Spotify told me that I was in the top 0.6% of Grateful Dead listeners this year, and my top song was a “Midnight Moonlight” cover by the Jerry Garcia Band.

What does that have to do with hyper-gambling shitcoins in your kid’s 529 account?

Absolutely nothing.

But it does mean one thing: It’s year-in-review season, and we’ve had a year worth celebrating.

The Positive Skew portfolio is up 312% on the year, outpacing bitcoin (my primary benchmark) by 2.45x (I’m using the trailing 12 months from the time of writing here — I’ll officially close out my books at year-end like everyone else. But for today, year-end is the first week of December).

Not a bad year, all things considered. 🙂

Before we dive in, we have to give a BIG shoutout to all the XRP holders on the list — there are a lot of you here.

XRP is, by far, the most mentioned coin by new subscribers.

You maniacs bought and held through some of crypto’s darkest hours. Don’t let anyone tell you your 5x this month was lucky. It sure as hell wasn’t. You won, Gary Gensler lost, and XRP is the hottest asset in the order book right now. Please send me pics of your Lambo’s under the tree this Christmas.

I’ve added XRP to my Market Dashboard below just for you all. To no one’s surprise, it’s the highest forecast on the board at the time of writing.

Market Vibes

Crypto Reads

Two Centuries of Trend Following: We establish the existence of anomalous excess returns based on trend following strategies across four asset classes (commodities, currencies, stock indices, bonds) and over very long time scales. We use for our studies both futures time series, that exist since 1960, and spot time series that allow us to go back to 1800 on commodities and indices. …It makes the existence of trends one of the most statistically significant anomalies in financial markets.

Ex PayPal COO David Sacks is Trump’s New Crypto and AI Czar : “David will guide policy for the Administration in Artificial Intelligence and Cryptocurrency, two areas critical to the future of American competitiveness. David will focus on making America the clear global leader in both areas,” Trump said Thursday in a post on his Truth Social network.

Erik Voorhees: But all of it—all of the wild bickering mass of true innovation and sinful grift and everything in between that is crypto—is really a collective civilizational protest against fiat, the banking system, and a regime of oppression.

Positive Skew Investing: 2024 Year-in-Review

First, the newsletter. I’ve written 31 updates (this is #32) over exactly 31 weeks (first send was May 3). We’ve grown to just under 4,500 subscribers since then.

I’m still blown away by your readership and honored to have a place in your inbox each week.

I hope you’ve learned some things about crypto and investing along the way. Our returns are quite good as well.

Current Portfolio Update

A rising tide lifts all boats, and we rose on a king tide this year.

Bitcoin remains that king, ripping through 2024 first on the the back of the ETF and now on the prospect of a future without active government subversion and antagonism.

For most, just buying and holding bitcoin is all you need. Crypto is a diversifier. If you have a big equities, bond, real estate portfolio — you really don’t need much crypto. My mother-in-law asked me about bitcoin this week. I told her to chill.

But for me, and for Positive Skew, we aim for more. We want bitcoin and then some.

So we position the portfolio in assets with correlation to bitcoin, but with more volatility. We seek to find the investments that go up 1,000% when bitcoin goes up 25%.

And the portfolio did just that this year.

I remain overweight in the Solana ecosystem and in the meme category. Since the election every. single. corner. of the market has been ripping.

Trades of the Year

Solana, Bonk and WIF

Solana, Bonk, and WIF carried the portfolio through Q1.

What started as small bags of Bonk and WIF in December quickly became big bags of Bonk and WIF by January. You love to see it.

I took profit on both all the way up the elevator ride to $2 billion market caps. I recycled the profits back into more SOL.

I was underweight to SOL at the time thanks to that asshole Sam Bankman-Fried. I dumped my bags when FTX collapsed in 2022 (at the time, I owned a lot of SOL). I got back in with a small bag around $30/token, added to it all the way up into the $80s for a nice 5-7x blended return over the course of Q1.

ETHE - Grayscale Ethereum Trust NAV trade

Overall the Ethereum ecosystem has lagged this year (more on that later), but I did luck into another well-timed trade that turned a big, quick profit.

