The Mindset of Speculators: Narratives, Risks, and Crypto Assets

In this uncertain world, each of us is a speculator. Our brains continuously construct probability maps of the environment, and our actions are based on probabilistic predictions of various outcomes rather than certain facts.

Taking skiing as an example, the best slope for skiing is exactly the ideal slope for an avalanche. Before skiing, the guide will assess the avalanche probability, considering snow conditions, weather, and other information. If the risk is too high, we will give up skiing.

In daily life, choosing to take the elevator or climb the stairs is also a probability trade-off. The elevator is faster, but it may malfunction and cause injuries. We weigh the probability of injury against the value of saving time and effort.

In fact, we are risking our lives every moment. This is not a bad thing, but rather the nature of humanity's inability to perfectly predict the future. If we could accurately foresee the future, it would be a terrifying existence. Imperfection is, in fact, more charming.

For social organisms like humans, we primarily create narratives through "collective intelligence." The most influential stories are often those that are widely accepted by everyone. Narratives are constructed from objective facts and everyday conversations. Although facts are important, it is difficult for individuals to obtain all precise data, so we rely on the judgments of others.

In the Crypto Assets field, the success of a project often depends on the strength of the narrative behind it, rather than the technology itself. Most investors find it difficult to assess a project from a technical perspective, but can easily judge whether a story is compelling. A good story will be widely shared, whether positive or negative.

As investors, our job is to identify which projects are most likely to succeed in the vertical narrative. Success depends on the macro and micro stories that are widely disseminated. The investments that yield the highest returns are often those projects that shift from "never" to "possible."

The macro story describes the observed trends and how projects leverage them, while the micro story explains why the project will excel in a specific area. The results are certainly important, but their impact on the coin price depends on the stage of the speculation lifecycle in which the investment is situated.

In the coming months, we will focus on specific tokens and their macro and micro narratives, including the retail shift to DEX, the demand for interest rate swaps triggered by ETH staking, Shitcoin dual-currency derivatives, and other areas.

Currently, the market focus is on the U.S. Bitcoin ETF and the global fiat currency devaluation, which will drive Bitcoin prices to new highs. The upcoming ETH ETF will also boost ETH. However, our goal is to find tokens that can outperform BTC and ETH by gaining a deep understanding of the projects and telling compelling stories.