from Nicolas Cole 🚢👻 | by Nicolas Cole 🚢👻

Beware The NFT Crash of 2022 I bought my first cryptocurrency in 2016. Poured all my savings into Ethereum. In 8 months, I turned $10k into $250k. I was still living in a studio apt with no dishwasher or AC. Then, everything crashed. 5 Big Lessons For This 🔥 NFT Market 👇

*Note: I just aped into NFTs. I have skin in the game. I think we have more headroom to go. But, I also went from pretty broke to "short-term rich" to broke again 5 years ago. And I'm seeing a lot of patterns repeat here. Let's not make the same mistakes, shall we?

Lesson #1: Just cuz someone made $$, doesn't mean they're smart. In 2017, crypto was bananas. Everyone where you went, "Bitcoin." Since I was known as a ghostwriter for CEOs, I got invited to a "Crypto Mastermind Dinner" in a $20M home in LA one night. Looked like this: t.co/U64GGpQDjZ

Outside the house was a brand new cocaine-white Rolls Royce. On the window was a cheap sticker that said, "BUY BITCOIN." I was randomly seated next to the guy who owned it. He'd just made ~$10M in crypto, and had diamond rings on every other finger. t.co/42cF3TL7wV

Dinner started, and we went around sharing our thoughts on the space. "Monero is going up 10x from here," he said. A lot of people listened. So did I. I went home that night and bought Monero. Of all the altcoins, Monero was hit one of the hardest. It still hasn't recovered. t.co/7qUXqfdOrK

Lesson #2: Copy-cat projects never work. In NFTs, everyone and their mother is now copying the "10,000 random character" format CryptoPunks and #BYAC created. Same happened in 2017. A gazillion projects raised money aiming to be "the blockchain for X." 99% of them went to 0. t.co/eUj4iqs0O9

I worked on one project, in particular, that had some very well-known angels/entrepreneurs involved. It was raising $30M. From nothing but a whitepaper. That I wrote. In 3 weeks. While in the hospital with shingles (I was working myself to death). 💀💀💀💀💀

The project was literally the same thing as every credit card rewards program ever. They just added the word "blockchain" into all their marketing materials. I know the guys spent hundreds of thousands $$$ pulling the project together. (I got paid.) It never launched.

Lesson #3: If the valet is giving you investment advice, get out. I seem to remember this same idea being in @morganhousel's book, The Psychology of Money. I'll never forget going out to dinner in LA one night, early 2018. I pulled up to the valet.

Bitcoin had just hit a new ATH: $18k. But it was starting to pull back, and everyone was wondering if they should take profits off the table. I got out of my car and I asked the valet if they accepted card. He laughed and said, "Yes—or Bitcoin."

When I showed enthusiasm for the newly emerging cryptocurrency, he started telling me I should buy more. "I bought much as I can," he said, in broken english. "I'll be millionaire!" I should have gotten out then. We'd hit the top. Instead, I bought more. AT DINNER. t.co/hbXxeW1i4U

Lesson #4: Don't play with tax money. From late 2016 to early 2018, I had watched my bank account balloon. It was euphoric. When the market started to pull back in 2018, I couldn't see what was happening. I was like a gambler, hooked. I just kept buying more.

The whole situation can be summarized by one interaction. I had my co-founder in town, and we went out to dinner. Our girlfriends were talking, and I just kept going on and on to him about crypto. "I'm buying as much as I possibly can," I told him. He asked:

"Are you using any of the money you put away for taxes?" We worked for ourselves, and I had a separate account for taxes with cash in it. "Yes," I said. "Some. Not all. But some." I was toeing the line. Pushing the edge. I was all-in.

A year later, crypto had sunk further. I had to sell a bunch of my Ethereum and Bitcoin at a huge loss to cover the gap in what I owed in taxes. It sucked. I realized then how important it is to have cash on hand to PROTECT your investments.

Lesson #5: If you're not a day trader, don't try to day trade. I had a bunch of friends who got into trading crypto in 2017/2018. It seemed like the cool thing to do. Fast-forward, and most of them ended up making less money trading than they did working their jobs.

Meanwhile, I spent most of 2018 and 2019 and early 2020 cutting my expenses. I didn't buy much more crypto. I already had 90%+ of my net worth in it. Instead, I started making lifestyle decisions that allowed me to PROTECT my crypto holdings.

In late 2020, when the crypto markets started to rally back, all that crypto I had been holding for 4+ years exploded. Life-changing outcome. If you're not a day-trader, don't day trade it. Just buy. HODL. And live your life as normal.

NFTs are going to repeat this same cycle. I guarantee it. People are over-paying MASSIVELY for JPGs right now. And they're going to keep massively over-paying. Some will make boatloads of money (and talk about it on Twitter). Most will go broke.

If you HODL your JPGs long enough, some might rally back 3-7 years from now and you'll turn a profit. Most people don't have that level of patience (or conviction). They'll sell for a loss. This is how the game works. So, have fun with NFTs now. But know the crash is coming. t.co/hxXBZs3Ww1