Written by: Vab

This is a true story.

Once upon a time my husband and I were under-payed teachers living in one of the most expensive counties in the United States. Every month was a struggle. We were living paycheck to paycheck, commuting 30 miles to and from work everyday, penny-pinching on every purchase, trying our best to raise a 10 year boy outside the influence of Apple products and Japanese gaming consoles. It was a tough time financially, very stressful, but at least we owned our own home.

This was our second attempt at home-ownership. We'd been one of those young, low-income couples Wall Street banks had preyed upon leading up to the 2008 financial crisis. We lost our first home to foreclosure in 2010. A $300,000 property we had been sold in 2007, which was auctioned off to a corporation for a measly $35,000 just 4 years later! Needless to say, this event completely destroyed our lives. I ruined our credit and wiped out our savings account. It would take 7 years of sacrifice before we could call ourselves homeowners again. In retrospect, getting fleeced by Wall Street back in the day was the catalyst that set us on the path to financial literacy and entrepreneurship. So, I guess, thank you lizard men?

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The year I just described was 2017. The same year Bitcoin first hit $20,000. A year before our second child was born. It was a hard time for us, psychologically. We knew the stakes were only getting higher, and although still in our early thirties, we knew we weren't getting any younger, too. This year was made even more mentally challenging because of the fact we'd known about Bitcoin since 2011. Yes, we owned some, but not a life-changing amount (even at $20,000/per coin). We had prioritized buying a house over Bitcoin accumulation, and Bitcoin (as it always does) made us pay the price for that mistake!

We could've made millions in 2017, but we didn't. At the time, it made us feel like proper idiots, but, thankfully, the self-loathing didn't last too long. Instead, we chose to view the glass as half full and acknowledge the valuable life lesson missing the Bitcoin boat of 2017 had taught us: long-term success in investing comes from a combination of education and experience.

At this point, we knew exactly what we needed to do. We needed to learn more about Bitcoin, enough to make us comfortable with investing a large portion of our family's net worth into it. We needed to become Bitcoiners.

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The Ride Up

The next three years would complete the decade of financial hardship and emotional stress the 2010 foreclosure had borne into our existence. Alongside millions of other millennials we hustled endless side-gigs and ate avocado toast until our eyes turned green! We spent all of our free-time learning about Bitcoin and crypto, dreaming of the day all of that sacrifice would pay off. The day we would finally become millionaires. By late 2020, we had managed to invest $80,000 into Bitcoin and core Defi tokens like Aave, Chainlink, and Synthetix. During the raging crypto bull market which followed for the next 12 months we also degen'd on plenty of sh*tcoins, like $FLOKI, $COC, and all manner of “Inu." By the Fall of 2021, our $80,000 investment had turned into a $3.3M crypto portfolio!

The feeling was almost indescribable.

Making a million dollars in crypto feels like you've landed on the moon, that’s why the moon meme is a thing! We felt as though we'd gone to outer space (where very few have ever been) and were allowed to witness something truly spectacular, an aurora borealis 1M miles above the earth.

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It made us feel very special. Destined. The experience validated our worldviews, rejuvenated our spirits, and filled us with a deep sense of purpose. We were winning, and it felt great! It was an existential reprieve whereby stress was momentarily hung in suspended animation, and we were allowed to live without it for the first time in our entire lives. It was a dream come true!

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Here’s a screenshot of one of our wallets from around that time:

So, what did we do with our new-found wealth? What happened next?

Lots of spending. We bought a ton of sh*t we didn’t need.

Lots of wasted time. We felt as though we'd won the time lottery, so yeah, we wasted lots of time doing nothing about nada. In our defense, at the time, we also felt like we deserved a break from 10 straight years of constant work. Today, however, we know better than that!

Lots of giving back. This was not a bad thing. Giving back was the silver lining in the whole experience. We helped our friends and family with our newly minted wealth, and this was something which truly made us feel happy. A deep desire to give back was the real reason we had embarked on the journey to financial independence in the first place, and it felt great to finally be able to do it!

Eventually, lots of emotional distress. This was the part we weren't expecting. We thought making millions would forever rid us of stress and anxiety, but it turns out the whole “first-time millionaire,” “rags-to-riches” experience is a crazy trip. A round trip reality rocket ride to outer space and back in less than 12 months! When our ship crash landed back on earth in 2022, and the proverbial dust had finally settled, it was time for one thing and one thing only: a MAJOR dose of reality.

The Crash Down

So, what was reality?

