin for this cycle so far uh but if you have other things that are really interesting for example ai if you have an ai move i guarantee you memes the momentum and the capital longing memes are going to pull back to long AI coins.

1:03:52Right? So it's maybe over the cycle you can argue that Pepe is the best meme sort of beta for ETH. I don't know. I don't think it will be that far off. All I know is that when it ends it's going to fall off a cliff. So but then again you can make the same case for almost any beta coin for ETH or for SOUL. So it's yeah.

1:04:23so I said my approach was I tried to look for a beta for example for ETH Lido yeah at some point

1:04:36you say enough is enough right at some point right yes and so there is something in I mean first like for you how quickly and what are the kind of factors that help you say enough is enough, essentially, when do you cut? Would be a loss or just a lagger, right? Because there is an opportunity cost of having your money in a certain coin rather than another. So this depends. Are you talking about a position or are you talking about the portfolio in general? Position. Position. For me, the portfolio, we're going to talk about that later when you start to de-risk and all that stuff. So position-wise, I think you have to be, it depends on why you buy a token in the first place.

1:05:21If you buy it for a particular thesis, let's say a catalyst is going to happen. Or let's say you think that this vertical is going to take off in a very meaningful way. You cut the position when that thesis has been invalidated. So you see signs that indicate that what you think is going to happen is not going to happen any longer. I think that is a prudent way to do it. The alternative is to have discretionary price points or like percentage draw on limits where you say below this, below like a 20 % loss, I'm just going to cut the position. I don't care what else happens. This is where sort of investing becomes more of an art because oftentimes you have to combine the two.

1:06:06And it depends on the situation. Sometimes the fundamental invalidation would take precedence and sometimes the price-based invalidation would take precedence. So for example, maybe something like for a very volatile asset with no fundamental backing towards it, meme coins for example, you can make a trade with the invalidation that if it drops more than 25%, I de-risk, I cut. Because what else do I have to hold? there's nothing else that I can rely on to hold a position, right? So that's one example. Obviously, it doesn't work all the time because many times, you know, meme coins have the 25 % fluctuations and then you end up cutting the bottom and then it rebounds and you feel like an idiot.

1:07:02But that's why it's a difference between price-based invalidation and thesis-based invalidation. And this is why I feel that I'm not very good at trading meme coins because when you don't have a thesis-based invalidation for memes, because there's no thesis, I mean, right? There's nothing that you're waiting for. So it's only price that you have to go off. And when it's only price and it drops 20%, so you cut the position, and how many times has that worked out, right? You just end up selling the bottom for the entire cycle until that one time where it's correct. Right? So it's very challenging.

1:07:47This is why I think memes are very, very difficult to trade.

1:07:52We're two weeks away from the Bitcoin halving. Yeah. But we already broke previous all-time high, right? Yeah. So that was one of the key things that people are, we're all looking at previous cycles. Oh, yeah, okay, Bitcoin halving plus six months equal previous all-time high. ish but it happened much earlier this time yes where do you think we are in this cycle and why so this one is very complicated because I there is no heuristic or historical sort of path to reference right this is net new territory that we're in I don't think we're close to a cycle top yet. I think minimally, Bitcoin will breach$100 ,000 before we can really call it cycle top.

1:08:50Above that, I have no idea. Does it top at$100 ,000? Does it top at$200 ,000? Does it top at$300 ,000? Who knows? I don't try to take profits based on certain price levels of Bitcoin. I just play until I feel that the music has stopped, wherever it may be. so what does help you feel that the music has stopped so because my of course my question was not hey where do you think we're in this cycle yeah my question is what are the factors that you're looking at could be bitcoin halving is now yes could be how long we are in the cycle since maybe the bottom last time or since the bitcoin halving is now actually don't play that that much Could be price levels.