I bought ETHE, the Grayscale Ethereum trust when it was trading at a ~25% discount to its net asset value (ie. the ETH in the fund was worth $100, but it was trading below that book value, around $75). I figured an ETH ETF would eventually be approved, and the NAV discount would be a nice beta on that event (I was thinking it would be approved sometime in 2025).

Not 2 weeks later the ETH ETF was approved, the discount closed and the price of ETH shot up. I got the gains on both ends and was able to take some profit. It was about a 70% return in a month. I should have bought more!

MicroStrategy

I had similar timing luck with Microstrategy ($MSTR) earlier this month.

I did a deep dive on their “Bitcoin Treasury Operations” strategy, bought some shares, and it ripped from ~$350 a share to $550 in 4 days.

I took profit, rebalanced, and flipped some gains into IBIT options. Not a bad week.

Speaking of Microstrategy, Saylor bought another casual clip of $13.5 billion bitcoin this week. The man is a maniac, and I’m here for it.

Losers of the Year

Boden

My biggest “loser” of the year wasn’t even a loss. It was BODEN, the memecoin that was and then wasn’t. I got into Boden early and at the peak was up about 20x.

Then I got greedy. I didn’t sell on the way up. I lost discipline. I drank the kool-aid.

I should have rebalanced. I should have followed my own advice.

But I didn’t, and it turns out that Biden’s mental condition wasn’t actually that funny — after the debate everyone collectively realized it was in reality a sad situation, and the party ended.

Dump.

I ended up making money on the trade, but holy shit I lost a lot of paper gains on the crash.

Arbitrum

Arbitrum was my big disappointment this year.

I think the Ethereum L2s are very good products. I use Base all the time. Arbitrum too. During the bear market I kept my portfolio afloat with yield from my deposits on GMX (a perp’s exchange on Arbitrum).

I was convinced that this cycle was going to be all about the L2s. I built up a HUGE bag of ARB over the past few years. Arbitrum was going to be the DeFi chain.

My average cost basis was around $0.80 per ARB. In the excitement of Q1, it more than doubled and ranged above $2. Life was good.

But, that price action hid the real story. Money wasn’t bridging to Arbitrum in the same way after Solana and the meme coins stole the narrative. The hot money wanted to gamble memes.

Then, Coinbase launched Base and carpet bombed the market with PR, incentives, and the promise of distribution to their millions of retail customers. Base, by the way, was built on the Optimism stack, Arbitrum’s biggest competitor at the time.

Not to mention that any big Arbitrum investment was inherently timeboxed. The token had massive unlocks on the horizon. The clock was ticking.

ARB dumped all the way back down to the $0.50s. I sold all the way down, coming out barely positive on net. All that money could have been 10x’ing with Solana, WIF, Bonk, or literally anything else. Sad!

Virtuals - My Unforced Error of the Year

Virtuals is a platform that enables you to launch autonomous AI agents on-chain. The AI’s can talk shit on twitter AND they can control a crypto wallet.

One of their agents popped off on twitter, so I took some time to go deeper into the protocol. It was easy. It worked. The tokenomics made sense. It was a great bet.

Virtuals is on Base, so I fired up my Base wallet to buy a bag and …. I got distracted. Honestly I don’t know what happened. I just goofed it and never hit “buy.”

Virtuals was trading around $350-400 million market cap at the time. This was maybe 6 weeks ago. I wrote about it here.

Today it’s trading just under $2 billion. I realized my mistake and bought in at $1.5 billion. So I’m up, a little, for now. But MAN, it hurts to see what would have been a 6x winner in my wallet.

Lesson learned. Buy the damn coin.

The Ones I Sold Too Early

Virtuals is the one I bought too late. I miss many of the most explosive winners - there’s just too many. I can deal with that. You can’t be everywhere all the time.

The hard ones, the ones that keep me up at night, are the ones where I was right, sold too early for some reason, and then missed the exponential move higher.

Let’s talk about the two big ones I sold too early.

POPCAT

This one hurts.

I bought POPCAT on Dec 18, 2024 for $0.012. I sold it a few weeks later for an ok gain. Certainly not a homerun. It was fine.

Today, as I write, POPCAT trades at ~$1.40. That’s a 117x return.

117x.

