In TradFi (Traditional Finance), buying and holding ETFs is an excellent strategy that’s been proven to outperform most hedge funds. Take a look at the average returns of the S&P over the past decade, going back to 2012:

Even with the current YTD Annual % Change of -17.66% in 2022, that averages out to a return of 11.88% a year.

This may not seem like much for desensitized crypto degens that are used to huge swings of 200% or more… but this means that if you invested $1M at the beginning of 2012 (and not a single additional cent), with compounding interest you would have $3.4M ($1M * 1.1188¹¹).

For 99.99% of people, simply DCA’ing (dollar-cost-averaging) by putting a portion of their paycheck into buying SPY (or our preferred, VOO) stock will outperform almost all strategies that they might attempt.

But does this work for Crypto?

Well… sort of. To extend the analogy, let’s suppose you DCA into Crypto by buying only large-cap coins (BTC and ETH). Will you outperform “the market” in the long-run?

In a broad sense, yes you will! As in TradFi, trying to time the market hasn’t worked out particularly well for most traders. However, there have been proven strategies that have worked in the past… here are two:

1. Buying NFTs on launch
   During the bull-run of 2021, most NFT collections on ETH mainnet that had “sufficient hype” would easily 3–5x in the next 24 hours following launch. Many fortunes were made during this time period, as we saw repeat stories of folks following the same formula to go from 3–5 figures in their trading account to 6–7 figures (from hundreds to literally millions!!) many times over. There were two types of traders that made it really big:
   
   (1) those that repeatedly bought into these drops and 3–5xed their money over and over
   (2) those that got “lucky” and bought into the top 1% of projects early in large volume e.g. CryptoPunks, BAYC, Cool Cats, etc.
   
   Since it’s difficult to get “lucky,” doing research and buying into promising drops repeatedly was one of the best strategies for making money during this time period. During the current “NFT winter,” (OpenSea monthly volume dropping 99%) and broader “Crypto winter,” this strategy doesn’t really work as reliably anymore. Sorry if you missed out on this!
2. Calculated bets on Shitcoins
   Despite all the flack that Shitcoins got from “professional investors” that considered buying Shitcoins to be largely gambling, it was actually an extremely profitable strategy if executed properly.
   
   (1) Only dedicate a small portion of your portfolio to Shitcoins — 1–5% at most. The rest of your crypto portfolio should largely be in large-cap coins.
   (2) Do research on the most promising bets. Research does NOT mean scrolling crypto Twitter (more on this in later articles!) This is an entirely different game from long-term investing. This is TRADING. Look for signals that indicate the coin price will go up in the future, not for indications that it will necessarily become a good long-term bet. If you were one of the people that wrote off DogeCoin during its entire meteoric rise, especially as it broke into the mainstream zeitgeist, you are likely to be too close-minded to make money from these types of bets and strategies (stick to S&P!)
   (3) Learn basic risk-management. Take profits. Even the basics will take you far in building your crypto portfolio to several millions more than it is now. For example, if your DogeCoin bet (1% of your portfolio) suddenly ballooned to 20–30% of your portfolio, you know that your portfolio is taking on too much risk and that you should decrease your position size. The best part of learning risk management is that you stop relying on guesses on “how much higher will it go?” But start making rational decisions based on your risk tolerance and sound financial strategies.

Making calculated bets on Shitcoins with a small portion of your portfolio is essentially what VCs and Angel Investors do in TradFi: you do your due diligence and spread your capital among a large number of bets, but you know that most bets will go to 0 (worthless and lose your money.) However, it’s the couple that end up mooning 100–1000x that will pay for all your losers.

We’ve covered two strategies that were high expected value and reproducible. For those that had time to dedicate to executing these strategies, they certainly were able to generate more returns than Buy & Hold.

However, does Buy & Hold have any merit now during the Crypto winter where prices have crashed dramatically during the past months? We think it does. Here’s a free strategy that we think will outperform most (with significantly lower risk) over the next few years:

(1) Accumulate. DCA into Bitcoin and Ethereum. Continue to make multiple low-cost bets if you have time to execute on strategies.
(2) STAKE. There’s a next generation of staking and validating services that are going to be insane in the next bull-run. This means that you can generate 10–20% yearly returns ON THE NATIVE COIN. This means if you have 10ETH, you could have 12ETH by the end of the year, regardless of whether it went up, down, or stayed the same price. These next-gen services offer great returns, high-availability, high-security, and liquidity (don’t need your funds to be locked up.)

