Welcome to the Banana Zone 🍌

Don’t f*** this up edition 📊

November 23, 2024

GM! Welcome to Milk Road PRO. The newsletter that’s like a cold splash of water and a double espresso.

(We’re here to sober you up when you get drunk on gains).

Well friends, we’ve made it to the promised land.

Another wild crypto bull market (aka Banana Zone) is underway, the 5th since the invention of the blockchain.

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Source: Tradingview

These moments are where most of the gains in crypto are made. 

In the coming weeks/months, the entire industry will be repriced. Our portfolios will double, triple, quadruple or more in such a short period of time.

No other industry brings gains as large, or as fast as crypto in these moments.

If you managed to allocate into crypto before November 5th, the beginning of the Banana Zone, take a second and give yourself a pat on the back.

It’s never easy to allocate capital, especially a meaningful amount during times of fear, uncertainty and doubt - which is where things have been in crypto for the last few years.

Allocating before everyone is doing it and before it’s “obvious” takes courage and conviction  - so kudos to you for making it happen.

That said, the Banana Zone is not just the time where most of the gains are made, it’s a time where most of the mistakes are made too.

Today’s report is your final warning to prevent you from making the mistakes that so many did before you. ⚠️

Last cycle, most of my friends ended the banana zone with less money than they started with 🤦Imagine losing money in crypto when its total market cap went up 2,300% in just over 1 year! 

Everyone thinks there’s no way that will happen to them, yet it happens to most retail investors in crypto. 

But not you, and not this time! 

Because you’re going to read this report (ideally reread it on a weekly basis) and listen to this advice!

Today I’m going to walk you through:

1. What you should expect during this Banana Zone

2. The Do’s and Don'ts during this time

3. How to think about your investment strategy over the next few months

But before I do, a quick PSA to our Milk Road readers!

(P.S. - We’re hosting a PRO AMA next week — scroll to the bottom for more info. 👀_)_

PSA: THIS IS YOUR LAST CHANCE TO ALLOCATE TO CRYPTO

I’m going to start this section off with a memo from an $800 Billion AUM research firm, Bernstein, which they wrote to their clients and investors…

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Source: @alpha_pls

“Buy everything you can” “Add crypto exposure asap” “Don’t fight this”

Milk Road readers and listeners have already heard us scream this since early 2023, but now this message is being put out into the Tradfi world and even mainstream media.

The message is very clear: The Banana Zone has begun!

Of course, the title of this section is a little over exaggerated. Crypto is a long term secular trend which is still in its early days. There will be plenty of great chances to allocate to crypto again, however in just a few days to weeks it will no longer be one of them.

To be clear, I think crypto continues to go up for the next 6-12 months at least, however allocating capital is all about doing so when the risk / reward makes sense.

We first started telling our PRO members to buy $SOL when it was at $25 and $BTC back when it was <$20k. Sure, both assets could have gone down another 50% at the time, but it had potential to go up 10x or more in the near term too. That’s a compelling risk / reward.

Today, Bitcoin could again go down 50%+ but it's upside this cycle is what, maybe $150k-$250k? 

That’s a little more than a 2x from current prices. The risk / reward of allocating a meaningful amount of your portfolio into the crypto majors is waning quickly.

It’s becoming more and more risky to allocate at these prices, even though we still believe prices will still go up from here. And that’s because there will be a downside at some point, we just don’t know when or how much.

To help paint this picture a little more clear for you.

In the last crypto cycle Bitcoin hit $69k in 2021, 3.5x higher than the $20k high from the previous cycle in 2017. Not a bad investment even if you bought at the previous all-time high.

However, in the 2022 bear market Bitcoin retraced below the previous cycle's all-time high, down to $16k, making those who bought at $20k in the red.

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Source: Tradingview

Now to be fair, for those who bought at the previous all-time high of $20k, if you held long enough you would be sitting real nice today at ~$99k. 

However, you would have needed to hold for 4 years, through a 70%+ drawdown and have conviction through FTX, Terra Luna, 3AC and many other crypto companies collapsing and going bankrupt! 

Not an easy thing to stomach.

On the other hand, for those who bought early in 2020 or even during the 2018 and 2019 bear market, the retracement back to $16k was irrelevant, those investors were still up multiples during the entire 2022 bear market. It also becomes much easier to take profits early in the banana zone if you purchase at a much lower price.

All this to say - If you’re still on the fence to allocate or waiting for a pullback - stop waiting. 

Get in now, take whatever profits you can get this cycle (don’t expect a 10x or 100x if you’re allocating at these levels) and stick around during the next bear market so you can allocate at a more appropriate time to capitalize on the next cycle.

