Today, I mainly want to discuss ETH. Even in the darkest times of the past three months, I still have full confidence in ETH. I have been heavily invested in ETH for almost a year now, and it has been nearly nine years since I first bought ETH. How many nine-year periods can one have in life? But most people's nine years are spent in mediocrity, or do they make progress every day and seize the compounding of life? Whether it’s nine years or one year, I always have many feelings—feelings about the market, about human nature, about destiny. Each historical interpretation is different, but the elements of each interpretation are always the same. The market changes, but human nature remains the same.
The fourth quarter of the cryptocurrency bull market has officially begun, with the opening act being the compensatory surge of ETH. Many people habitually short ETH, expecting the Fed not to cut rates or reduce the balance sheet in May, or shorting ETH after the Prague upgrade, but these people overlook a common sense: ETH is one of the top two quality assets in the entire cryptocurrency market (the top two are BTC and ETH). These people may have formed muscle memory, or they have heard a lot of information online—ETH is not good, which seems to be etched in their memories. They instead think that altcoins, meme coins, and shitcoins are more valuable. Moreover, their misguided correctness seems to be about hyping BTC, but how many of them entered the market with large positions below $50,000? Why do they need to hype BTC? I heavily invested in BTC at $16,000 in November 2022, and I described all the attributes of BTC comprehensively and thoroughly when it was below $1,000 in 2016. Now, all the praises for BTC echo what I had previously discussed. Most of them only echo eight words about BTC: 'If it goes up, it's bullish; if it goes down, it's bearish.'
Every asset has its own strong cycle. When ETH outperformed BTC with a 60x increase during the 2020-2021 bull market cycle, and when ETH crushed BTC with a rise from $900 to $2000 in July-August 2022, what were these people doing? There are opportunities in the market every moment; why are the people who make big money still a minority? Because everyone's judgments have both correct and incorrect aspects. Some people have 80% correct and 20% wrong judgments, while others have 40% correct and 60% wrong. However, even if most people make correct judgments, they often lack the determination and patience, swayed by overwhelming external information, and thus miss the opportunities within their understanding.
My strategy is to continuously rotate based on accurate judgments of each round of major cycles, thereby extending the time cycle, with both the lows and highs of my assets on the rise. During the bull market of 2016-2017, I believe I was lucky, as the industry was still in its early stages and not fully developed, and at that time, it was the mindset of project parties, with the cryptocurrency market not having a strong correlation with the macro market. However, by 2020, after surviving the hellish market in March, we welcomed the summer of DeFi, and some institutions began to hold BTC positions, and everything was changing. Many theories and ideas I proposed were fully realized during the bull market of 2020-2021, and I was excited to see my original ideas coming to fruition, which allowed me to make a lot of money. For the first time, I achieved significant results after fully capturing the main waves of SOL, Matic (renamed), FTM (renamed), SAND, and RACA. The joy of knowing and doing in unison is unparalleled. This also led many to develop a meme coin orientation, believing that altcoins could make big money. This experience made those who made profits in 2021 suffer greatly in this bull market, as many who profited in 2021 have already lost everything in this bull market.
At the beginning of 2022, with the start of the Russia-Ukraine conflict and the beginning of the Fed's interest rate hikes, I began shorting BTC, ETH, and U.S. stocks, until the end of June when I started to cover shorts and buy the dip, focusing on ETH, LDO, and OP. I clearly pointed out at that time that the rebound was a violent bear market monthly-level rebound centered on the ETH 2.0 upgrade (the Paris upgrade), and by August 15, 2022, I had almost fully taken profits and liquidated my positions. During that one and a half month market, ETH surged directly from over $800 to over $2,000. Meanwhile, LDO rose sevenfold in one and a half months, and OP rose fivefold in the same period. BTC only rose from $17,600 to $25,000. However, not many complained about BTC; firstly, the time was short, and secondly, most retail investors had never heavily invested in BTC, and those who did held BTC contracts. It was only due to recent hatred towards ETH that they praised BTC more.