Important note if you haven’t been trading crypto for the past decade: Crypto bull-runs happen in 2–3 year cycles. We expect to see crypto prices on large cap coins easily 2–3x each year during the next bull run. Compounded with a good staking strategy as the secret sauce, that means easily up to x10 returns.

But the takeaway is this: accumulate large-caps and spend time executing on riskier strategies that are still +EV that will generate high returns. Try to accumulate at least 100k before the next bull run. HODL with a high-yield staking strategy. Aim to make millions during the next run-up. Good luck anon!

Follow the lemondrop Twitter here for a more consistent flow of info in bite-sized pieces, and to be notified when the next article (lemon)drops!

Within the cryptocurrency space, many new enthusiastic coin-hodlers have been reporting insane levels of returns on their investments within the past years.

It’s not easy to get consistently high returns over a long period of time. Unless you get lucky, you’ll need to develop the skills, discipline, and intuition for investing. Besides the inherent difficulty of navigating this new technology and grasping the concepts that come along with it, newcomers attempting to dip their toes into the space get inundated with an endless supply of information.

Trading charts, price predictions, explanation videos, DeFi protocols… the rabbit hole never ends.

We’re a group of traders and engineers that have been casually investing into the crypto and Web3 ecosystem for several years. For fun (and as an experiment), we created a new joint investing fund of $80K, which we turned to over $1M in the last 6 months. Not our first $1M, but it was definitely in record time with our joint efforts.

Despite what the shitcoin-shillers and experts tried to sell us during this journey, we learned one truth:

The path to mastery is to consistently consume high-quality information, and join a high-quality community.

Consuming high-quality information will give you better data and information to make investment decisions on.

A high-quality community will make it easier for you to filter out the noise and find that high-quality information. They’ll also cheer for you during your highs, support you during your lows, and make you laugh and smile daily with a strong meme game.

There’s no way around it. If you embark on the journey alone and make decisions solely based on articles and bits and pieces of information that you find on the internet, it’ll be infinitely harder. There are plenty of messaging groups or communities on the internet that you can join (Discord, Telegram, Twitter, etc.) Here are some tips on how to choose the right one:

1. Avoid Communities Full of Bots and Shitcoin Shillers
Communities that aren’t moderated particularly well will be full of spam and scams. Avoid being sold to. Filter high-quality vs low-quality information. High-quality information will have well-researched due diligence and detailed analysis. Low-quality information will use mostly anecdotal evidence and propaganda.

Buy tis coin now, it wil moon!!1!!!! 999% returns!!! -cryptog0d420

2. Join Communities That Focus On Learning
One of the first red flags for us is when people tried to sell us on joining their communities, they highlighted the “x1000 returns” that “many of their members” were making. Many of these “investing groups” were more similar to sketchy pump-and-dumps or pyramids schemes than people serious about leveling up their investing game. One of the main points of joining a community is to share learnings, especially from losses, so that you can take those lessons to apply to your own investing strategies.

3. Focus on Well-Researched Bets
To elaborate on the previous point — in order to learn faster, you have to make a well-researched bet, observe the outcome, and reflect on the decisions leading to the outcome. The more times you go through this process, the more competent investor you will become (more iterations!) Great communities will have tons of well-researched bets that you can learn from. Bad communities will have more content and discussion that resembles:

“I thought X would happen (no particular strong reason or analysis applied)… X didn’t happen and I lost money… oh well.”

You’ll learn nothing and spin your wheels forever if this is primarily the type of discussions that you’re seeing.

We’re starting Lemon Drop so we can share not only our investing knowledge, but grow a community passionate about making greater returns with less effort (work smart, not hard!) Some of us are engineers as well, so we want to create tooling and applications over time to help people make better investing decisions.

You’ll get free Beta access (eventually when it’s released) to all the tech we’re working on by joining the newborn Lemon Drop Discord. We’ll also be manifesting a strong meme culture a la r/wallstreetbets (we love that shit, investing should be fun.)

Also, we’re new at this writing thing — give us some notes in the comments on how to improve. We deal in numbers and with code most of the time, so we’ll be bad at first. However, you’ll always get high-quality information with no fluff! We don’t really know how to write flowery shit.

(UPDATE: We’re pivoting away from the Discord as it was taking too much time and effort to maintain… we want anything we do to be high-quality, so we’d rather not have it exist if we can’t dedicate time to it. We’re creating a community around our new Twitter though, come join!)