4/13/2021 First Issue Ever: Straight From Degen Island.

- Bowtied Bull
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First Issue Ever: Straight From Degen Island.

Welcome! There are many links in here so if they don’t show up in blue, majority of
underlined items are links!

We’re glad to have you here as the hedge funds and mutual funds will have to make a
decision… subscribe to a cartoon bull or underperform once again (for the 100th time in a row)
as they invest in dead products called stocks and bonds.

Everyone here will get a rst look at our calls which already tend to move prices so it’s a bit of
a chicken and the egg problem for everyone on the outside. That is neither here nor there. The
main point here is how we’re investing and the state of the market. Our current guess is that
you’re here for crypto so that is our focus.

Watch us blow up or get rich! Either scenario? It was totally worth it.

Starting with the Big Picture: At this point we are overweight ETH vs. BTC. We will
*unlikely* go to zero exposure on either one and think that the current market structure favors
alt coins at this time. While we continue to think that BTC will go to $100K+ this year, ETH
should outperform on a relative basis (the exchange ratio of ETH/BTC should go up, over the
next ~6 months).

The second belief we have is that NFTs are in a bubble. We do own some… But we think it will
be di cult for the sub-segment to increase in price relative to ETH near-term. To track this
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dynamic you can look at the NFTX index, which has continued to underperform relative to
ETH. There will be many wash trades and other scams, however we wouldn’t chase it here.
Also? We do think there will be a pump in punk prices due to the Christie’s event but just like
the Beeple event a er the auction ends it usually goes down a er the peak hype (a er all… an
auction always nds the most desperate person to buy the peak). So that’s the quick NFT set
up, punks may go up into Christie’s but we just don’t think adding to NFT bags makes sense
right now.

The third belief here is that we’re going into a semi-alt cycle. What this means is that projects
with real announcements will “pump” on the news. However, projects with no real value will
unlikely pump as easily. This is a bit complicated, however it is the same as 2017. In 2017 the
alt cycle pump started with *real* projects like Ethereum. Then towards the end, total garbage
projects that went to zero were pumping randomly. We think we’re in phase one where real alt
projects have a chance to move on announcements.

The fourth belief we have is that you want to be involved in DeFi. This is going to be talked
about in depth later. DeFi e ectively means Sushi, Uniswap, 0x, Pancake and many others
(please don’t assume we own all of those just yet, we have to roll out everything in phases).
E ectively, rich people do not want to buy digital art as their rst “alt coin” investment. They
will likely buy ETH and then try their hand at DeFi rst once the Gas fees come down a er
EIP-1559 is launched.

The h item is that premiums will widen. This is yet another one we can cover in a future
post. The “Kimchi” premium is back which really means that there is a supply shortage. For
someone who wants to pay for their subscription here in a single trade it wouldn’t even be
hard. Just nd someone (anyone) in Korea and get the wrapped BTC and charge them 2% for it.
TaDa! You just made $1,200 which will pay for twelve years of subscriptions here. We’ll go
ahead and give out the obvious way to do this (assuming you can hustle and get a single korean
to buy some BTC) which is to use Ren Cafe BTC. In short, if premiums like this exist, it
usually represents a shortage just like 2017. (We just gave you a way to charge a 2% mark up on
BTC and pay for the entire subscription for free if you’re willing to do some online hustling! 2% on
$5,000 US token is $100, use google translate on the internet! No it isn’t a layup but as long as you can
buy BTC at +1-3% you *can* collect the arb since the premium right now is in the 15-20% range )

Quick Summary: 1) ETH over BTC for now heading into EIP 1559 update - will not sell the
BTC we own currently, 2) NFTs are declining from the mania - punks may pump from
Christie’s but not worth the risk to us, 3) alt cycle is starting but only for real projects, 4) we’re

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expecting more interest in De in about 3-4 months post gas fee reduction and 5) Kimchi
premium is a simple way to make a few hundred or few thousand US tokens with the use of
the internet and your social network.

Current Portfolio: Here is a snapshot of our current portfolio. The plan is to simply multiply
the percent exposure by the monthly return or loss in USD token terms to adjust it. Anyone
who has been involved in crypto knows that exact net worth is pretty much impossible to
calculate so we’re going to let the table do the rounding di erence for us. If you have suggestions
on how to make it better please let us know. We’re going to disclose the high risk part over time since it’s
extremely dangerous to blind buy them without understanding it at all.

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FI Section: This is the least interesting but we can summarize it easily. Simply own a small
amount of real estate, stocks and some bonds from years ago. This is *not* for everyone. If you
have high cash ows from your business already and live within your means, it is tough to
need a ton of money when you have a paid o home + income coming in. Take a look at your
expenses and if you assume you have no rent/mortgage… The amount of spending you have is
minimal. You can take it to zero in a second which means the risk associated with it is
minimal. It’s straight forward so we’ll stop there unless anyone is interested.

