Over the past 6 months, I’ve started to expand my portfolio by dabbling in cryptocurrency. Although I am not an avid investor or trader, I wanted to diversify the assets that I have invested (as I do in fantasy football). The parallels between stock trading and dynasty fantasy football are apparent and cryptocurrency is no different. With that said, there are advantages to be gained in dynasty fantasy football by using lessons learned from crypto trading.
* Note: This is not financial advice and I am not an investment banker.
Bull vs. Bear
The best way to describe (and remember) the difference between bulls and bears is the way these animals attack. When a raging bull charges, it lowers its head and then thrusts its head and horns upwards. When a bear attacks, it stands tall and then swipes its claws downwards.
A bull is a token (asset) that has a positive outlook in the market and its value is trending upwards. You would be “bullish” on Saquon Barkley in 2022 if you believe he is undervalued at his current ADP. On the other hand, a bear is a token that has a negative market sentiment and is likely to see a drop in value. I do not have much confidence in DK Metcalf this year given all of the changes in Seattle, including losing Russell Wilson, so you could say that I am “bearish” on him.
Diamonds Hands if you believe #HODL
Diamond hands refer to people who hold onto assets (generally meme stocks and crypto) for long periods of time and/or throughout (turbulent) price movements. HODL is a purposeful misspelling of “hold,” which is used to encourage people to hold onto their assets during bear markets. The moniker also stands for “Hold On for Dear Life” depending on who you ask. Regardless of the meaning, the concept is the same.
The first rule of any investment is to buy and hold. You have already done extensive research that led you to the investment decision, so sit tight and wait for the rewards. In 2016, bitcoin was worth about $430. Since then, the value of bitcoin has grown despite numerous predictions from skeptics that it is going to flop. Resisting the urge to cash in when value shoots up is incredibly difficult because there is always a risk of the value decreasing just as fast (see Travis Fulgham, James Robinson).
In dynasty fantasy football, you need diamond hands when it comes to players who are breaking out and that you believe will sustain that success. These are the players that your process has been correct on even though the consensus may have been lower. You also want to HODL those young players who have flashed serious promise but have generally failed to live up to their expectations (see Rashod Bateman).
On the other hand, diamond hands can end up holding nothing but coals (see N’Keal Harry, Denzel Mims, Jalen Reagor). If a rookie has completely faceplanted, there is no need to HODL anything. Also, take some profits to enjoy your success in hitting on prospects that no one else believed in. If you have Elijah Mitchell on most of your dynasty teams, you have found great value. Try to hold onto the majority of your exposure to make sure you don’t lose out in the future, but consider diversifying your position and trading Mitchell in a few spots to shore up other needs to stockpile the Iron Bank.
Don’t Go Aping
To “ape” into something is to recklessly invest in the hopes of short-term profit after you have seen its value quickly rise. In the crypto/NFT world, there are scams everywhere and prudent investors do their own research to vet a token or NFT to ensure it is safe.
Too many times, (novice) dynasty gamers get excited about a Twitter darling and start to follow the groupthink. Sure, Dynasty Twitter isn’t full of scams (?) but there is a lot of bad information. It is tempting to fall into the hype on players people are shilling on Twitter (see Laviska Shenault). Also, with the advent of KeepTradeCut, crowdsourced rankings and dynasty values are flooding the marketplace.
Avoid falling prey to the hype on any player, but take advantage of market inefficiencies and overcorrections. Give yourself ample time to strategize before making a trade. Do your own research on the player. Ask yourself the hard questions: Does the trade actually improve your team? Are you just trading for the player because you need 100% exposure? When you’re excited about making a trade for your new favorite player, your brain physically is not at a baseline point. You will make an offer that you will not remember and/or regret. It happens often in dynasty fantasy football. Take a breath, think it through, and stop chasing.
Fear, Uncertainty, and Doubt (FUD)
FUD is short for “fear, uncertainty, and doubt.” This can be legitimate, like people airing concerns about a token or NFT project’s security or legitimacy, or tactical, as in an organized movement that encourages people to sell, lowering the price of the asset (market manipulation). Cryptocurrency, like fantasy football, is driven by emotion (and tons of trolls).
FUD in fantasy football can come in many ways. A simple tweet from a big-name analyst can cause wild swings in the market sentiment around a given player. KeepTradeCut could be used for market manipulation. Ambiguous backfields or questions about a player’s ability to return from an injury can create FUD.
Do your homework and be prepared and you will be insulated from FUD. Trust empirical data, not tweets. You need diamond hands on those players you believe in. Do not chase players based on speculation or hype. I will only use KTC to get a glimpse into the general market sentiment on a player. Be wary of KTC values and never make a trade purely based on them. When there is an unwarranted FUD, then ignore the noise and look for an opportunity to buy low.
Buy the Dip
As Beezy would say, always buy the dip. In crypto trading, this refers to buying more of an asset after its price has dropped. Warren Buffett once said you want to be greedy when others are fearful and you want to be fearful when others are greedy.
In dynasty fantasy football, buying the dip means acquiring more of a player who has underperformed or disappointed you but that you still believe in. As I mentioned in Art of Dynasty, players to target in trades are those who are coming off season-ending injuries or a poor season but are still in their primes. I would also look at situations in free agency to see if there are any opportunities to add proven veterans who you expect to have improved situations.