Of course, there’s still profits to be made this cycle. 

But I recommend always playing the long term game in crypto, it increases your chances of succeeding significantly. 

If your goal is to simply get rich quick and get out, you will fail. I promise you that.

If you’d like to avoid that kind of pain – now is the time to level up your skills, with our Crypto Investing Masterclass.

Which, for your convenience, we’re running at a 70% discount for the next 4 days (usually $499, now $149.70).

This is Your Chance to Learn:

• Why crypto moves in 4-year cycles and what that means for you 🤔

• How the stock market, macro trends, & business cycles steer the crypto world 📉

• The step-by-step process to valuing crypto tokens before you buy 🤑

• How to design your portfolio to maximize upside and minimize risk 👨‍🎨

Jump on it while you can!

GET 70% OFF OUR INVESTING MASTERCLASS

Ok, enough of the PSA - for those of you already allocated or who just got allocated, let’s move on to what to expect in the coming months in crypto markets.

THE BANANA ZONE: WHAT YOU NEED TO KNOW

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Source: RealVision

The Banana Zone is the point in the cycle where prices go exponential. Where almost all of the industry is repriced.

It’s a time where the valuations of tokens and companies in crypto disconnect from reality. From the outside world, nothing will make any sense. 

The weirdest and most unexpected things will get valuations that no one could imagine, tokens that have no business going up will go up a LOT and everything will seem like “it’s the next big thing”.

(It’s an exciting, but confusing time to be in crypto). 

New projects and tokens launch daily, narratives change just as fast and top tokens flip on a dime. It becomes impossible to keep track of everything happening in this space.

It’s also a time where the amount of people in this space grows by an order of magnitude. We will go from tens-of-millions of people who care about crypto to hundreds-of-millions.

You’ll start hearing stories on Tiktok or twitter of people making millions - some of it true, much of it not at all.

For those who love a good dopamine hit - there is nothing more stimulating than The Banana Zone.

Unfortunately for us mortals, humans SUCK in these types of environments. 

The human brain is too emotional to handle such a fast-paced environment that has the potential to make large amounts of money in such a short period of time.

The mix of “greed” and “fear of missing out (FOMO)” take over the brain and force rational people to do very irrational things. 

These 2 emotions are the single reason why most people lose money in a space that goes up more than 20x in just over a year. It’s also the sole reason why we have these exaggerated boom and bust cycles - dopamine is one hell of a drug! 

Entering the Banana Zone knowing that this is going to happen is helpful, but it's not enough to prevent your brain from forcing you to make mistakes.

It’s like knowing that potato chips are unhealthy and will make you gain weight, yet when someone opens a fresh bag of chips and starts crunching on them, you decide to eat them anyway. 

And like most people, you probably end up eating the entire bag - in the case of investing, you lose all your money!

If this is your first Banana Zone, you’re probably wondering…how the heck can someone lose money when everything goes up 20x? 

Let me explain some of the most common mistakes to help you wrap your head around what will happen to you.

THE “DON’TS” OF THE BANANA ZONE

1. You will try to chase tokens that are pumping

Even though you’re holding tokens going up 5-10% a week, you see that there are other tokens going up 20%. 

Greed and FOMO kick in and force you to trade an underperforming token into an outperforming token.

The problem? The moment you do this, the outperforming token starts to underperform and the previous token you had starts to outperform – and you my friend, are now rekt 🤷 

You NEED to understand 2 things:

• You’re NOT going to invest in every token that pumps. It simply never works out that way. Pay attention to the tokens you invest in and forget about the rest!

• Not every token will pump at the same time and you will NEVER figure out which ones will pump and when. Simply hold the tokens you believe in and wait for it to catch a bid. You will win some and you will lose some, that’s the name of the game!

The worst thing you can do in this Banana Zone is try to trade in and out of tokens. You will lose if you do this.

Unfortunately, I already see many of you making this mistake in our Milk Road PRO discord and it’s only been a few weeks of prices going up. Don't underestimate how hard it’s going to be for you to NOT do this.

Invest in your tokens early and ride them for the cycle, don’t try to jump around!

2. You will try to time the market

The tokens you invested in will go up 50-100% early on in the Banana Zone and you will start to feel like a genius. Now you start to think you understand the market and can beat it.

At this point, you’ll try and sell the pumps and buy back in lower. Here’s the problem… YOU’RE NOT A GENIUS. 

It’s the Banana Zone, everyone is up 100% ya bimbo 😉 

You can’t time the market and neither can we at Milk Road PRO, and we live and breathe this stuff everyday. 

Don’t try and time the pullbacks, you will fail. It’s smart to take profits, even if it’s not the final pullback before the bear market begins, but here’s the problem.