1) Real Estate - mainly paid o home and a couple of small rentals, 2) stocks - essentially all
QQQ, SPY, FANG and other individual stocks - CHWY, TSLA and VHCIX - a healthcare
Vanguard index fund and 3) bonds/cash - only here as they have been held for a long time, we
wouldn’t even touch bonds/cash if we were young. As you get older you tend to simply forget
about some holdings you have and this is in that category.

Large Cap Crypto: This is how we de ne the market. Large-cap established crypto assets
followed by speculative “we expect them to go to zero” type assets. So do with that as you will,
nothing in here is to be deemed professional legal or nancial advice. People will likely blind
buy small caps so keep that in mind for better or worse!

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With that out of the way: BTC, ETH, LINK, LTC, Large Cap De and Stable Coins are
considered “large cap” to us. The rest of the items here are considered speculative stu that
could 5-100x or go straight to zero. As you can see if we lost 12-20% of our net worth we would
be ne with it. However we would not be ne with losing 90% of it! This of course shows our
conviction in crypto for 2021.

Also. Many of you puked at seeing the phrase LTC and we agree. The problem is that when the
herd comes they are just going to say “oh its just a cheaper bitcoin” and buy it for no reason due
to technical analysis and some other stu (ie. the big Litecoin move in 2017). That’s the only
reason we hold it.

Starting with Bitcoin: While it isn’t our largest position, we have to start with it. The king has
proven to be a reliable long-term store of value. The only reason it isn’t our largest position?
We expect it to be more range bound relative to ETH heading into the EIP 1559 update.
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Likely a few pops to $65-75K is possible, however, it appears to be in the rst “peak” of the
standard double peak for a Bitcoin bull run. This happened in 2017 and happened in 2012-2013
as well. The volatility is coming down but the structural set up appears to be similar/the same.
We’re not calling for any change at this point and assume this cycle will be the same as prior
cycles. Which would mean consolidation for a bit before a bigger move later on. (This helps
explain why we noted ETH over BTC a few weeks ago on Twitter). Notice the volatility at the
consolidation point seems to dampen a lot, meaning less downside and likely more of a “quiet”
move up vs. the 2013 run up and the December 2017 run up.

As a point of emphasis, we would *never* recommend having a zero BTC exposure. This asset
is the most mature and is a “core holding”. To give some perspective, our current BTC balance
will not drop. It will only oscillate based on price movements. So if the percent of our bags
drop/increase, this is entirely due to the price of BTC in US token terms when compared to the
other items we own.

In terms of analysis, our opinion is that the most important item to track is really the HODL
wave. While many people look at other metrics (like PI cycle top), if you think about BTC… it is
a xed asset. So as long as people don’t sell and the demand continues to increase by more
than 2% (current supply issuance), the price should climb. Currently, you can see some paper
handed people are selling small amounts (HODL wave slowly declining). Until it really moves

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up past $100K or so, you won’t see a signi cant drop in the HODL wave (is our guess). Either
way, you can see the paper hands slowly selling o a bit which explains why the price action
has been attish for a while now.

The second item we track is fund ows from exchanges. We do have access to Glassnode and
track this consistently (unfortunately can’t publish it due to their rules, but we’ll reach out and
see if it is possible). If people understand crypto currencies, they know that if they have
Bitcoin or Ethereum on Coinbase, they don’t actually “own” any crypto currencies. This is
simply a fact. If you do not have your own private keys on a Trezor or Ledger (other devices
like COLDCARD), then someone else has your coins. You can see the steady decline in the
amount of Bitcoin held on exchanges: here is a public link although a tad dated for now

The third item? We do believe that Stock-to-Flow is directionally accurate. Since Bitcoin has
the largest network, as the supply issuance decelerates, the price should rise. We will be
careful with our language here. While we do think it is directionally accurate, it is un-clear to
us if we see a “super cycle”. It is also unclear to us if people do have “hands of steel”
(potentially undershoot stock-to- ow in a bad scenario). The other two items we mentioned
will give us the true answer in the rst place.

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For the rare Bitcoin Maxis who may be reading this a guy on Twitter said Walmart will
announce BTC holdings in May. So we’ll be looking for that and time stamped the tweet.

Litecoin: Honestly, this thing is just a cheap knocko of BTC and is even marketed as a cheap
knock o . If it hits $500-1,000 US token, we probably dump the whole thing. Don’t even know
why we own it. That said, we really do think people will buy it since it’s a “cheaper” bitcoin
especially if it hits $100K US token. The newbies will simply say “Wow it’s only $250 which is
only 0.25% with BTC at $100K”… and blind buy it. Anyway we have to tell you what our bags
are even if they are gross and we own LTC for now. The chart looks pretty good considering
what happened in 2017.

