From: thepipeline_xyz
Developing a long-term investment strategy in crypto involves understanding market cycles, distinguishing valuable projects from speculative assets, and maintaining a robust personal financial philosophy [01:37:37].
Memecoins vs. Fundamental Value
The crypto market has seen many cycles play out, leading to experienced participants holding a generally bearish view on memecoins [01:41:00]. Memecoins are particularly popular with newer crypto users, often those who joined in the last one to two years [01:48:58].
While some memecoins like Doge, Bonk, or Whiff can emerge to create real culture, they are exceptions [01:39:04]. The vast majority of memecoins (99.9%) are considered “absolute trash,” often created by a small number of people and functioning as pump-and-dump schemes [01:13:09]. These assets are generally useless, and those with large followings may use them to create liquidity for themselves, leading to a “YOLO cycle” or “financial nihilism” among investors [01:21:50].
The idea that memecoins are a rebellion against “insider” or “VC coins” is a misconception, as there are often insiders who hold a significant portion of the supply (e.g., 40%) and are waiting to dump on retail investors [02:17:19]. This low liquidity situation means that when large holders decide to sell, the market can crash rapidly, leaving late investors holding the bag [02:29:28].
Instead of chasing someone else’s victory in speculative assets, focus should be on building or investing in “something real” [01:42:07]. This includes infrastructure plays, financial derivatives, and bringing real-world goods on-chain [01:44:00]. Projects like Solana, despite facing severe market downturns and perceived backer issues (e.g., FTX), emerged due to the grit of its founder, Anatoly, and a strong developer community [02:37:33].
The “Skinny Door” Analogy
Su Zhu’s “fat people, skinny door” analogy describes the crypto market’s liquidity [02:16:32]. The “skinny door” represents very low liquidity, making it challenging for many to exit, while “fat people” are the large supply holders willing to sell [02:41:09]. This dynamic contributes to the severe corrections seen in crypto [02:34:00].
Challenges for Founders and Builders
Founders building in crypto face significant challenges, especially during bear markets [03:39:00].
- Market Appetite: The market appetite for certain narratives (e.g., NFTs) can change rapidly, requiring startups to be lean and adaptable [03:17:10].
- Funding: Founders should aim to raise as much money as possible at a higher valuation in a bull market to sustain operations through a bear market, rather than taking a “lean” approach early on and risking a down round later [03:14:00]. A typical funding window provides 12 to 24 months of runway, but long-term sustainability often requires a 10-year plan [04:58:00].
- Dev Fatigue: The ease with which memecoins can generate millions of dollars in weeks can lead to “dev fatigue” among talented individuals working on “real products” [07:09:00].
- Narrative vs. Utility: While narratives can be powerful, they can also be extraordinarily disheartening for legitimate builders when speculative assets gain traction [02:44:00]. Projects need to find product-market fit beyond mere speculation [03:15:00].
- User Experience (UX): For crypto products to gain mass adoption, the crypto element must be completely invisible to the end-user, providing a seamless experience akin to traditional web services or mobile apps [04:19:00].
The Vision for Real-World Assets (RWAs)
A long-term vision involves bringing real-world assets (RWAs) on-chain using NFTs as a form of title or deed [04:47:00]. This could revolutionize industries by creating transparent, verifiable historical records of ownership, maintenance, and metadata for physical assets like construction equipment [03:46:00]. Currently, the “app layer” of crypto is failing to achieve this, with most efforts remaining insulated within the crypto ecosystem [04:37:00].
“People who are building products using crypto, using blockchains and using using the technology and the infrastructure provided by crypto for a real world industry like we’re just not doing that” [04:06:00].
Future builders should identify industries that need disruption and use crypto as a tool, rather than focusing solely on the crypto industry itself, which is primarily suited for infrastructure development [04:50:00].
Personal Investment Philosophy
Long-term success in crypto, like in other forms of investment strategies, requires a strong personal financial philosophy and self-awareness [05:41:00].
- Define Your Endgame: Identify clear financial and quality-of-life goals. Don’t let the pursuit of wealth consume your identity [05:47:00].
- Manage Expectations: Be aware of the “house money” fallacy, where mentally, your net worth becomes the highest number you’ve seen, even if it’s vaporous liquidity [05:54:00]. This can lead to disappointment and unrealistic expectations.
- Take Profits: Always be willing to “take some off the table” [06:00:00]. If you’ve achieved significant gains, like turning a small investment into millions, secure those profits.
“You will not regret not holding for 20 like forget that you have a Long window you’re probably like 24 years old too by the way you can make 7% a year and double your money every 10 years like dominate just like just not don’t dominate just get average returns and now your 12 million 10 years from now” [06:30:00].
- Avoid Comparison: Recognize that “someone is always richer than you and somebody is always better at this than you” [05:22:00]. Focusing on external validation or being “the richest guy in the room” is a dangerous path [05:58:00].
- Balance Life: Maintain balance between your crypto activities and other aspects of your life, such as family, hobbies (e.g., CrossFit, baseball), and personal well-being [05:00:00]. Over-focusing on crypto can lead to neglecting healthy routines [05:20:00].
- Re-evaluate Conviction: The core narratives and reasons for getting into crypto may become weaker over time [05:50:00]. It’s important to re-evaluate your conviction and adjust your investment allocation as goals and market conditions change [06:14:00].