The bulls, the bears, the swans? 🦢
Let's discuss the Black Swan theory in NFTs.
Excerpts from @Diamond_Cruiser's #✉️-daily-letters to our members. 🪡🧵👇🏼
2/ "You may probably hear about people minting 100 of a project on a conviction play and making bank.
In reality, the people who do this constantly are not 'conviction' plays but merely using a Black Swan strategy."
3/ "The Black Swan strategy is famously coined by Nassim Taleb. Most people think all swans are white until they unexpectedly see a black swan.
Black Swans are unexpected events that make a high impact. Most economic models are not prepared for a Black Swan."
4/ "To be a Black Swan trader, you make tens, even hundreds of small bets in the hope that a single Black Swan event will make you rich.
You take 90% small losses in the hope that the 10% win covers everything and more."
5/ Max Minting all projects is an example of Black Swan theory in play. People hope to get a rare or at least profit from all their holdings.
Venture Capitalists also invest small amounts in several start-ups—hoping for that one unicorn.
6/ "The main risk with this is that NFT traders just "wing it" when it comes to max minting.
Most VCs use a patented cost-benefit analysis before investing—ensuring through mathematical precision—that they are making an accepted risk on their capital."
7/ "Of course, people try to "instigate" a black swan event. VCs utilize their network and connections. In the NFT world, people shill their bags to pump the price. All fair in the name of business."
8/8 "Do you have what it takes to be a Black Swan trader?"