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On a serious note, when this token runs it usually runs extremely fast. So if we’re right we’re
hoping to outperform BTC and then just dump it back into BTC.

Ethereum - ETH is Money! Ah yes, Ethereum is money to us. More money than US token.
Why? You can use it to get a loan. You can send it anywhere in the world. It can help you build
a decentralized product. It is building a decentralized version of Wall Street (think copy
pasting all Wall Street capabilities without a central authority - derivatives, options, loans,
collateral, insurance, liquidity etc.).

There is a catch. Just like Bitcoin, it grew rapidly and now has a “scaling issue”. Similar to the
Internet, when 56K modem came out the pessimists said “the internet was doomed, it can’t send
photos like my fax machine”. Ethereum is in the same boat. People believe that Ethereum can’t
scale and don’t realize they are betting against a swarm of geniuses looking to solve the
scaling issues: EIP-1559 will likely drop gas fees substantially (could even make it de ationary)
and they plan on moving to Proof-of-Stake in the future as well. If the technical stu and how
it works is interesting to you, check out this video (no we are not a liated, our goal here is to
try and make gains vs. becoming a tech video hub as there are millions of those)

First item. Ethereum is higher risk than Bitcoin as it needs to solve the scaling issue through
the items mentioned above. We are bullish on the prospects as the team is incredibly talented.
This is why we took the risk of owning more ETH than BTC at this time (in US token terms).

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For those that are new to crypto, this is unwise as you should start like everyone else with BTC
since it is the largest network (and easiest to understand… also expect volatility to dampen for
BTC as well).

Second item. Similar to Bitcoin, you want to track exchange balances. Why? When big
institutions come in (or smart investors), they know that they have to take their coins o ine
(same story). As you can see here (this is public!), the exchanges are losing ETH as people move
them to hot/cold wallets (likely to buy/sell NFTs and interact with DeFi).

In September of 2020, you see a lot of ETH move o exchange which then sparked a rally a few
months later. Currently you see more ETH coming o exchange and we think (hope as well
since you see our bags), the price re ects the move in a few months (perhaps June time frame).

Third item. We expect institutions to move into ETH in a bigger way. Major rms have
already started talking about the demand for ETH (Grayscale, Gemini etc.). Similar to last year
(with BTC), we expect larger institutions to begin to adopt ETH as well. This is the next clear
step a er BTC in our opinion. Mark Cuban is on the ETH bandwagon as well and he has a
good history in technology (selling the top in the tech bubble for example)

LINK: The link marines have e ectively created a near monopoly on the Oracle feed. They are
acting as oracles from every single project, even down to the lowest tier with Duck Protocol (a
small cap de project used to lend out shit coins, seriously this is the easiest way to describe
it, a digital pawn shop). For a good description of Chainlink check out this post by Gemini.

If you don’t want to read it we can summarize as follows. If you want to create a smart
contract with someone to place a wager with your friend, you will need a way to prove that you
won. For example. If you want to bet that the price of Bitcoin will hit $100K by the end of the
year, you need the smart contract to con rm that Bitcoin did or did not hit $100K by the end of
the year. Since we do not want to trust a middle man to prove that this did or did not happen,
LINK acts as the decentralized data feed. Essentially, it will pull data from Coinbase, Kraken,
Binance etc. and see if the price did in fact hit $100K. This adds enormous value as LINK
removes the need for middle men by acting as a decentralized information provider. It sends
data to the smart contract that says “Yes or No” to the $100K BTC price wager. In exchange
for this, LINK is used to pay for the decentralized service.

Similar to our LTC comment, we actually think it’s set up for a move now that it has been at
for a long period of time. We have a stronger view of it moving up now, hence the larger
position, but, the majority is simply there for long-term holding. If the price were to double

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relative to BTC or ETH we would consider rebalancing. Currently, if we had nothing we would
probably do an ETH/LINK pair on SushiSwap/Uniswap or another platform you are
comfortable with.

De and Stables: We have to a do a longer breakout point here but for now… we own a lot of
the various de protocols (see full list of De on CoinGecko). This is where it gets extremely
complicated but we’ll summarizes it for the people that already know the basics.

When you provide liquidity and stake to a particular protocol you typically earn rewards. If you
add liquidity to Pancake, you can earn Pancake rewards. You could also do something like a
ETH/Link pair and earn sushi rewards. There are so many forms of this that it is painful to
write out. Since we’re just doing the high-level for now we put it all into a bucket along with
stable coins. Why? The stable coins can also be used to earn yield.