1:09:41Yeah. Could be election year. Could be interest rate cuts. Could be, you know, a more macro kind of play where you say, and then that's why maybe you go into, it's my idea, but like it's a lot of people think like that, right? It's, look, meme coins now. Obviously, you need to look at which one, but like the entire thing is macro, macro plus Bitcoin halving plus where we're at in some sort of Bitcoin price seems like it's still going to last quite a while there's probably going to be some big drawdowns but just because of the macro it seems like it feels like but you never know obviously and therefore you can take more risks and then my other thesis that was I'm thinking like that now but my initial thesis was most of the gains will be made between bear market and bitcoin previous all-time high the ones without too much risk because for me once we reach previous all-time high you can have great gains but it becomes very risky because when the fourth start but the other day i was talking with caspar uh casper from uh spartan right and he was here he was saying my friends they call me and they ask if they should sell bitcoin because we were just at previous all-time high but for me we're just starting the bull run I think we're going into 2025 easily.

1:11:10Well into 20... So then I'm like, you know, that's why I'm asking, what's the framework? Obviously, no one has a crystal ball, but the ideas, understanding how you think. We look at a couple of things. I think everything that you've pointed out plays a part in some way or not, in some way or another. I think for us, you have... two very different flows entering the crypto space today. The first one is the retail flow, right? And this is reflected via your Coinbase App Store rankings, right? Generally, how high is that on the App Store ranking means how much mindshare and attention is being spilled over to mainstream retail.

1:11:54The second one is you have institutional flow. And this one is the real game changer that we didn't have the last cycle. this one can potentially lengthen the cycle a lot longer than what we're used to or it can increase the velocity of money a lot faster than we're used to meaning when big you know one example is when bitcoin went from 30k basically to 70k without really stopping right I think nobody really expected that

1:12:28I look at I think as long as institutional flows continue to be benign, you really just have to prefer to stay long because this is really a tidal wave of capital coming into buyer banks. I think from a very high time frame perspective, crypto has so many tailwinds that allow prices to keep going up that it's very difficult to stay bearish for long. Even when you call cycle tops, you're calling a cycle top not because you think that's the top for crypto forever, but because you want to buy back lower at some point in the future. right you're not you're not saying okay i've i've i've earned all that i can from crypto i'm selling everything and i'm never coming back right you always have this impression of i've made enough for this cycle i know there's going to be a crash coming and then i can be smart and buy it back right so i think with this etf it's going to throw a lot of people off guard because well the first The first thing is nobody really knows when the spurts of flows come, right?

1:13:43I think now we're seeing a bit of a lull in the flows. Three weeks ago, everybody was like, you know, the ETF is going to kickstart the super cycle. So, but I think the longer term direction is very clear, right? BlackRock is a huge supporter of crypto as an asset class. And with them pushing it, the rest of TradFi has to follow. and I'm seeing a lot of people this cycle that are entertaining putting 2 % to 3 % of their portfolios in crypto versus last cycle because of this ETF. So I wouldn't be surprised if we go to 200, 300K this cycle. But again, I don't anchor these price targets. For me, what I really look at is, very similar to what I told you about Solana, right?

1:14:34when it broke, when it did something I didn't expect it to do. On the upswing, I also watch for these signals on the downswing. So a classic case is if Bitcoin makes a lower high and then start selling off. That is something that would give me, start having alarm bells in my head ringing, right? Because, okay, very, very good example. Right now, Bitcoin's at 70K. we just had a correction from 72 to call it 61 a couple of weeks ago right if you look back at it normal bull market blip 20 correction we continue resuming up only what happens if at 70k now we go to 50k that is not normal anymore right we had a reset leverage got wiped out we retested at an all-time high and then failed to break and then come back down forming a lower low.

1:15:33That to me means that whatever my biases of being long I had, I have to start re-evaluating them. So that would be a signal to me that it's maybe time to take some chips off the table simply because I don't, my vision of what I think the future will be is a lot more blurry. And so as, you're never going to be able to sell the top, right? But I think if you adopt that kind of probabilistic approach, you'll be able to save yourself a lot of pain, right? So let's say, for example, if let's say 70k was the top, which is unthinkable to most people now, even to me, right? If you have a hard rule and say if Bitcoin drops below, 55k I sell everything I go to cash forget about it that means to you now your defined maximum loss is like 25 % that means in this cycle at most you can lose it's 25 % right and that's how you protect yourself if it is really the top the question then is having these plans in place but also having plans in place if they're wrong so let's say you have a fake out Bitcoin goes to 70, goes to 50k.

