2023 Performance Review + Reflections

GM Bear Market Survivors!

What a brutal year 2023 was, with the Fed’s relentless pursue to raise rates higher and many calling for an inflation that stays “higher for longer”, market participants including you and me definitely felt some form of despair last year.

I won’t dive into the specifics of what went on in 2023, but if you stuck around during all these time, you would know that the most important lesson of 2023 is – Patience.

Our patience and resolve were tested to the extreme last year, Bitcoin was literally at $16.6K this time last year.. (can you believe it!?!?), nobody would’ve imagined Bitcoin hitting $43K by the end of the year, especially with peak pessimism and many were calling for Bitcoin to go much lower to $12K.

The Reflexive Nature of Crypto

Crypto is one of the most cyclical asset class out there, after going through a full bull and bear cycle myself, I can summarise it in a paragraph:

Fundamentals is a reflection of price action. Crypto is reflexive in nature and runs on narratives and attention. The true commodity is attention, and the coins/sectors that can capture the largest mindshare and attention in a given moment will be deemed the “outperformers“ that outperform everything else.

As such, I think it is futile to continue using trivial metrics such as FDV/TVL or P/S ratio to measure a crypto project’s fundamentals. The closest thing we can get to valuing these coins is relative comparisons to projects of the same vertical – e.g., ETH vs SOL, but even so it also depends largely on what market participants are focusing on at a certain point in time.

Will “fundamentals” eventually catch up to reflect upon its price? Not really. In crypto, it’s the other way round. The higher the price, the better the fundamentals. Or in web3 native terms: “The tech is getting better each day.”

Once we recognise that this is a highly speculative and “growth” based asset class, we can then employ strategies to maximise our returns potential here. Does buy and hold work? To some extent, yes, if you hold coins that won’t disappear in the next 5 years like BTC/ETH/SOL.

The crypto markets is optimised for active trading, and will benefit traders who are momentum-based and can catch large trends early before they play out. The bear market has provided bear survivors with a favourable market, where most alt coins are literally just about to break out of their high time frame (HTF) charts and go into price discovery mode as investors take on more risk + expectations that there will be multiple rate cuts throughout this year.

Will there be a recession? No one knows for sure, but the best hedge against FOMO is literally to just be allocated. You wouldn’t want to miss the forest for the trees in literally a cycle where the institutions are coming in hard, and trillions of liquidity is about to injected into crypto for the first time over the next decade.

If you are feeling lazy to put in the effort, just read this tweet at least twice a day.

Net Worth Up 6.55x From 2022

Going into 2023, I suffered deeply in the first half of the year, and saw my portfolio shaved into half in unrealised PnL. While it felt devastating when that happened, I continued to Dollar Cost throughout the year, focusing on stacking ETH which was my highest conviction bet at that point in time.

It was not until Friend Tech came along that I started to compound my returns significantly and a couple of good decision making (like swapping my ETH for SOL) but the biggest W of the year includes:

February 2023

• BLUR Airdrop (5 Figs)

March 2023

• ARB Airdrop (5 Figs)

July 2023

• ARKM Airdrop (5 Figs)

August 2023

• Friend tech: 30 ETH cost, 72 ETH total cost + PnL. Pulled out 30 ETH base + 37 ETH profit + farming points (15742 points)
• PRIME: Started scaling in early August, from $2.50

Sept/Oct 2023

• SOL: Bought since $22, scaled in and aped hard from Oct 20 onwards
• BONK: Started buying from ~$200M FDV (.195)

December 2023

• JTO Airdrop (5 Figs Airdrop)
• Lump-sum invested into SEI, one of the best decisions in hindsight. Winners average winners basically

As such, my portfolio only started turning for the better from August onwards, which also coincides with Bitcoin’s move upwards into the $30K region in the same timeframe. It definitely pays off to have “time in the market.” There is simply no way to time bottoms perfectly because bottoms are formed after the fact.

Of the entire list of Ws I had this year, swapping from ETH to SOL was the biggest EV move for me, followed by aping into BONK early with a pretty significant allocation. Airdrops remain one of the easiest and most profitable way to compound your bags, because you are literally paid for trying things out early, which is just impossible if you are in any other sector.

As of 31 Dec 2023, here is how my portfolio looked like:

I am 100% allocated. DAI represents my angel investing bags and are illiquid. Can’t really reveal much as they are NDA.

If I had to dissect my portfolio up, it can basically be divided into the following sectors:

1. Solana Ecosystem (Core Position)
2. Sei as a Solana Killer + Parallelized EVM Play (Satellite Position)
3. Gaming Narrative PRIME + RON (Satellite Position)
4. Modular Data Availability + Rollup-as-a-Service Narrative TIA (Satellite Position)

Things may change extremely quickly though, and I am ready to move at least 90% of my portfolio to other sectors as I see fit. As of now, market narrative and attention seemed to be concentrated in the top 2 categories, but I do have 2 sectors which I feel will have powerful narratives this year and they are:

1. Crypto x AI
2. Bitcoin Ordinals Ecosystem

Airdrops Galore

In mid December, I dropped a bunch of airdrops I am concurrently farming right now in my telegram channel, which I feel will pay off hugely going into 2024, and just gonna include it here for easy reference:

“There are hundreds of token-less projects, but I am optimising my airdrop farming by allocating my effort/capital to the ones that can potentially give me the highest expected returns.

