The crypto story of a retail investor

Hey The Cryptonomist readers, my name is Patryk Karter and here’s my crypto story. 

Given the recent rises in prices, I’m sure there are many people that are just starting out in the crypto and blockchain world and have no idea what to do. I wanted to share my story, the mistakes I’ve made, what I’ve learned and where I see this market going.

It goes without saying that this is not financial advice and that this is all for educational and entertainment purposes.

“Now this is a [crypto] story all about how my life got flipped-turned upside down”.

(Who gets the reference?)

The screenshot below was taken from CoinMarketCap and it is the Total Market Capitalization of thousands of cryptocurrencies from February 2017 until February 2021.

I will use this screenshot to detail my journey in these last 4 years.

The crypto story begins

Light blue (August 2017)

I was living and working in London, not sure about where my life was going. I was looking for answers. I didn’t like my job, so I was reading books and watching YouTube content about philosophy, self-development, entrepreneurship and the like. I realized I needed to have some sort of passive income so I could quit my job and focus my energies on finding what I wanted to do in life. Here’s where I started to get interested in crypto, at first obviously because I wanted to make money.

Down the rabbit hole

Green (September – October 2017)

At this point I was hooked, I invested a significant part of my savings into crypto and started talking to everybody around me about this “next big thing”, only to realize today that I looked like a madman, I hadn’t made any money yet, what was I thinking? I did however trust my research skills, as those led me to having a scientific worldview and a solid logical and consistent moral framework, so forward I marched.

To the moon!

Yellow (November – December 2017)

I started to feel the euphoria and thought I was a genius. My portfolio was growing on a daily basis, I was already thinking about quitting my job and living off my profits. In that period I had a trip planned with my elder brother around South-East Asia: Thailand, Singapore and Bali. I took my laptop with me in order to keep following the market, imagine my state of mind, I was on holiday and was earning money while swimming in crystal clear water and drinking delicious smoothies.

HODL! Don’t panic

Orange (January – February 2018)

Bitcoin had peaked on December 17th, although I obviously didn’t know the bubble had popped and thought it was a mere correction and that the market would keep on going upwards, I repeated the mantra HODL! To be honest, most of my portfolio was in altcoins (cryptocurrencies other than bitcoin) and they kept on rising. Around the beginning of January, my entire portfolio had doubled overnight, that was the sign to sell. After that day, it just started to go down, with a few rises that were obviously bull traps. I started panicking a bit, what to do? “What if I sell and it starts going up again?” I decided to at least sell x2 the amount I invested initially back in September 2017, then on the way down I kept selling a bit more and overall  I more or less tripled my initial money, which is pretty good, but nothing compared to the peak of the bubble where my investment had grown x20.

In-depth research

Red (March – December 2018)

After the holiday in Asia, which ended in mid-January, I moved to Poland as life was cheaper there compared to London and I decided to live without working for a while, using the money I made during that bull run. My plan was to find a job I could do remotely and keep learning about cryptocurrencies and blockchain as I believed that couldn’t be the end of it.

I started working as a freelance translator, with my main client being The Cryptonomist, a news magazine which dealt with the topic of crypto and blockchain. Yes! The perfect job, I could continue learning about this sector and keep up with daily news while earning money. During this period I learned about the cyclicality of markets and that a next bull run would come in a couple of years. So I kept studying, researching projects and accumulating cryptocurrencies.

Accumulation phase

Purple (January – December 2019)

My daily routine was: translating crypto-related content, reading books, listening to podcasts and watching YouTube videos about cryptocurrencies and blockchain technology. It stopped being only about making money. I started opening my eyes to the current financial system and realizing how broken it is. This revolution has the potential to make the world a better place. I kept on working and buying crypto using the DCA strategy as well as diversifying my investments.

