Chasing Rabbits
December 25th, 2024

Consensus Advice re: Rabbits

For me pace is the deciding factor in whether we are in a Bull or a Bear. Though we are (as I write) ~10% down from BTC’s ATH the pace of play is no less frenetic, a sure sign that we are astride the Bull.

In the Bull, Crypto Twitter is in no short supply of Advice Guys. These are the types who remind you of the importance of bankroll management after %50+ alt drawdowns. These are also the types who, when the pace quickens, pat you on the head and say:

                       “The man who chases two rabbits catches neither.”

It’s a reasonable implication that we should focus on one thing and do it well rather than focus on more than one things and do them poorly. Crypto is a game that has historically and dramatically rewarded concentrated bets and it feels near-consensus that diversification and aggressive portfolio growth are not friends.

That said, I think for many market participants - those with a certain personality type, those with a <7 figure portfolio size - the adage is wrong. We - I am firmly in their number - should not be chasing one rabbit; we should not be chasing two rabbits. We should not be chasing at all as much as grasping at the forest air in frenzied delirium, pulling as many fluffy bunnies to us as humanly possible.

Naming the Pig

For the moment let’s follow the adage and chase that one rabbit. What happens next? First let’s assume we are rewarded for our myopia and we catch it. Ideally we would dispatch, skin, and eat it, bolstering our fat stores and moving expeditiously to our next quarry. Ideally.

Markets and market participants are not Ideal! Some of us are idiots. Some of us don’t even eat the rabbit because, as you might expect, the rabbit is quite cute. Soon we began to mistake our food for our friend. A bit later we name the proverbial pig and rather than calling it Dinner we call it Fluffles or Cuddles or Thumps.

Maybe I’m not giving us enough credit. Maybe we do eat the rabbit before naming it. But then, rather than standing up and dusting off our trousers and looking for the next rabbit, we rest. And why shouldn’t we? Our bellies and egos are full. We conquered the wild, worked for our dinner. And so we build a fire and recline and are awoken the next day by the pangs of hunger that remind us that that rabbit wasn’t particularly large.

Ok, maybe I’m still underestimating us. Instead we wipe the rabbit grease from our mouths, repack our bag, and are off at once. In a matter of minutes we see another rabbit but, alas, it’s a bit too quick. The next is a bit too small, hardly worth the effort. A third is plump but far off, sure to see us and retreat before we can catch it.

The issue of course is not the rabbits, but us. Our bellies are full and our drive is down. We are hunting from a place of security rather than desperation.

So what? We’ll get hungry again. Really hungry. And then we’ll just catch another rabbit, right?

The Ones That Got Away

Let’s go back to the beginning. There were two rabbits and we know the fate of the one we chose. What of the other? Likely it is long gone, underground, content to nibble the grasses at the edge of its hole until our scent is a distant memory.

This seems…fine? There were two rabbits and we got one. Soon we’ll see two more rabbits and get one of them and we’ll iterate until we can live off the interest on our pelt-and-meat accounts (somewhere around here the metaphor breaks down, admittedly).

But this assumes a literal interpretation of the adage, wherein there are two and no more than two rabbits and one and no more than one us. Consider instead standing in a forest clearing with five hundred rabbits. We select one rabbit and chase it out of the clearing and into the woods and, once again, catch it.

Let’s assume the best of ourselves. We don’t Name the Pig, or Rest on our Laurels, or Lose our Desperate Drive. We kill and eat the rabbit efficiently and move on. Still, what happened while we were away?

While we chased and ate one rabbit there were hundreds of others who ran around our clearing and have since returned to their nests. The proverbial Ones That Got Away, got away. We paid the opportunity cost.

Catch as Catch Can

There are two main differences between the world that spawned the adage and the world of five hundred rabbits. The first is obvious: there are more rabbits. The second, and most important, difference, is that in this new world we recognize we don’t even need to chase the rabbits but rather can reach out and grab them by the armful.

If we accept these differences our goals and behavior should change dramatically. Catching one rabbit should not be celebrated or even noticed. Eating should happen a few nibbles at a time, in between catches, a necessary part of the process rather than a celebration.

To stretch this metaphor to its breaking point, consider the behavior of other hunters. If we know there are other hunters in the clearing all grasping at rabbits like we are, we need to grab what we can as fast as we can. Moreover, if we want to keep up, we need to account for the likelihood that our competitors in rabbit-grabbing will likely get more efficient in their task over time, and we, too, need to continually improve.

So what

Having been in the forest for about 3.5 years my main observation is that most of us see the rabbits and few of us grab enough. Sometimes we don’t grab a rabbit because we don’t recognize it as a rabbit. Sometimes we don’t grab a rabbit because of some specific obstacle - this rabbit requires us to use new bridge, that rabbit requires us to buy it using an unfamiliar or nontraditional marketplace. But mostly we don’t catch the next rabbit because we a) think we have enough rabbits and b) are tired of grabbing.

To be crystal clear and to depart from the metaphor, this is not a post about airdrop farming or NFT whitelists. This is a post about that project you saw on Twitter with 400 or 1000 or 5000 followers that may be worth 20 minutes of your time. This is a post about new token standards, new narratives, new trends, and the acknowledgement that the only thing that stays the same is how many new things there are.

I’ll admit this is a convenient interpretation for your author who is not a millionaire and who likely has some sort of attention-related mental itch that a frenetic pace scratches. But I suspect I’m not alone.

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