I had a few good ones earlier this year like Arkham and Jito which gave me really great airdrops, but going into 2024, here are a few I am most excited about and some of which are more or less implicitly confirmed to have a token:

SOLANA ECOSYSTEM (Highest mindshare + largely faded by EVM maxis). In terms of priority (capital, then effort), here is how I am going at it:

1. MarginFi (lend/borrow assets, earn straightforward points)
2. Kamino Finance (same as MarginFi, points system coming, even less crowded than MarginFi)
3. Tensor (Blur fork on Solana, least competitive vs MarginFi/Kamino, currently just staking Tensorians and earning passive points)
4. Jupiter (least effort but likely has the most contribution to all 3 farms above, just keep swapping tokens through this and increase your trading volume before snapshot 2/3/4 is taken sometime next year)

BLUR/BLAST L2 ECOSYSTEM (Mostly NFT side of crypto twitter farming the BLUR side, Blast Bridge has more than $1B TVL already but still think this will surprise a lot of people next year):

1. Blast (deposit your ETH/Stables and chill till Feb 2024 to withdraw, don’t forget to spin for points which will be claimable for airdrop)
2. BLUR Points staking (If you hold BLUR, you can stake BLUR to earn points that will also contribute towards Blast L2 launch next year

GAMBLEFI (Basically decentralised casinos, Rollbit has been the kingmaker of crypto casino in 2022/23, and new competitor = shiny new token = potentially a 10x/100x opportunity that is not even here yet)

1. Shuffle’s $SHFL airdrop. Airdrop criteria has already been announced, snapshot likely will be taken before end of year, just get to Gold 1 and above to be safe. Search Shuffle airdrop here to find the farming guide.

Tokenized Commodified Internet Bandwidth (basically a new narrative, strong airdrop potential for Grass)

• Grass points airdrop. Just sign up using your comp with your email, login and connect your Internet. You earn points for any unused Internet bandwidth and apparently this will be a MASSIVE airdrop. Very under the radar.

LIQUID STAKING (LSTs will become more popular over time, but their governance token are mostly free money so why not)

1. Swell Network’s $SWELL Token. Stake swETH, earn “Pearls” that can be converted to $SWELL token sometime next year. However I am no longer farming this, think I have enough Pearls and looking at greener pastures (categories above)
2. Eigenlayer Restaking Points. Deposit your ETH/LSTs to earn points, will likely be $EIGEN airdrop next year. (Also currently not farming this)

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General Thoughts

Timing the market is not my game; instead, when I invest in a project, I focus on adopting a business owner mindset. My philosophy is that if a company is of high quality and growing, I should consider investing even if it is overpriced. Attractive investments are extremely rare, so get in early and ride the wave, ignoring the noise and investing consistently.

On Market Crashes

This is the one thing that investors and layman alike fear the most. The market will always swing between being overvalued to undervalued, which at the extremes will lead to bull run or market crash, and it is all due to market sentiments of greed and fear in play.

Looking back on history, the stock market experienced a severe (40%) crash every 10-15 years or so on the average. All times, it has recovered and exceeded the previous high within a few years. The same goes for crypto as well, while there are currently only 3 distinct market cycles within crypto that we can refer to, each cycle the market cap trends higher as the asset class continues to mature.

Timing the market may work short-term but not long-term

Some may think a good profit can be made if we sell our investment when the market is overvalued and then buy back in when it crashes. I think this is very difficult to execute successfully. Miss one cycle and you may need to wait out many years or miss out completely because narratives are changing every single day.

Each major market correction can offer opportunity to greatly magnify our portfolio performance. Many fails to realise that a lower price, in fact, reduces and not increases the risk.

The importance of a war chest

Keeping a sizeable warchest is important. A war chest of 5% in cash will not have that much impact. But keeping too much cash (50%), will mean you are only enjoying half of the earning growth of your investment during the in-between years. I personally think a good ratio will be in the 10%-20%.

Lastly, we have to be mentally prepared. Just imagine that your portfolio is cut by 40-50%, what is the impact to you financially, do you still have other incomes to cover the expenses? I always ask myself that if my portfolio is reduced by half, will my life be any different and will I panic. Stress test our financials to such scenario will help to prepare our mindset when it happens.

Because it will happen, the only question is when. (Already happened multiple times this year if you are in crypto)

As 2023 comes to an end, I wish each and everyone all the best in your journey towards financial freedom, good health and peaceful family ties and of course, happy new year in advance! To those who read all the way till the end, I sincerely thank you for the bottom of my heart for the unwavering support thus far.