1:16:52So it breaks your invalidation. So you cut everything you sell. And then 50k bounces back to 70k. Then you're like, oh, I'm sidelined again. So these are the questions that we always ask ourselves. But if Bitcoin were to make those kind of moves, going from 30 to 70 to 60 to 70 to 50 to 70, what does it mean? basically it means that you're in a very long extended range of chop yeah and in chop the easy money is not meant to be made right you only want to play the game when the easy money is made so it's very simple right then what what you do is actually you wait for a proper break of 70k so that you say you say okay i only start longing when bitcoin hits 80k because then you know that long-term resistance has now been broken and it's very clear when a bull market again then you play the game because it's easy.

1:17:47So I think that's how I approach it. So I don't care. The numbers I gave you, you can change it around. It can be 100k to 80k. It can be anything you want. But that's the probabilistic way of how I try to mitigate losses because if you do that, you have a better chance at keeping 70%, maybe 60 % of your portfolio. I don't believe for a fact that you draw down 10 % from all time high. I think it's absolutely bonkers because of crypto's volatility. I think if you can navigate a cycle and draw down like 30 % from all-time high to cycle low, you would have done fantastically well, right? So I think if you take steps like that, your chances of drawing down only 30 % increase dramatically.

1:18:37And maybe even you draw down 50%, but that's still fine, right? because you've made enough for your wealth to have compounded how do you stick to your rules because it's tough a lot of people i mean probably everyone maybe until you got wrecked right yeah like then you learn maybe next time i should follow my rules but you have your rules that you set initially and then you become greedy or that is the part about having the discipline in having a right system in place so that you don't break your rules. I break my rules more often than I like. I think everyone does. And every time I break my rules, I lose money.

1:19:16Exactly. Almost every time. That's it. And so it's very clear to me because so I do a trading reflection once in a while. And especially when there's a big move, either a right call or a wrong call. And then I look at it and I say, okay, what did I do right or what did I do wrong? And every time when it's a huge loss, I would have fucked up at least two or three big rules that I had and I was like ah okay I realized this was I had set these rules in place but I was an idiot and I didn't listen to them and this is why I deserve to lose money done yeah

1:19:54do you think we get another blow off top I mean there was no blow off top last cycle but there was a big drawdown do you think this time it's different or do you think that we get, even on Bitcoin or ETH, another 70%, 80 % correction again from the top despite the ETFs? And for me, I was just trying to think, how do I think about that? I was looking at people calling kind of 10 trillion top this cycle. Could be less, could be more, I don't know. Let's say it's probably going to be less. But anyway, who knows? then I was looking at the Nasdaq bubble 2001 there was ETFs there and I think the Nasdaq topped at kind of like 10 trillion market cap and it still went down a lot so that was kind of my because obviously you want to be you want to be optimistic yes and think ETF change everything right but you want to find examples that are very similar or similar in the past that prove you completely wrong and so for me was looking at that yeah the numbers might be wrong right but kind of like, it's probably not going to be that different, right?

1:21:06Despite ETFs and all that stuff. I think people forget to realize what the ETFs actually mean. The ETFs mean that the general investing world can now invest in crypto. But they are not so different from you and I. The guy managing a family office somewhere or the people managing sovereign wealth funds or even the companies that are potentially buying Bitcoin, they're still humans. They still follow herd mentality. So you're going to get the same type of human irrationality that we had in the past cycles, just with a lot more dollars at stake. I don't think the pattern is going to change. I think you're still going to get 70 % drawdowns on BDC.