Since we will do a longer DeFi post shortly, we’ll leave the rest there. If you’re a whale/dolphin
you already know how to do this and are likely staking/earning rewards as gas fees are insanely
high (only the crypto rich are doing this in size). If you’re new, better to secure some speci c
projects before paying $100+ in gas fees just to stake and earn rewards. As a last item, if you
want to start and have small amounts, Pancake is probably better right now *due to fees*.
Emphasis on that as there are other alternatives but they have high fees due to gas costs and
are reserved for the crypto well o .

Below is a Snapshot of Our Small Cap, Lots of Grey for now…

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Stacks (STX): We took out our principal a er the monster run but we are still leaving a core
position there. Here is our logic. If you tripled your money, you can take out the principal
investment and STACK the rest. This makes it even less risky for the average investor.

Put some math around it. If you had $100K, turned it into $300K and then sold say half of it
you have $150K stacks and $150K stable token or US token value. You can then take the $150K
and earn low double digit APY. Assume it is 12% (its a bit higher or lower depending on cycle)
and thats 1% per month. So even if the project goes to zero in a month (HIGHLY UNLIKELY),
you would still collect $1.5K in BTC. Not too bad for house money.

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It is good to explain our framework this way as you can see that we’re in a di erent part of the
“money accumulation phase”. If you’re ultra wealthy you can probably just let the whole thing
run. If you’re younger and need the money you would cut about 2/3 of the position a er a 300%
run and simply pay all your bills for a few months. So on and so forth. In short, we’re stacking
STX right now and will update what we’re doing during these update type posts.

MCDEX (MCB): Here is the latest token we bought! Congrats on being here. We dumped 1%
net worth into it which isn’t a small position (in our opinion) and we doubt it goes to zero.

Here’s how we think about this one, we expect a bigger move up in about 3-6 weeks as it goes
live (likely on BSC - Chinese Founder - which has low fees right now). You can see them hint
about the arbitrum L2 here. Usually when something like that happens it’ll be launched in a
month or so. Similar to STX (expecting exchanges to come on being the move) we think the
arbitrum launch will be good news. Especially if it is done on BSC. Most people don’t even
know what MCDEX is.

What is MCDEX? It is a decentralized protocol for perpetual futures contracts. For those that
don’t want to read up on it… in a single sentence: this is basically decentralized BitMex (turbo
autists can explain it better but that’s good enough to understand it). Considering how many
people went nuts on BitMex with crazy amounts of trades, a decentralized one would likely see
insane initial adoption as well.

You can check out a few videos here and here. As you can see, following ChainLink closely can
help you nd projects as well even if you don’t own ChainLink or if LINK is stuck in a holding
pattern. You can also read up on perpetual swaps basics here, but everyone who knows about
Bitmex should be familiar with their business.

Currently the easiest way to get MCDEX is to get on Metamask (which you should have
already) and simply swap it if interested. As usual, all decisions are yours, we’re simply here to
say we went long MCDEX.

Some Simple Stu : The links give enough info as we would be copy pasting too much but the
big picture is 1) we think arbitrum L2 launches soon sending it up and 2) we think BSC makes
sense for integration. The podcast and interview with Chainlink is the best in our opinion! As
always someone who actually works on the project will be ahead but we doubt that the vast
majority even know what the project is at this point.

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Some Security Stu : If you’re going to go full Degen (like us) and end up buying small caps,
we would recommend that you use the CoinGecko smart contract link to copy paste into
metamask. You can see the link on the le side below the word explorers and above
community. This will make sure you pull the right one. Scams will continue to pop up so
continue to operate like this if purchasing random small cap coins.

Short Update on Degen Island: Today was a rough day Decentralized Generation. The Clowns
did signi cant damage to the City of Boston particularly at MIT. As many of you will learn,
Harvard and many other surrounding universities were converted into insane asylums. A er
the elite students found out that they had no real tangible skills… and were unemployed….
Their parents put all their money into T-bills and other US token producing products which
led to bankruptcy. In 2030, Saylor sent in a 25.86 BTC donation which caused the school to
become a Citadel within Clown Central. Despite his best e orts one of the top degen traders
(KoalaClownKiller) was sent to the digital hospital in Ready Player One form. He lost half of
his gear and is acquiring new NFTs to mask his identity. Pray for his future as his
contributions within Boston were amongst the highest we’ve seen in the past decade.

Disclosures and Feedback: As a point of emphasis nothing in here is legal or nancial advice
but opinions from an anon Bull with a Bowtie avatar.

In terms of feedback please let us know what you would like to see as you’re going to drive our
content going forward. Our rst stab!

Best of luck and don’t have paper hands if volatility returns!

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Write a comment…

BowTied Bull 14 hr ago

Hopefully this shows up top, but we won't do a Q&A for this post we're flooded. Will figure that out
for a later date thank you!
20 Reply

2 replies

Robber 17 hr ago
Short Update on Degen Island was the best part imo.
7 Reply

1 reply by BowTied Bull

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