17 Lessons on Cryptocurrency Investment We Can Learn from Texas Hold'em Poker

Author: The Way of DeFi

Playing Texas Hold'em can give you an edge in cryptocurrency; you don't have to play thousands of hands to see a return.

Here are the 17 most important lessons:

1. Whales Have an Advantage

Texas Hold'em:

The player with the most chips at the table can bully everyone else.

Cryptocurrency:

Whales can bully you without you even realizing it:

• Whales can get early access to trades

• They have easier access to insider information

• They can manipulate the market for small-cap coins

This is not a level playing field. You may have seen this firsthand a few weeks ago: whales were playing games/w @Wonderland_fi, leading to a chain reaction of liquidations.

Whales only want money, and everyone else is being played, even those who are not using leverage.

2. Ulterior Motives

Texas Hold'em:

At the Texas Hold'em table, you'll hear a lot of advice:

"Buddy, if I were you, I wouldn't call."

Are they really looking out for your best interests?

Cryptocurrency:

We need to be cautious about advice from others. What are their motives?

"This is a hundredfold coin."

Actually, their goal is to offload their bags onto you.

3. PVP (Player vs Player) Mindset

Texas Hold'em:

Texas Hold'em is a player vs player game, which means someone has to lose for you to win.

Cryptocurrency:

You underestimate the PVP nature of cryptocurrency; it's not WAGMI (We're All Gonna Make It).

Sometimes, when you hear about a protocol, early players have already started dumping, and you're left holding the bag.

4. Don't Play Too Many Hands

Texas Hold'em:

New players get caught up in action, while professionals know it's best to wait for a reliable opportunity to strike.

Cryptocurrency:

It's better to patiently wait for good projects to invest in. FOMO (Fear of Missing Out) can lead to losses.

You're investing, not playing a video game.

5. Steady and Steady

Texas Hold'em:

On TV, you see professional poker players bluffing and winning with terrible hands.

These are eye-catching and attention-grabbing, but that's not good Texas Hold'em.

Cryptocurrency:

Are you a newcomer? Then at first, stick to reliable projects and stop chasing high annual yields; there are no free lunches in this game.

6. Result Bias

Texas Hold'em:

You can play your hand perfectly and still lose; that doesn't mean you should change your strategy.

Remember, the process is more important than the outcome.

Cryptocurrency:

Just because someone got lucky and held onto a 10x shitcoin doesn't mean you should replicate their investment strategy.

In the long run, skill beats luck.

7. Table Selection

Texas Hold'em:

Would you want to play at a table with a drunken billionaire or a Texas Hold'em pro? Find a table where you can beat your opponents.

Cryptocurrency:

I don't "understand" art + culture, so I don't try to dabble in NFTs; I'm good at numbers + economics—this is why I focus on DeFi.

What are you good at?

Most of you can't win in cryptocurrency. You're not dumb; you're at a disadvantage because of smaller deposits and having a full-time job.

Maybe your best choice is to keep it simple: dollar-cost average into blue-chip coins and wait.

You'd be better off playing a simple game and winning.

8. Little by Little, One Goes Far

Texas Hold'em:

Some people are obsessed with "big hands"—crazy all-ins, which easily underestimate the potential of winning small chips.

Cryptocurrency:

Don't be fixated on finding 10x altcoins. Stablecoin farming and blue-chip coins often outperform those chasing shitcoins.

9. Be a Tight Aggressive Player

Texas Hold'em:

I'm a patient player. I wait for a good hand, then I go into beast mode. I maximize my win rate and minimize my losses.

Cryptocurrency:

I invest in far fewer projects than most, but when I'm confident, I go all in.

10. Keep Your Eyes on the Long Term

Texas Hold'em:

Sometimes profits go up, and sometimes they go down. Don't be fooled by daily happenings; what's important is long-term gains.

Cryptocurrency:

Stop checking your portfolio countless times a day. Doing so will only make you anxious.

11. Bankroll Management

Texas Hold'em:

No matter how well you play, there will be fluctuations and losses. Managing your bankroll is how you prevent going broke.

Cryptocurrency:

No matter how good a project is, black swan events like rug pulls and exploits can happen, so manage your funds wisely.

This also includes funds outside of cryptocurrency:

• I have an emergency fund for 6 months of living expenses.

• I have investments outside of cryptocurrency, like index funds.

I'm not fully invested in cryptocurrency. This means that whenever the market dips, I remain calm as a cucumber.

12. The Size of the Pot

Texas Hold'em:

You must allocate appropriate funds for each hand.

Cryptocurrency:

Don't bet the house on a risky and unknown project.

Pot size = Portfolio allocation.

My investment allocation:

• The maximum amount for one protocol is 15%

• For me, the maximum bet for a Degen (degenerate gambler) is 5% of total funds.

This ensures the safety of my capital.

13. When to Cut Losses

Texas Hold'em:

You have two Aces, and the flop gives you a third, but there's a flush threat from opponents, and several people go all in; at this point, you should cut your losses and fold.

Cryptocurrency:

This was a good project, but things have changed; choose to cut your losses and fight another day.

14. Fix Your Leaks

Texas Hold'em:

Leaks are fundamental flaws in your game; making too many moves pre-flop can easily be exploited by opponents.

Cryptocurrency:

Identify the patterns of your failures:

• Are you constantly getting wrecked chasing high APYs? That's a leak.

• Getting scammed repeatedly? That's a leak.

15. Learn the Math

Texas Hold'em:

Math gives you an edge, like calculating pot odds and expected value.

Cryptocurrency:

Learn about impermanent loss, tokenomics, market cap, etc. Make sure to learn how to use spreadsheets.

16. Dealing with Bad Plays

Texas Hold'em:

This refers to starting with a mathematically strong hand but ultimately losing. This happens, but don't let it affect you.

Cryptocurrency:

A bad play could be a rug pull. You'll be upset, but don't let it lead to worse decisions.

17. Find Your Edge

Texas Hold'em:

Texas Hold'em is player vs player. You must find and hone your edge. This could be getting better at math or learning how to read others better.

Texas Hold'em is a skill-based game, and you can improve your skills.

Cryptocurrency:

Here are some skills you can work on:

If you want to gain an edge in DeFi, please learn:
--- Tokenomics
--- Game Theory
--- Cryptography
--- Decision Making
--- Cognitive Biases
--- Macroeconomics
--- Trading Psychology
If a 19-year-old kid with a meme coin ends up outperforming you, don't be surprised.
It can happen.

Gain a Psychological Edge

Your success in Texas Hold'em and cryptocurrency depends on the quality of your mindset; do everything you can to gain a psychological edge:

• Exercise

• Get plenty of sleep

• Don't drink while playing

• Meditate daily

Train your mind like athletes train their bodies.

I'm not trying to sound pessimistic, but making money in the cryptocurrency market is tough. Too many people make money by telling you how easy it is to profit. Therefore, I try to keep you grounded and humble.

Here, the first step to victory is survival.

A Few Points to Be Clear About:

• The psychology involved in cryptocurrency trading is more than you realize.

• This is an unregulated space, and you underestimate the power of whales.

• Understand the math.

• This could be PVP. If you're a newcomer, proceed with caution.

Anyone can hit a lucky break, but don't confuse it with skill.