1:21:55but the numbers are just far far higher and for what it's worth I still think at some point BTC will hit a million dollars at some point it can be 10 years down it can be 20 years down it can be 30 years whatever but I think the long term trajectory of Bitcoin I think is more or less secured with this with this ETF

1:22:28a lot of people start their crypto journey from their basement yeah as we like to meet or from their room it's very lonely it is and you're also very prone to make a tough mistake because you're doing your thing alone yes you told me that working together as a team is so much better than working alone. Yes. Obviously in life in general, I think the same, but in crypto even more, right? Yes, 100%. There's so many things happening in crypto today. As one person, you cannot cover it all. So, and this is what we have been really cognizant of in Tangent, where we try and bring on people that we know can fill specific skill sets that everyone else lacks.

1:23:20So we have all bases covered. basically. But even taking away from a sort of company building standpoint, having a group of friends that can watch things when you are unable to watch them, maybe you can pick up, they're in some group chats that share alpha that maybe you're not in. And so you can get this via your friends. I think it's so important, right? And also having people to bounce ideas off, sharp people to bounce ideas off where you can second you can recheck your biases that you have with other people who can offer an alternative viewpoint i think that's extremely important because very often what causes huge mistakes is when people are in a not the right mental framework and they're on so basically they're on tilt and then they have no no one holding them back from making worse and worse compounding decisions that eventually result in them losing it all i think very rarely do you have a situation in which you lose like you you do extremely well and then you make one mistake and you lose everything it's very rare you have to have situations like ftx happen or luna happen for that to really happen but in general setting apart from systemic issues like that it doesn't happen what happens is you do very well and then you start getting a bad run and you just you know so you start eating a couple of small losses you get frustrated you size up because you want to make back the losses but you're not in the right framework and then you just keep compounding it and then you lose everything but they call revenge training right exactly yeah so having people around you would maybe try and at least mitigate some of that when maybe your friends can say hey I think you're not not right frame of mind why don't we step back we go for a beer we take things chill and then we reset you said you think btc goes down 70 80 percent right which is the result of you know a bubble is a leveraging event and then you You have a deleveraging event, basically.

1:25:37Yes. When deleveraging happens, people and companies blow up. Yes, as we've seen. Exactly, as we've seen. Do you think the same kind of thing can happen again at that scale? And I remember I was, I think it was 2022 or late 2021, I was watching on Netflix the Quadriga Exchange. I don't know if you're familiar with that. That was 2018. Vaguely, yes. It's an exchange in Canada where the guy kind of like, I don't know, went to India and then died because of like some stomach problem, but it's probably not true. He just took the money and ran away. And I was kind of laughing. I was like, man, these are the old days of crypto.

1:26:19This could never happen again. And the next thing you know, a couple of months later, you have Luna, you have Celsius, you have BlockFi, you have Voyager, and then you have FTX. Yes. So it's basically much worse than what happened years later. So I think it's going to still happen. I think the regulatory frameworks in place now are nowhere near what we have in traditional finance. And even in traditional finance, you're still seeing these things happen, right? It's in human nature, the greed that we all have will result in these negative externalities happening. The main difference is last cycle, your big blowups are like companies losing$10 billion.

1:27:00even Luna was like a$50 billion loss the fear is the next cycle it's not a$10 billion loss it's like a$100, maybe$200 billion loss and at that scale even if TradFi wanted to step in and save it they may not you may actually need the Fed to actually come in and save you similar to what happened with the 08 crisis and the Fed stepped in with QE that's the kind of scale that we're talking about talking about if regulatory frameworks are not put in place. But, oh, I believe it's probably going to happen again. Where do you think it happens? That's a good question. Because you're thinking where does the leverage come this cycle?

1:27:46Last cycle was lending and borrowing from CeFi, right? Yes, that's more or less died off. This cycle, we have liquid staking, derivative, restaking, all that stuff, right? I haven't put too much thought into it. I don't think we're anywhere near the levels where I would get concerned yet.

1:28:08It could be an attack vector but to be honest I haven't given it that. It's probably going to come from a place that we don't know. It's the same as what's the next big thing this cycle. Last cycle was DeFi summer. It came out of nowhere. This time was meme coin. Out of nowhere. People were anticipating gaming, AI, social fight all that stuff yes yes cool but no it came from Mincoin yes probably the blow up comes from something they were like no idea never expected that I don't pretend to know you know that's why these things are so deadly because they they catch you by surprise but the takeaway is probably it will happen it's gonna happen like mega leveraging event yes blow I mean mega drawdown in BTC ETH 95 97 99 % out as usual.