So many of you will take profits, because that’s what your strategy told you to do. But then a pullback will occur and rather than hold onto those profits, you’ll buy back in because Twitter, TikTok and Youtube influencers will tell you it's a supercycle at the very top of the cycle.

And you’ll believe it because everyone including your mother and taxi driver are talking about buying crypto.

Now you’ve taken profits, created capital gains on your earnings, but then bought back in just in time for the final market crash of 70%+ in just a matter of days.

Now your investments can barely cover the cost of capital gains on the earnings you no longer actually have 🤷This is one of the most common stories you will hear in the bear market.

Here’s an image of the price action of ETH last cycle in 2021. Do you really think you can figure that out?

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Source: Tradingview

Stick to your plan and know that you are not a genius! 🤷

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Source: imgflip

3. You will take out leverage or move your capital somewhere risky to try and earn more.

Humans are greedy, we always want more.

Don’t worry, it’s not your fault. You’re not a bad person, it’s just human nature.

The human brain needs to survive and it will do everything in its power to not just survive, but also to thrive.

Once it gets a taste of making some money from crypto, it will want more money. But very soon in the Banana Zone you will run out of fiat to put into crypto. 

So then what do you do?

• You take out a loan against your crypto so you can buy more crypto

• You put your $BTC or $ETH into an app that promises 5-20% more yield on your assets

• You will sell your good investments to buy more risky investments, because you think it will outperform.

You’re probably thinking: “I’m not a finance person, I would never use leverage or use risky yield”. 

Remember my friends that I mentioned lost money last cycle? Neither are they, but they ended up doing it.

Apps will create super simple ways for you to take out leverage or use risky yield. It’ll be so easy that you won’t even realize the risks that go with it…and you will do it. 

Because you're human, and you want more.

You have to learn to manage your expectations and not allow yourself to add risk deeper into the bull market. Your job is actually to do the complete opposite! 

THE “DO’S” OF THE BANANA ZONE

1. Manage your expectations

I hate to be the bearer of bad news but you’re not going to 100x your portfolio in the next year. You’re very likely not going to 10x it either.

If you bought back in 2023 then absolutely you could have, but if you’re just buying now there is a <0.1% chance you’ll hit those kinds of numbers in the next 12 months.

At this point, you should be happy with a 2x to maybe a 5x from here. If that upsets you, then you are very likely to be the person that makes one of the mistakes mentioned above. 

You NEED to manage your expectations and realize how insanely good a 2x-5x is in investing in just 1 year!

It’s absolutely incredible to get results like that.

It’s also incredibly stupid to not take an easy 2-5x in the next 12 months because you instead tossed your entire portfolio into a random token you think might do a 100x.

You have to manage your expectations and make sure you at least come out of this cycle with some solid returns (i.e. holding the majors).

Take your home run swings on memecoins and alts with a small % of your portfolio if you want, but don’t f*** this up! 

2. Do Less

Less is more. The bull market will come with endless amounts of incentives and opportunities for you to do more with your portfolio

The best decision is to do NONE of it with your portfolio.

In fact, your goal from now until the end of this bull market is to figure out ways to do less.

Your goal over the next few months is to take less risk, to hold less assets, to be in less DeFi protocols. It is not to do more. Doing more is only going to complicate things and get you into trouble.

You were meant to DO all the things in the bear market. The bull market is where you aim to do nothing. Just sit back and watch your portfolio rise.

Now, I know this is easier said than done, so my recommendation is to take a small amount of capital and have some Banana Zone fun with it. 

Play in memecoins, use all the crazy new Defi protocols, go absolutely crazy! Just don’t do it with your actual portfolio.

Do it with your play portfolio - because I can almost guarantee you that this portfolio will be worth a lot less in 1-2 years time 😂

3. Take Profits

Taking profits is so simple, yet so difficult.

In a bull market your assets will do a 3x in a matter of months and you’ll have more money than you could have imagined just a few years ago. 

But once again, greed and FOMO will kick in.

Your mind will tell you “If I just hold on for an easy 2x more, I’ll have double the money I do now”. And it’s at that moment that you will get rekt.

Your 3x will quickly turn into just a 2x. And then the 3 don’ts I mentioned above will become more enticing to you. 

And that’s when your 2x (used to be a 3x) ends up at break even or even worse 📉

If you have debt or you want to put a deposit down on a home or whatever else you want/need and your portfolio reaches the point that you can do it or is well beyond it, take some lifestyle chips off the table.

One of my favorite bull market quotes is: “If you make enough to change your life, change your life!”

Too many people round trip their assets from cycle to cycle. 

I’m not saying you need to sell it all or get completely out of crypto - in fact I don’t recommend that at all. 

