Let me take you all back to math class for a moment. this is a standard bell-curve. To put it simply, 95% of the population resides within 2 standard deviations of the mean (middle of the curve). The remaining 5% are individuals who extremely under perform or outperform the majority. However, let me contexualise this for you a bit more. I will also provide examples further down.
The majority of people who invest their money will lose their money to the market. This is the same for people who actively trade. You may disagree with me on this point, however, there are a lot of people out there who are actively trying to time the market with a sell to buy back lower, only for the market to reverse on them and they have to buy back higher before price finally falls. Sure you may time it right once or twice, but it also may just be pure dumb luck. But that dumb luck gives you conviction to try it again in the future. This is a dangerous game to play and the market will eventually humble you. I can further simplify it for you. Grab a coin and flip it and see how many times in a row you can call it. If you can call it 9/10 times consistently across multiple tries, you may just have enough dumb luck in you.
Of the majority who do make significant money, a lot of people will hold back to break even or sell for a loss. All I need to do is point you to 2017/2018 for examples. People who got in slightly early (few months before ATH), made money but lost it all. This is the epitome of the middle of the bell curve. You are the dumb money.
Let’s talking about due diligence/doing your own research for a moment. Again, the majority of individuals will miss key indicators/criteria as to why something will pump and why something won’t pump because you’re simply unable to process or analyse something as in depth as what is necessary. Because you’re getting information from echo-chambers of hopium without forming your own conclusions PRIOR to arriving to a subreddit/telegram/social media platform. Critical thinking can be taught to a certain extent, but without a significant level of it, you’re the middle of the bell curve.
The top 2.5%
To put quite bluntly, you need to be intelligent. Intelligent in the sense of accurately anticipating future market trends or niches which you can then profit from by getting an early allocation. Key word is early allocation. Not just this, but you need a great deal of conviction in your own analysis. Michael Saylor is a great example of this. Say what you want about him, but he is extremely confident his DD and his profits show for that. I am of the opinion that anyone getting their FIRST allocation at the moment is dumb money and in the middle of the bell curve, albeit perhaps the higher middle.
The bottom 2.5%
The bottom 2.5% will make significant amounts of money. Highly probable even more than you and I. No you didn’t read that wrong. This is a genuine belief that I have. BUT, they may not keep a majority of it when the music stops. What I mean by this can simply be summed up with ‘everybody is a genius in a bull market’. ICOs, IEOs, NFTs, DEFI, all of these contribute to the mania of a bullmarket because some people get hilariously rich with flips. Risk management is non-existent for these individuals. But of course, what goes up must come down. To further summarise, these are the true ‘apes’ with no self control or DD, but amazingly, make millions. Chances are though, they will keep little to none.
Examples of commonly trashed coins/concepts
Middle bell curve – It’s literally a meme, it has no utility whatsoever? There’s no use cases, it’s just another crypto? I don’t understand why it pumps. There aren’t even devs working on it. 37B market cap for this?
Top 2.5% – It’s literally a meme. There’s a huge community and love for Doge because it’s a joke. Crypto can be seen as the foundation of freedom and free expression, of course it’s going to pump, but, the pumps can be viewed as seasonal. Get in, make your money, get out.
Bottom 2.5% – It’s a dog coin. Nice.
Middle bell curve – It’s a jpeg lol. I can right click save as and I now own it. 6 figures for this?
Top 2.5% – Everything is/will be going digital, including art. Digital art is verifiable through blockchain technology to ensure I’m not buying a fraud, unlike in real life where I need to get an expert opinion. There’s huge potential for utility, such as selling memberships to a future mint, later on, rewarding those memberships with a secondary mint or airdrop to a token. You’ll eventually be able to showcase your NFT collection in a metaverse, like you would at a museum IRL. Only those with a pre-purchased NFT may enter. Ticket sales to a livestream in a metaverse.
Bottom 2.5% – This penguin is cute. I’ll add this to my collection of 8bit punks worth 6 figures, along with my boredapes.
Middle bell curve – Wen smart contracts? 85B market cap for an unfinished project? ETH>ADA. Charles is narcissistic, I refuse to invest in someone like that.
Top 2.5% – Interoperability and competition is healthy for the crypto space as whole. It’s how an industry as a whole moves forward. If smart contracts finally arrive, perfect, if not, that’s unfortunate. Let’s see how it plays out.
Bottom 2.5% – Married to your bag, refusing to acknowledge potential drawbacks of what you’re invest in. Smart contracts absolutely WILL come, Charles said so.
The aim of this post is to challenge your own thinking. Where do you think you are in terms of the bell curve? My advice would be to have a plan in the chance that you make life changing money. If you don’t, you’ve wasted the last year or more of your life in crypto and all the stress will be for 0 payout. Pay yourself. No one else is going to, they’re your bags. At the VERY least, take out your initial investment and play with the houses money.
EDIT1: Interesting to see quite a lot of downvotes but no one providing any comments of substance to disprove this.