1:29:00As usual. And some big companies blowing up. And some people losing a lot of money. So a funny thing was, and this is a pretty hilarious story now that I tell people, when Bitcoin was 20k in 2022, my then girlfriend, now wife, asked me, hey, Bitcoin seems to have dropped quite a bit. Is it a good time to buy the dip at 20k? and I was like sure why not you can I don't think it's that better decision to buy Bitcoin at 20k now and so she did and she asked me where should I custody this and at the time I was like well you can custody with FTX because if FTX goes down crypto is dead anyway and so she actually did and so when when FTX did indeed go when go under she lost her Bitcoins so that is I still get flack to it for it today but yes I have I have recompensated her or I will recompensate her on her Bitcoin but you know that's a funny story that basically even things that I think are safe yeah it turns out they're not probably you want to think same as you want to go against your intuition in markets in general if I feel like things are too good probably is a good time to chill or whatever I think is safe it's probably not safe Never take anything for granted, basically.

1:30:29That's very hard. That's very, very hard. Yeah. So you joined forces with some friends of yours. Yeah. You're part of a team called Tangent. Yeah. What is Tangent and why did you start the collective? So we initially started off as an angel investing collective. It was really just myself and Jason Choi, who I've been good friends with ever since 2020. we decided to try and at the time we felt that there was a market gap in the angel investing space because I think angels were just putting on very small checks and then not doing anything after that just a sort of like a KOL sort of publicity round so we felt that we could try and push the standard there I think we did that reasonably successfully for the better part of 2023.

1:31:24I think if you can ask most of our podcos today, most would have pretty good reviews about us as supporting investors. I think we did that for about a year. And then Jason and I decided, you know, we've been comfortable enough working with each other that it's time to combine net worths. And because I actually had a liquid trading experience, that's really where my bread and butter was uh i would actually start to expand and retrade what i'm good at so we started doing a bit of liquid trading uh at the start of 2023 and since then we've grown to a team of seven now everyone works on uh well more than half the team works on liquid investing at tangent and it's entirely prop capital so it's just Jason and mine my net worth inside we still have 99 % of our net worth in crypto we're still max long we're still bullish to space but we're gunning for it I think our goal is to become one of the powerhouses of crypto funds in Asia

1:32:48So something you did really well, I mean, you kind of like did that accelerated route, right? But something that is very important for new people in crypto to understand is the first cycle should be about building the right connections. Yes, absolutely. So that the second cycle, you'll be able to capitalize fully because you have the right connections, the right accesses, the right kind of framework, the right people. Chances are in your first cycle, you really spend most of that learning the right lessons or blowing up along the way. So either one. So you find a group of friends over the first cycle.

1:33:31You find a good system or good process. You discover who you are as an investor. Maybe you prefer to be a longer term investor. Maybe you prefer to trade shit coins on an hourly basis. Maybe you actually prefer venture investing because you are too jaded or disillusioned with what's happening in the crypto liquid markets. That's fine, right? So you discover yourself. And then in the second cycle, you really understand what your age is, where the market opportunity is, who you can leverage to help you get there. and then you really make your money.

1:34:11What should someone do to join the best teams for the next cycle? And if I look like more specifically, what's the type of value? Because there is always value that can be brought, right? When you're having crypto, you might think it's very intimidating. You might think, oh man, these guys are so smart. They're so advanced. Compared to me, I can't bring them anything. But it's probably, you know, type of value that you guys, let's say a tangent or spartan or that kind of places right are still looking for and you would on board as employee or partner or you know in whatever like i think first and foremost we want to find someone with the right ethical and cultural fit so at tangent we try to uphold the highest ethical standards.