But at least take some profits in dollars (or stables) on the way up in the bull run (ideally way earlier than you think).

Guarantee that you walk away from this cycle a winner!

(P.S. of course at PRO we will do everything we can to give you the right signals to start taking profits)

4. Lower your risk throughout the bull market

This goes along with taking profits and doing less - but I’m going to repeat it because I need you to fully grasp this concept.

Your job from now until the next year is to lower your risk, not add more risk.

You should already be at full risk-on BEFORE the Banana zone starts, not after! We have been telling you for months to go full risk-on.

This means if you were going to get levered up, you needed to do this months ago.

If you were going to put all stables or dollars into risk assets, you needed to do this months ago. 

As prices move up and we go into a more euphoric part of the cycle, you want to start to unwind your risk. As the rest of the world gets more bullish, you want to get more bearish.

As the rest of the world finds more reasons to buy more crypto, you want to be looking for reasons to start selling.

This is extremely hard to do - as it’s always very difficult to go against the grain. But going against the grain is how you win in investing. You will NEVER win by following the herd.

Remember, work on lowering your risk as the bull market goes on, not increasing it!

5. Stick to your plan

At Milk Road we’ve been preaching for years now to go into the bull market with a plan

Figure out what assets you want to hold, when you want to sell, how much you want to sell, etc. etc.

But here’s the problem. In the euphoric part of a bull market, everyone’s plans begin to change.

Price predictions go higher.

Your plan to sell moves later into the bull market

Your plan to stop buying moves later into the bull market too.

The expectations of your post-bull market net worth increases.

The goal posts move, but what’s really happening is you’re simply adding more and more risk.

Remember, as prices go up your risk/reward goes down. So does your ratio between invested dollars vs non-invested dollars.

So even if you don’t buy more assets or do anything with them, as the price goes up you are automatically adding more and more risk. 

Don’t let the bull market “high” change your expectations and force you to fumble your bags.

Simply stick to your plan. Your older self will be forever grateful that you did.

WINNING THE BULL MARKET BONANZA!

The only way to win in investing is to get SERIOUSLY lucky or simply control your emotions.

Making money in crypto, especially in a bull market, is actually super easy if you can control your greed and FOMO.

The problem is most of us humans can’t.

Reread the lessons above every time you start to feel either emotion. Better yet, find a way to put your investment decisions (buy and sell orders) on autopilot and then don’t touch it.

The more you can remove emotional decisions from investing, the better you will do. I often joke that the best thing you can do in a bull market is throw your ledger down the drain and don’t buy a new one until 6-9 months from now.

I’d be willing to bet that you would outperform most people actively investing throughout this bull market.

I know I sound kinda bearish and maybe even a bit boring, but it’s for good reason. 

I’ve seen too many people make stupid mistakes and lose money because they let their emotions get the best of them - myself included!

I have been the biggest bull on The Milk Road Show and on Twitter for the last 2 years. I’ve been yelling and screaming about how bullish I am on crypto and how everyone should be fully invested.

It was during a time when most others were crypto-bearish - in fact it was pretty embarrassing to push this narrative anywhere outside of Twitter and the podcast.

That narrative is now changing and my family and friends are starting to talk about crypto once again. I’ve received multiple messages on Instagram recently where crypto has basically been non-existent for 2 years.

Over the next few months my goal is to become the biggest bear on Twitter. 

I will once again become the “outcast”, but this time for the opposite reason, calling crypto bearish whenever everyone is “bull-drunk”. 

This is not always an easy thing to do and I hope to have help from all of you in the Milk Road PRO discord - keeping all of us in check throughout the rest of this bull run.

Thanks for reading and I highly recommend you read this one again and again over the next few months, I know I will!

I will leave you with a famous quote from the greatest investor of our lifetime:

“Be greedy when others are fearful and be fearful when others are greedy” 

• Warren Buffet

FRESH AMA COMING UP 👀 

We’re excited to host another PRO-only AMA to tackle your burning crypto questions! 🔥

Wen? November 27th (Wednesday this week).

Where? In the Milk Road PRO Discord (meetup channel).

What’s on the agenda? That’s up to you! Be sure to submit your questions here.

Not in the Milk Road PRO Discord yet? Join 1,400+ fellow members here & don’t miss out!

Note: Upon joining the Discord, you’ll be asked to fill out a form. Please, please pay attention to 2 things:

1. Enter the exact email address you used to sign up to PRO with.

2. Enter your exact Discord username. To find your Discord username, click on your profile picture in Discord. Your username is the smaller text name under your profile picture.

Do this with bomb-defusing precision—a single typo might lock you out! 😬