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Description

Today’s episode is from a 2018 conversation with Ari Nazir, founder and managing partner at Neural Capital, a hedge fund focused on cryptoassets. We discuss how a general lack of experience and sophistication among cryptocurrency investors makes it profitable to trade against popular opinion. For the full conversation, check out Flippening episode 13.

Links Relevant To This Episode

• Nomics.com
• Nomics on Twitter
• Clay Collins
• Flippening.com
• Nexo
• Nomics API
• Nomics’ Fully Customizable Daily Crypto Newsletter
• Ari Nazir
• Neural Capital
• Ethereum (ETH)
• Monero (XMR)
• Bitcoin (BTC)
• Stellar (XLM)
• Ripple (XRP)

Transcript

Clay Collins: Welcome to Daily Wisdom from the Flippening Podcast. These episodes feature short, to the point clips from our full-length interviews. We talk to the men and women behind the trades, crypto exchanges, and regulations with the goal of helping you become a better, more informed investor. 

Michael: Hi, I’m Michael Kaplan, editor of the Flippening Podcast. Today’s episode is taken from a 2018 conversation with Ari Nazir, founder and managing partner at Neural Capital, a hedge fund focused on cryptoassets. We discuss how a general lack of sophistication among crypto investors makes it profitable to trade against popular opinion. For the full conversation, [00:00:30 ] check out Flippening episode 13. 

Now without further ado, our conversation with Ari Nazir, founder and managing partner at Neural Capital. Enjoy!

Ari Nazir: One of the rate-limiting steps in this entire ecosystem is there are only so many technical minds that actually understand what a blockchain is. There are even fewer minds that can build. If you are a long-term hedge fund, the average age of a manager is like 26 to 27. These are relatively young people [00:01:00 ] that haven’t actually gone through cycles. You know the most recent cycle that they remember is the great financial recession of 2007 to 2012. You need those more experienced hands and more experienced people playing to help you think through technical, long-term signals. 

But there’s a massive opportunity if you’re qualified and competent to take it that without knowing the actual underlying technology of the project you can take long/short positions. Just based on the technical indicators.

Clay Collins: Can you describe [00:01:30 ] just maybe in a paragraph, I guess verbally what sentiment investing is?

Ari Nazir: I believe sentiment investing and sentiment trading is an amalgamation of signals, taking into account behavioral economics and market psychology over any given period of time to invest in a certain way.

Clay Collins: When you think about decisions you would make as a sentiment-driven investor, what are the indicators that are most [00:02:00 ] important to you? Can you do sentiment-based investing purely with market data or do you also incorporate a number of members in a Telegram group? Number of mentions on Twitter? Number of Reddit posts being mentioned on CNBC Fast Money. Et cetera.

Ari Nazir: Number of Telegram groups, I don’t know who to blame for this but I do think somebody needs to be held accountable. The number of Telegram users that you purportedly have is not an indicator of your community strength [00:02:30 ] in any way. Because at the end of the day I can buy those users and fake the volume. Ethereum isn’t used for ICOs because Vitalik was able to get 20,000 Telegram users in his Telegram in like a week. That’s not why people use these currencies. 

Telegram users, we obviously monitor that. We monitor GitHub commits, but a lot of this still comes down to actual human research. Because you know the GitHub commit example just because I look at GitHub commits [00:03:00 ], that’s actually a pretty sophisticated way of potentially manipulating the price or quality of your