1:35:03So that by itself, as I said earlier in the pod, we've seen a lot of stuff that we're not too pleased with is happening in the industry, but there's nothing we can do about it. So that's the first screen, right? If you don't meet that bar, there's no point. The second thing is I want to see hunger. I want to see people really hungry and looking to make it, really leaving no stone unturned, being very malleable, in their mind, being able to learn anything that you ask them to go and learn. Because I think these people are the ones that develop and hone the killer instinct the quickest. So I don't really care about whether you're a university graduate or not.

1:35:43I want to see how you pitch. I want to see the quality of your ideas. How many ways have you looked at certain things? What are the angles? What are the risks? How probabilistic is your thinking? Usually when we talk to people, we have like two or three different rounds of interviews to sort of suss it out.

1:36:05And I'm a firm believer that if you are really the cream of the crop, we will pay you commensurately. Because I think that's a big issue as well amongst a lot of funds globally.

1:36:22So it's ethics. It is how hungry you are. And it's how sharp you are. those are the three things so I think ethics you kind of have to make that decision by yourself but hunger you can't really teach sharpness actually I think can be taught I think I've seen or I have seen last cycle and I'm seeing this cycle a lot of people that I didn't think were that sharp but were very eager to learn and over time they got a lot better so I think it can be it can be learned yeah yeah There is a part in this podcast where we talk about the guests' favorite projects in the space. Yeah.

1:37:10I had a lot of people who are part of the Pudgy community on this podcast. Oh, yes. I'm one too. Me too. And I know you're one too. Yeah. You bought a bunch of Pudgy penguins. Why? I felt that the culture was the most honest. I think the vibes are the best. And I was a very early Pajji appreciator, actually. When they came out, I was buying a number of Pajjis below 1 ETH, actually. And over time, I sold most of them except my signature one. And then recently, I decided to buy a couple again. mostly because I think over a long enough time frame they're going to do okay as a levered ETH bet and this is really one of those actual levered ETH situations because it's nominated in ETH I just like the vibes man I think that's basically it like I don't like why do you like art?

1:38:12because you like how it looks so you like the vibes so you like how it fits in your room you know like that's why you buy it for NFTs it's quite the same to me. You are more of a trader, right? I am. Therefore, you probably have like let's not say a target but something that you think is possible this cycle. For Pudgies? For Pudgies. Yeah, I think 50 ETH not out of the question. I think right now you've seen sort of an artificial cap for NFTs that probably basically hit last cycle. where I think a floor Basie was equivalent to one of your very high-end luxury watches about, if I'm not wrong, it was like 300 to 500k, something along that range at the top of Basies.

1:39:00I think it was like 150 ETH when ETH was like 300. 150, yeah. Right, so something like that, that's probably the top. So you're looking at not, that's very interesting. You're not looking at, hey, if Punks or Bored Apes went to, let's say, 100 ETH. Yeah. Therefore, Pudgy could go there. You're looking at ETH denomination. I'm looking at dollars. You're looking at dollars. Yes. Very interesting. Because if you think about luxury collectible items, I think people will still anchor to luxury goods. So for example, if a Pudgy Penguin costs more than a Ferrari, then that distinction to the person that can afford both of them starts to be, do I want a floor Pudgy or do I want a Ferrari?

1:39:46and then all of a sudden the vibes from the Ferrari may be better than the Pachi. You know what I mean? So it's, that's why I think Pachi sort of caps at a certain price. Maybe I'm wrong. It is a mid-curve take on, maybe the dumb, like the left curve take is just, oh, the other one went to that many E's, therefore this one goes to that many E's, right? And I actually think something that goes against my view is the fact that I think over time digital IP will get valued more and more versus physical items. So that could be it. I also think for that to happen, let's say for example, ETH goes to 10k, right?

1:40:36And purchase goes to 100 ETH, which means that each part each party is a million dollars, right? I have three people on this podcast, Alex Vanewik, James Wu and Luke Belmar all saying Pudgy's going to 100 ETH. Yeah, so in that situation... Even Casper actually from your former Spartan said the same. And he's a Pudgy also. I know. I wish... I'm hoping that it happens as well. But for that to happen, right? For Pudgy's to reach a million dollars, you're going to need a lot of wealth to be created for people to have that kind of spending power. For me to be like... Because I'm not talking about like a golden Pudgy.