At its peak, POPCAT could have been a nearly 200x return for me.

You can’t go broke if you don’t lose money.

That’s what I’m telling myself anyway.

But leaving a 200x on the table…..tough.

PNUT

PNUT is a similar story. Same mistake, 10 months later. This one hurts me even more.

I bought PNUT on Nov. 2, the Saturday afternoon that the poor squirrel’s death went viral. It was up big, and I aped in with a small bag for the lolz.

It went up, it came down, it wiggled for a few days. It was election week. Emotions were red hot.

The election came and went, and after the dust settled I decided to sell — I thought this stupid meme would fade away as quickly as it exploded onto the scene.

I was wrong. Dead wrong.

By Nov 11, PNUT was up 5x from where I sold. By the 13th it was up 23x from my exit.

The move was violent. Up only. From less than a $100 million market cap to nearly $2.3 billion in 72 hours.

You can’t go broke if you don’t lose money. I should have held for one more week. Just one. more. week.

Lessons Learned and Looking to 2025

This year was a huge validation of my philosophy of crypto investing.

1. Price action drives narrative (Solana, memecoins)

2. Buy the breakout and follow the trend (I named my newsletter positive skew, after all)

3. Remove the emotion (f*ck you BODEN and PNUT)

My best winners were the ones where I followed my system. My biggest losers, both realized and unrealized, were the moments I lost my discipline. When I let emotion win over cold, hard quantifiable truth.

Crypto is simply different than other asset classes. The volatility demands a system. Our feeble, smooth brains can’t handle the swings. In crypto, greed is definitively not good.

That’s why I began developing my automated system in the first place. After all these years hodling and trading and round tripping — I needed a better way.

My biggest losers this year were discretionary bets on memecoins outside my automated, systematic trading program. That’s not a coincidence.

I am an emotional idiot sometimes, but my software is a perfectly disciplined mathematical robot.

To that end, I’m making 2 big changes to the newsletter over the next few weeks.

First, I’m going to be migrating to a new domain name, new website, and new email provider. Same newsletter, same degeneracy, just a new coat of paint for the next era of Positive Skew.

I’ll update you as I make the migration - this should be a non-event for everyone, but just wanted to give you a heads up.

Coming Soon: Positive Skew Premium

Second, I am almost ready to launch a new premium membership to the newsletter. This newsletter will remain free forever. The premium add-on will be in addition to the core Positive Skew weekly update.

The core value of the premium membership will be:

1. Daily market and portfolio updates with proprietary and actionable crypto data (all my forecast models, volatility targeting, portfolio optimization, and more delivered to your inbox every day),

2. Real-time trade notifications based on the Positive Skew systematic trading system,

3. Early Access to future models and systems (I’m actively working on futures- and options-based systems now, preparing for even more vol in ‘25), and

4. Early subscribers will get lifetime access to all future analytics, quant systems, and features.

The system is a volatility targeted, diversified crypto momentum strategy. This post describes how it works at a high level.

The premium membership does not include financial advice, but it is loaded with useful data and analytics you can’t get anywhere else.

It includes real-time portfolio positions, trade alerts, forecasts, and complete transparency into everything I’ve got. These data have been invaluable to me as a crypto investor over the years and is the primary driver of my excess returns this year.

This system is up 15.7x since Jan 1, 2020 with a 75% CAGR (compounded annual growth rate).

It’s up 58% since the election (beating bitcoin by nearly 40% for the month). 

This is the core of my crypto trading. This is how I was able to beat bitcoin by 2.5x this year. My memecoin gambling is just something fun to do while my systematic algo pays the bills.

I’ve designed the system to be easy to adapt to your own trading, without needing any special tech, data or otherwise.

• Every token it trades is available on Coinbase.

• It trades once per day. It can be easily run manually without any software or tech expertise.

• It automatically optimizes the portfolio. Big winners, tiny losers, diversified and engineered for a massive positive skew.

I need beta testers before the official launch. Interested in a free premium membership?

Reply to this email and I’ll sign you up for a free trial before launch.

The first 10 volunteers will get a year of premium access for free.

The next 15 volunteers will get 50% off.

Don’t be last!

Portfolio Update

No trades this week.