We had awaken from the Crypto Dream of 2021, only to quickly find ourselves in the Crypto Nightmare of 2022. The nightmare came fully equipped with everything you’d expect: panic, fear, desperation, even bogeymen! But, instead of Freddy Kruger or Micheal Meyers we had Do Kwon and SBF to worry about.These psychopaths were hell-bent on chasing down not just our portfolio, but those of everyone in the space, with rusty blades and bloody axes, financial weapons of mass destruction, which they were only too eager to use to hack and slice 'em all up into pieces!

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Indeed, 2022 was a bloodbath for everyone holding crypto. A year which cleansed the industry of bad actors, bad investments, and bad business practices. Everyone was taken down a notch. If you’d become a billionaire, you were pushed down to hundreds of millions. If you’d made hundreds of millions, you were demoted to tens of millions. If you’d made 8 figures, you were brought down to 7, and if you’d made 7, you were humbly escorted back home to 6. This was 2022, in a nutshell.

Everyone made mistakes. Regardless of their wealth level. No one was left unscathed. The mistakes we made cost us ~80% of the new wealth we’d created just a year before (roughly $3.3M), a loss of over $2.5M! However, I know we got off easy. Even after such a dramatic loss of profit our net worth was still 500% higher than it had been in 2020. We were much better off. We could continue to build wealth. Others weren't so fortunate, many lost it all.

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The Lessons Learned

The primary mistake everyone made (myself included) was not taking enough profits, or reinvesting realized profits back into the market prematurely. In other words, refusing to accept reality (at the expense of gains which had taken years to materialize). In short, taking too much risk.This is a problem all investors face, not just those in crypto. How much risk you should take, and when, is literally a $1M question.

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How much risk should you take?

The answer is: it depends. As a rule of thumb, the younger you are, the more risk you can take, but this doesn’t mean you should be yolo’ing your monies left and right in the hopes of striking it rich. It just means you can afford to put a larger percentage of your net worth into speculative assets (like microcap crypto tokens), than an older degen could.

For older degens, who perhaps have already accumulated some wealth, the main concern should be wealth preservation and diversification. The older you are, the more risk-averse you should be with your investments, as you have less time left to potentially rebuild lost wealth, than your younger counterparts.

When should you take risk?

The answer here is simple to understand, but difficult to execute. In general, the earlier you arrive to a speculative market cycle, the more risk you should take. I’m other words, when you are near a price bottom, you should buy higher quantities of that asset, and when you are near a price top, you should sell higher quantities of that asset. Pretty simple, right? Yeah, on paper. Maybe.

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The reality is that knowing what phase of a speculative cycle you’re in takes specialized knowledge and lots of experience. Luckily, if you’re reading this, you’re already ahead of the pack. Here’s an article we recently wrote on spotting cycle phases.

Educating yourself on the nature of markets and investing is all well and good, and definitely a requirement for success as a crypto investor, but it won’t get you anywhere unless you also spend time figuring out the nature of your own mind, your own psychology.

What do I mean by this? I simply mean you must learn to manage your emotions if you want to become a successful crypto investor. The amount of money you will make during a crypto bull market will largely depend on your ability to keep fear and greed (emotions) in check.

If you gloss over this part of the process, if you don’t give it the full attention it deserves, it will only end up causing you financial pain. You will either lose more money, or make less of it than you should’ve. Trust me.

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How do you deal with fear and greed?

The best way to deal with fear and greed, in our opinion, is to buy when you’re feeling fearful, and to sell when you’re feeling greedy. This takes lots of planning, and lots of discipline. You have to plan your entries and exits in anticipation of these emotions, and have the discipline to stick to those plans! This is easier said than done.

This part of the process doesn’t require you to learn about the fundamental, technical, or on-chain drivers of the crypto market. This part has nothing to do with finance or economics. This part is all about your ability to exercise discipline under stressful real-world situations.

Here’s a video series we can vouch for on the topic of trading/investing psychology (we recommend you watch it more than once):

Closing Arguments 

Well, if you made it this far I appreciate ya, sir! You may have noticed the recurring theme of this article: success in crypto investing (as in life) comes from a mixture of education and experience.

This is the reason why my partners and I started Brainyield. Our hope is to share as much of our knowledge and experience with you degens for free. We believe financial education is a key component to long-term success in crypto investing. So, if you can only afford to make one investment in 2023, invest in your EDUCATION! You can start by reading our article on why Bitcoin should be your savings account, and signing up to our FREE on-chain analytics course. That's all for today my frens, please bookmark this place and come visit us again soon. Peace!

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