1:41:13I'm talking about a base Paji right for it's a pretty big decision right if how rich do you have to be to be like alright I'm gonna buy a Paji today and drop a million dollars on the Paji I agree but you can buy like a house on a lake somewhere or you can buy like an irrational moment of crypto you know everything is going to yeah no I agree so it's it's like maybe you're too rational like crypto whales have to be so rich to get to that point And, well, I certainly hope that we get there. But to me right now, it seems a bit far-fetched. Yeah. What are another two or three projects or team that you really like in this space?

1:41:57I think the Ronin team right now is really good. I had a close friend who was actually one of the people I hired in Defiance. He actually left to go and join the Sky Mavis team. His name is Bailey. Shout out to him. he's been great he's been helping this guy maybe build out the Ronin ecosystem over the last two years and I think Ronin today is the third most used blockchain in the world behind Tron and either ETH or so and I think them as an ecosystem bet on Web3 gaming is one of the clearest bets that I still have today because I think we still haven't really cracked the code for what Web3 Gaming can be, meaning a completely separate economic system of virtual assets being traded and virtual business models being created based on a particular type of game that has been designed.

1:43:04So we are still scratching the surface of what Web3 Gaming is. And when you don't really know what can be the future, you typically, you're not really willing to risk betting on what you think will be the future. You typically bet on proxies. I think it was his team. And Ronin, I think so far, has proven to me to be the best ecosystem out there today, by far. So it's not, and this is, I mean, if you want to take it as a Ronin shill, sure. Disclosure, we have a Ronin position as well. But I think it's a very comfortable bet for us. And we don't think it's going away because I think the three things so far that have been consistent movers, at least this cycle, AI, gaming, and meme coins.

1:44:01So Ronin for us is a very easy proxy bet on gaming. and you know over time maybe we find um certain things that we think can outperform within the gaming ecosystem but uh and actually we talk about this in tangent but it's called the aircraft carrier thesis whereby uh ronin is the aircraft carrier so it continues to sail and every time you see a game that you think oh wow this is really interesting this could push web through gaming in a certain way you make a small bet so you sell ronin into that gaming bet And if you're right, after that thesis is realized, you sell that game back into Ronin.

1:44:40And then the Ronin bank just keeps getting bigger. So that is how we're viewing Web3 Gaming today. So at some times, it depends on when you catch me, I may have no Ronin or a lot of Ronin, but that really depends on like, do I think another game is going to be massively bullish? So for example, I could be trading between Pixels and Ronin because maybe I think pixels is Levitt Ronin in a sense. And then when the thesis is done, I sell my pixels into Ronin. But I think Ronin is a very clear denomination bet for gaming itself. What else? What else? The key narratives. Or maybe not. Could be something that goes against, you know, the crowd.

1:45:25I think something that has caught some people, started taking notice of Prime, the TCG, specifically because of the Colony game that they're building up. I think they recently released a white paper about what they intend on open sourcing in terms of their gaming models there. And I think if you watch the demo for Colony, it is one of the coolest shit I have seen in a long time. And so this perfectly fits within the AI in gaming sort of verticals. So it's, you know, best of both worlds.

1:46:07It's because of that, I don't think it has a valuation ceiling. I think as a trading card game, which is what Prime was for the better part of 2021, two and three, you could make arguments. It says, okay, you know, at a billion dollars is sort of overvalued. But once you introduce this sort of AI 1.5 gamer type of situation. And just for your audience, Colony is a game where you're basically God, the player is God. You give instructions to an AI that does things on your behalf. So it's not like you are the person controlling the AI and going to do things. You give them instructions and they need to do things naturally.