Other earning strategies

Dark blue (January – September 2020)

“The market is a device for transferring money from the impatient to the patient”

This quote by Warren Buffett is golden, especially during a bear market. So I kept being patient. At this point I had most of my life savings in crypto, something that I don’t recommend to anyone, it’s very risky! If I had invested all my savings back in 2017 I would’ve been very close to losing it all.
While waiting for the next bull run and the resulting price increases of the cryptocurrencies I own, I added some other strategies to earn more money.

The first is Staking. Bitcoin uses PoW (Proof of Work) as a consensus algorithm, which is the one that uses the famous “mining” and consumes staggering amounts of energy. Despite the fact that most of the energy for bitcoin mining is renewable energy, I still think that that energy could be used in a better way, especially since there are alternative consensus mechanisms that don’t consume gigantic amounts of electricity, the most famous being PoS (Proof of Stake).
Ethereum is currently moving from PoW to PoS in an attempt to increase speed and scalability.
However, there are two big competitors, Polkadot and, my personal favourite, Cardano. By owning the Cardano cryptocurrency, ADA, you can stake it on the network and earn rewards from it, the rewards currently are about 5% APY, not bad for just keeping your funds in a hardware wallet, on top of that you’re contributing to the security and decentralization of the network.

The second strategy to earn passive income is Yield Farming. Last year’s (2020) buzz word in the crypto space was DeFi, which stands for Decentralized Finance. In short, DeFi is an umbrella term for a variety of protocols using smart contracts that allow creating financial applications (for services like lending) that don’t require an intermediary like in the case of centralized finance, i.e. banks. This sector has created a new kind of job called Yield Farming. Yield Farmers browse all these different protocols and cryptocurrencies in search for the best interest rates in order to earn money. It’s a very rewarding but time-consuming effort. So how can non-expert users earn from it? There are some applications that do that for you, my personal favourite is Celsius Network. It’s simple, you create an account, confirm your identity, deposit some funds (or buy them in the app) and they automatically start generating interest. Interest is paid weekly, every Monday, and ranges from around 5% for Bitcoin, 15% for stablecoins, up until 18% for some altcoins like Synthetix (SNX). I’ve been using Celsius since November 2019 and they never skipped a week. If you want to give it a try here’s my referral link, by using it we can both earn $20 in BTC if you deposit $200 dollars worth of any supported asset and hold it on the Celsius app for a month.

Cardano and Celsius Network are among my most favourite projects, I highly recommend researching them in depth and listening to Charles Hoskinson, the founder of Cardano, and Alex Mashinsky the CEO of Celsius Network. They are both amazing human beings and they have made it their life mission to help the 1.7 billion unbanked people around the world.

The crypto story ends (for now) – Where are we today?

Grey (February 2021)

I think we are somewhere in this zone (dashed blue line) in this market cycle, which means there’s still room to grow but it’s important to plan an exit strategy. It’s also crucial to keep emotions in check, it’s easy to go crazy seeing your money x10 or even x20, been there, done that. I believe the next bubble will pop in the next 6 – 8 months. However, I might be wrong, there’s a lot of institutional money coming into crypto. Big names like Tesla, Square and MicroStrategy have invested in bitcoin significant chunks of their reserves. This kind of institutional buying will slowly allow the price of bitcoin to stabilize, but I’m not sure whether it will take place after this cycle or after the 2022 – 2026 cycle, I’m more convinced it will happen in the latter one.

In any case, people are starting to get euphoric, which means that the prices we will see in the next months will be the result of that irrational euphoria. What do you think will happen when bitcoin reaches a price of 150-200 thousand dollars and drags the whole crypto market with it? What do you think people who have been accumulating since 2018 will do? Don’t you think they’ll start to take profits in the coming months? Which means they’ll be selling. Selling to who? To the people that unfortunately will not do enough research and will fall prey to euphoria. I hope this story does help people approach this space with reasonable expectations.

For newcomers, here’s a list of YouTube channels I recommend. Try to watch at least 1 video daily, even if you don’t understand everything, this will force you down this rabbit hole that leads to financial freedom.

Thanks for reading and good luck!