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In This Issue:
Extremes
For The NFT Collectors
Japan’s MicroStrategy 2.0
Here Comes The Leveraged ETH ETFs
Solana Has Overtaken Ethereum In Stablecoin Volume
Extremes
In the book "Human, All Too Human," published in 1878, Friedrich Nietzsche shared his thoughts about the danger of convictions:
“Convictions are more dangerous enemies of truth than lies.
Conviction is the belief that in some point of knowledge one possesses absolute truth. Such a belief presumes, then, that absolute truths exist; likewise, that the perfect methods for arriving at them have been found; finally, that every man who has convictions makes use of these perfect methods. All three assertions prove at once that the man of convictions is not the man of scientific thinking; he stands before us still in the age of theoretical innocence, a child, however grownup he might be otherwise.
It is not the struggle of opinions that has made history so violent, but rather the struggle of belief in opinions, that is, the struggle of convictions.”
Nietzsche clearly had strong feelings about convictions if he was willing to go as far as to say they are more dangerous enemies of truth than lies.
While I'm not a philosopher, I believe Nietzsche's quote suggests that convictions are often seen as absolute truths rooted in belief rather than fact. In contrast, lies lack a foundation in truth and can be easily refuted when exposed. Additionally, a person who lies may be aware of the truth, whereas a person driven by conviction often sees only one perspective, limiting their ability to consider alternatives or ever recognize the truth.
Lies can be overturned, convictions not as easily.
All that said, I want to clarify that my perspective on convictions hasn't undergone a sudden change. What I'm emphasizing is that convictions, like a double-edged sword, have both advantages and disadvantages. One way to understand conviction is to view it as a form of mental leverage. It enables you to take on more risk for potentially greater rewards, but it can also lead to swift downfall if not managed carefully.
Let’s now examine some popularly held convictions and challenge them:
You need 100% exposure in a bull market and 0% in a bear market.
Going all-in is not suitable for the faint-hearted, nor for those who are not fully committed to investing as their career. Coming home after a 9-5 job unrelated to the markets and then shoving all in on a single asset or strategy is a recipe for disaster, even if you are ‘right.’ This strategy is going to fail for 99% of people. Humans just aren't built to manage emotional extremes. Additionally, this approach relies on timing the market, which is notoriously difficult. And as a reminder from yesterday’s newsletter, getting off zero is the goal.
Active trading is the best way to generate profits. Passive investing is superior.
Just like the first point, unless you are fully committed to making active trading your 9-5 job, finding success there is still challenging. This is why a blend of passive and active strategies is likely to be the most suitable. The decision shouldn’t solely be about which strategy is more profitable; it's about selecting the approach that aligns with your knowledge, skillset, and available time. For most people, the optimal strategy lies somewhere between active and passive investing.
Concentration in one asset class is the best strategy. Diversification across multiple classes is key.
You probably see where I am going with this one already. Concentration is how you build wealth, and diversification is how you hold onto it. That being said, diversification is a high-risk, high-reward strategy that only pays off if you are right. However, overdiversification will probably just result in underperforming major indexes, which are already plenty diversified.
Crypto should be left completely unregulated. Crypto should be heavily regulated.
The hardcore crypto maximalists who attack governments at every chance they get fail to see that without proper oversight, crypto can pose risks to investors and the financial system. Conversely, regulators eager to control this asset class completely overlook that government intervention stifles innovation and limits the potential of blockchain technology.
In crypto, all boats rise with the tide. In crypto, only a handful of assets will win.
If all boats rise with the tide, then why are some of 2017's hottest investments ghost towns today? Furthermore, while more than a handful of crypto assets will succeed, it is unlikely to be in the hundreds—more so in the tens or twenties at best. This might be a tough pill to swallow, but just because there is a Discord or Reddit group of dedicated bag holders does not guarantee that your asset will rise in value. It is also equally not the case that everything in the top 20 by marketcap will be relevant in a year.
Bitcoin fixes everything. Bitcoin is just a speculative asset.
Last time I checked, Bitcoin hadn't cured cancer, ended racism, solved obesity, addressed income inequality, or improved the quality of U.S. candidates in the upcoming election cycle. However, there is a compelling argument to be made that fixing the money could lead to improvements in virtually everything related to finances, which is essentially everything. Nevertheless, Bitcoin still has a long way to go and, in many respects, remains a speculative asset.
I urge all of you to regularly question and challenge your convictions. The best-case scenario is that your correct convictions are sharpened, and the incorrect ones are dismantled.
Last point, I am in Paris for Paris Blockchain Week, so please bear with me if I am not as active as usual here, YouTube or X.
For The NFT Collectors
I'm not an expert on the latest NFT trends and developments, but I've been working to build a foundational understanding of the Ordinal and Rune space to share some early insights with you. If you're hearing about Ordinals on Bloomberg, it's already too late, but since we are nowhere near there at that point yet, I'm excited to share what I'm learning with you. Decrypt recently published an article highlighting its top 7 Ordinal projects, and I found their list intriguing. For more details, click on the link above; otherwise, keep reading for some spoilers.
NodeMonkes
Runestone
Taproot Wizards/ Quantum Cats
Bitcoin Puppets
RSIC Metaprotocol
OnChainMonkey
OrdinalMaxiBiz
If Ordinals and Runes continues to prove it's not just a fad, I would expect a few of these if not all of these 7 projects to rise—not financial advice.
Japan’s MicroStrategy 2.0
You may have heard about Metaplanet Inc., a Japanese budget hotel operator that recently made headlines for following in MicroStrategy's footsteps by adding Bitcoin to its treasury holdings. While Metaplanet's size is vastly different from that of MicroStrategy, what sets Metaplanet apart is its strategy of allowing investors to gain exposure to Bitcoin who otherwise wouldn't bother. This approach is particularly appealing in Japan, where owning Bitcoin directly can incur high taxes. Partnering with major firms like Morgan Creek Capital and Sora Ventures, Metaplanet purchased approximately 91 BTC, valued at $6 million. This move caused a significant spike in Metaplanet's stock price, which surged by over 90%, pushing its market cap to approximately $14.3 million. Where things become really interesting is if MetaPlanet issues debt to acquire more BTC.
Here Comes The Leveraged ETH ETFs
Despite Polymarket attributing a 19% chance to an Ethereum ETF approval this May, issuers are lining up to issue leveraged funds that would hold Ether futures contracts. The funds seeking these products include Volatility Shares, ProShares, and Defiance, all of which include 2x leverage, some long and short. Before the Bitcoin ETF was approved, the SEC approved the futures applications right on schedule, which was about half a year before spot ETFs were approved. If the futures ETFs are approved for Ethereum, I don't see it as a major direct benefit to the underlying asset or common investors, but I do think it further cements the likelihood of a spot ETF.
Solana Has Overtaken Ethereum In Stablecoin Volume
I am usually hesitant to post metrics that fluctuate week by week, but it's now the case that Solana has overtaken Ethereum in stablecoin transfer volume for quite some time, possibly signaling a lasting change in market preferences. In terms of actual stablecoins on its blockchain by market capitalization, Ethereum is winning, but much of that capital is not being actively used. A year ago, Solana held about 1.9% of the stablecoin volume market share; now, it boasts 43% and counting. While the meme craze has played a role, Solana Pay's integration with Shopify, enabling merchants to accept USDC via the Solana blockchain, has also contributed to its growth. As of April 8th, according to data from Artemis, Solana recorded $63.6 billion in volume, compared to Ethereum's $26.6 billion.
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.