No Fundamentals?
Valuations are the central topic of discussion among crypto enthusiasts. “Will the token X appreciate or tank, and why?”—that’s the most popular question. (And that’s why we have SIMETRI in the first place.)
When evaluating cryptocurrencies and startups, many, especially those coming from traditional finance, strive to either apply existing mental models or create one-size-fits-all models with familiar tools. Unfortunately, the market shows us that it doesn’t work like that.
The chart below shows inflation of CRV, Curve Finance token. It doesn’t look good from an investor perspective, right?
About a year ago, I wrote a piece about why it’s bad, in which I applied TradFi logic. It didn’t age well.
I can count discounted cash flow with Python and run a Monte Carlo simulation, but these aren’t necessarily valuable skills in the world of crypto. In many cases, tech knowledge, social networking skills, and taste in memes are much more important.
You could make all kinds of theses about Binance Smart Chain, attach Binance cash flows and token burns and run various calculations to make a point that it’s going to be a viable Ethereum killer.
Yet, a better play would be following the short-lived sentiment and exiting early with the expectation that the entire network would start to choke because it wasn’t technologically ready to handle high throughput.
A comment from one of the BSC node runners. I suggest that you read the entire thread. Source: GitHub.
All that is to say is that, in my humble opinion, learning a web3 library and understanding how crypto narratives are propagated may be more valuable than paying thousands of dollars and jumping through hoops to get a CFA. After all, we were called “shadowy super-coders,” not “shadowy super financial professionals.”
Crypto consists of tech “noobs,” who easily digest stories and tech pros, who relentlessly build to create new narratives. It’s a boiling pot, where everything changes fast and new ideas may challenge your fundamental beliefs. That’s why you can never master this market and apply universal mental models—you will always need to learn.
In SIMETRI we strive to do what’s meaningful, which is often not what’s most obvious or logical. It may not appear to be the most “professional” on the surface, but it might be that in crypto “professional” is as bad as the myth of clean code.
SIMETRI Portfolio–Staying Strong
Although the market dipped, five of our latest picks stayed strong. This is a good sign because according to our observations, tokens that show strength during dips are the first and the fastest to rebound.
Overall, the portfolio is back to the higher bound of the channel, within which it fluctuated during summer 2021 when the market was suppressed. Still, it may go deeper as the entire market isn’t out of the woods yet.
