Narrative Investing

The cryptocurrency market is in its infancy. We have seen massive growth in the last few years. This growth has allowed the infrastructure to improve and companies benefitting greatly from an improved structure. This growth hasn’t translated to a more mature market. Instead it has allowed the immaturity of the market to continue to thrive.

The market has been unable to mature because the market is experiencing growing pains. The market is still learning and new participants are constantly flooding in that have little to no experience in the market.

The cryptocurrency market is a difficult market to understand. It is shrouded in complexity and irrationality that makes it difficult for a new market participant to delve deep into the inner workings of it.

The stock market is able to provide market participants with the needed structure and history to make “better” decisions. The companies are out in the open, function, and have information that the stock market uses to value the company. While it is difficult to make money in the market, there a far more grounded ways of investing and trading in such a market than in the cryptocurrency market.

Even with its history and structure that the stock market provides the market is still subject to volatile cycles that can provide highly profitable as well as disastrous results. The stock market is dominated by the human crowd and this makes it subject to the mania and depression that comes from human influence. The market is irrational and inefficient because humans are irrational and inefficient.

The cryptocurrency market is the stock market on steroids. Cycles are more erratic and volatile. Lack of fundamentals on assets make it more prone to rely on the psychology. Reliance on the psychology is what makes the cycles erratic and volatile. The psychological state of the market is constantly changing, influenced by external events, and subject to wild swings. The psychology of the market is one of bipolar paranoia. One moment extremely bullish, the next moment extremely bearish, and every other emotions mixed in the middle.

The immaturity and psychology heavy nature of the cryptocurrency market makes it be dominated by stories. The market relies less on fundamentals and valuation mechanisms and more on stories. The market convinces itself what to buy or sell based on stories. These stories are built up by narratives. Narratives are strengthened or weakened by circumstances and direction of the market. Narratives are persuasive short stories that build larger stories that end up making the individual give their attention to assets. This attention can rapidly evolve into buying or selling an asset.

You might view yourself as above this market psychology. You don’t see yourself becoming beholden to narratives or market stories.

But if you believe this then you are just playing yourself. We are all manipulated and influenced by these market stories. This is what drives the cryptocurrency market.

Look at the assets you are invested in, buying, selling, and have traded in the last six months. Ask yourself why you became interested in them and decided to trade them.

You will begin to tell yourself the narratives and stories that made you act.

You being a smart experienced cookie and you are being impacted to buy and sell assets based on stories you are telling yourself. Now imagine the retail market that is entering the market daily that is not smart nor experienced.

How do you expect them to buy assets? Narratives. The stories and narratives that are most persuasive to them will make them trade the asset.

Narrative investing is making money from the development of narratives and stories in the market. Understanding the power narratives/stories exert on the market, observing their development, and buying assets that will benefit from the eventual destination of these narratives/stories.

Stories make the ocean and narratives are the waves. The ocean is this conglomerate of various stories that have a dominant effect on the movement and shapes of the waves. The waves strengthen or weaken the power of the ocean.

Narratives provide clues into the direction of the stories. Stories are built up by many narratives and provide the largest cryptocurrency assets with the dominance they are perceived to have. Narratives allow the investor to observe new stories being built up and assets that will benefit from this strengthening or weakening of stories.

Narrative investing goes alongside fundamental investing/analysis. In order to understand narratives, discover narratives, and invest in narratives one needs to have a solid understanding of cryptocurrency assets and find the similarities in themes that show up. Without fundamental analysis you will be constantly catching up and unable to find the gems that are plenty in crypto. Without fundamental analysis you will be unable to discover the new narratives that are rising to the surface.

Many investors and traders in the crypto space completely disregard narrative investing.

They would rather stick strictly to a valuation theory, fundamental analysis, mathematical approach, or technical analysis. While these strategies can prove profitable, without narrative investing the trader/investor in going to be unable to find the stories and narratives that will become popular in the future. They are stuck in the weeds, unable to see the forest.

Being observant and understanding the development of narratives is absolutely crucial to outperforming the market and buying narratives before the market finds them.

When you find narratives you are able to begin to create a better analysis of the future development of the narratives that will come as the market begins to take them seriously and have them influence their decision making. If you are able to understand how narratives will develop you will be there before anybody else and that is extremely profitable.

Narrative investing makes you an expert in market psychology and market sentiment. The more you observe the narratives, the way the market reacts to them, and the development of narratives the more you begin to deepen your understanding of the market. You gain a depth that is rarely found.

You are studying the mechanism of how humans buy or sell assets. You are creating theories that are tested with your money on the way narratives will develop. This will allow you to be constantly testing your theories and improving your ability to spot narratives and their development.

Take your investing to the next level.

Take your psychological understanding of the market to the next level.

Take your understanding of the world to the next level.

Start narrative investing. See every asset as part of larger narratives.

When you narrative invest you become proactive rather than reactive.