1:46:54It's almost, I wouldn't call it sentient but like it's sort of in the middle and I've never seen that ever in like in any web 2 game as well so I think that is very interesting I think if people catch on and let's say this AI gaming narrative takes off there's no ceiling for this how do you value something like this so Prime is something that we're really interested in as well so your main bets is and I read something the other day online it was exactly that it's then you want to bet on the narratives that don't have a ceiling right yes that is basically it's important because there's no real fundamentals yes you can't really maybe people can dream correct yes and so it would be from what I read was meme coin AI yeah and gaming or AI gaming yes all the rest one way or another there is some sort of ceiling just because there is comparables or fundamentals or it's kind of less yes and no it's just basically what they call bubble assets right correct correct yes um so i think actually one other area that i've missed out mostly is rwa because my mid-curve take was rwa is too closely tied to cash flows because when you value an rwa asset you basically value the yield and for people using the yield they typically would actually look at the numbers and evaluate things um and then you have ondo breaking 10 billion dollars today so that one is a bit of a head-scratcher to me uh you know truly the one ondo is one condo meme is really i think the crux of the thesis there uh and also the fact that they become one condo Yeah, it's also the fact that they've become the default BlackRock proxy.

1:48:52So I think that's what's really driving the performance. But as you can see, Ondo is an RWA coin, right? That without the BlackRock Association would probably be worth maybe a tenth of what is currently valued. But with the BlackRock Association, now suddenly you have a narrative, right? And that narrative allows you to dream far bigger than what the fundamentals suggest. So that's why Ondo has been moving. I don't know how big it is, but the ceiling for BlackRock was pretty large as well. So, you know, I won't be surprised if it keeps going, although I do not hold any Ondo right now. I did trade it, but not now.

1:49:35What's your advice to the crypto industry newcomers who want to change their life and future? Oh. I think you have to be very mentally prepared for insane levels of volatility. I think for people who have never experienced it before, you are going to go through a very, very stressful time. It could be euphoria, meaning good stress, or it could be massive drawdowns, which is really bad stress. So I think you have to mentally prepare yourself for that kind of journey in crypto. it's unlike anything else that you see in the world today or your experience in any other career or profession. I think the closest thing is probably like a commodities or FX trader that uses a lot of leverage.

1:50:26But you know how many people are there? So I think don't, again, don't anchor to specific financial goals. Like, I think it's very, very dangerous if you go into crypto saying, this is the place to get rich. I'm going to make$2 million by the end of the year. And then I'm going to sell, I'm going to buy, sell everything and buy my house. I think that is one of the worst ways you can approach it. Because once you start fixating on certain price targets, then if you, if let's say, you know, it's like October and you have three months left and you're nowhere near your goal, you become more and more desperate to start betting on things and that's usually the worst time to be taking all these kind of bets because it's the later and later in the cycle and that's how you lose everything so yeah I think don't play dance while the music plays but don't be fixated on only one number and when the music stops and it's time to back up you just let it go whatever stage you may be at I think that's important What's your biggest prediction for next 12 months?

1:51:44That's a good one I think we have I think this I think we go through one very heavy cycle in 12 months so we probably break through to like maybe 100k in like maybe the next 2-3 months and then we have a very brutal correction where people think 100K is the top and then you get a sell down to maybe like 60, 70K again. And that will catch a lot of people off guard, similar to how in the last cycle, Bitcoin went to 64 and then went back to 30 and then 69 again. And I think these are the moves that kill you the most because by every TA level, you're supposed to be out. And then like the market was supposed to have topped that 64, right?

1:52:34What kind of drawdown is from 64 to 30K? so I'm more than 50 % drawdown. There's no system that allows you that kind of drawdown, right? So you would have been invalidated. You would think market cycle's over and then it comes back. So I think you're going to get stuff like something similar to that as well and it's going to catch a lot of people off guard. And the reason why it's the case is because if trading market cycles were as easy as, oh, when Bitcoin hits 100k, it's the top I sell. and everybody would be rich. But these cycles are extremely treacherous to navigate. And that is why I say that if you can actually walk away from everything at the end of the day and only be down like 30 % from your highs, that's a pattern back.

1:53:23That's a job well done to you. Amazing, man. Thank you so much for doing that. Yeah. It was a great conversation.

1:53:35you