This is the last strong period for ETH, stemming from the violent rebound of the bear market from July to August 2022. Many criticize ETH's current weakness as being due to the Paris upgrade changing from POW to POS, but sorry, I have fully capitalized on the biggest benefits of ETH transitioning from POW to POS.
In November 2022, at the starting point of this bull market, I almost went all-in on the bottom, mainly buying BTC at a price of $16,000, and I almost bought it at the very bottom, which was $15,500. The reason I had already mentioned at the time was that BTC had been weaker than ETH for half a year and had been sufficiently adjusted; at the same time, among altcoins, my heaviest position was OP, as OP was the first mainstream L2 that had issued coins. I believed OP was roughly equivalent to a non-liquidating 3x ETH contract, and OP surged from $0.9 to over $3. Therefore, the combination of heavily investing in BTC and secondarily in OP was both offensive and defensive. During the rise of OP from $0.9 to $3, I took profits and rotated into Hook and AGIX, and this part of the position multiplied about tenfold in less than two months. This may have led many who witnessed my operations to misunderstand and think that altcoins were more profitable, prompting them to heavily invest in altcoins early in the subsequent structural market, which, despite being in a bull market, felt like a bear market. From November 2022 to the end of 2023, I held BTC for almost a year, although a small portion was used for trading, but most of my position was held for about a year.
It is worth mentioning that the explosive rise of SOL in this bull market largely comes from its low base and brutal washing. As an L1 of the SBF system, SOL underwent brutal washing after SBF's collapse, falling to $8, which laid the foundation for its subsequent explosive growth. As one of the five coins I heavily invested in and earned tenfold in 2021, I am very familiar with SOL.
See my previous answer on Zhihu (The case of former cryptocurrency mogul SBF ends, FTX founder Bankman sentenced to 25 years in prison, fined $11 billion; what information is worth paying attention to?).
In July of last year, I completed my significant investment in ETH, betting on the Fed's rate cut at the end of July, but Powell didn’t cut rates until September, and even then, it was a one-time cut of 50 basis points. However, he admitted that rates should have been cut at the end of July. Subsequently, I successfully predicted the election of Trump. However, during this process, ETH was relatively weak compared to BTC but relatively strong compared to most altcoins. ETH has stood above $4,000 twice.
Then came the tariff war after February this year. This wave of tariffs brought about the hellish market over the past three months, and many traders have been washed out in this hellish market. Many whales have also been liquidated. Many believe that the era of cryptocurrency industry dividends has passed. This statement depends on when you compare it to; compared to when I first entered the market in 2016, or even compared to 2024, it has indeed weakened considerably. But any sunrise industry is like this; as time goes on, the marginal benefits decrease, but compared to most industries, it is still a blue ocean. So the question arises: why didn’t you participate earlier?
In fact, many industry benefits, such as Futu offering cryptocurrency services to major clients, are being implemented, and the industry infrastructure is improving, including stablecoins and PayFi, which are still in a period of rapid development. For example, I was one of the first to propose in November 2022 that AI is a global major investment opportunity and began investing in AI, but many programmers scoffed, claiming they had been working with AI for many years and understood it better than I did. The results have shown otherwise.
In the past three months, due to the hellish market brought on by the tariff war, I firmly believe the bull market is still ongoing. By taking profits from my second largest position in LTC as a short-term position, I managed to do T trading twice, achieving a return of about 65% once and about 20% the other time. This effectively helped me weather the past hellish market, as diversification is always correct. Now, I finally witnessed two large bullish candles in ETH, which are very morale-boosting, and my increased rotation and profit-taking have greatly enhanced my future operational flexibility.
Indeed, ETH is still relatively weak compared to BTC now. If you can capture BTC's fivefold main wave, you are impressive. My strategic goal is to capture BTC's main wave and some structural opportunities in altcoins during the first half of the bull market, and to capture ETH's main wave and some structural opportunities in altcoins during the second half of the bull market. I have always been implementing my strategic objectives and have achieved a unity of knowledge and action.
I have two more months until my heavy investment in ETH reaches one year. In the past three months, many whales who heavily invested in ETH for four to five years have already been liquidated. This round of washing has been very thorough for ETH, and the Prague upgrade has optimized the fundamentals. The current price is still relatively low in the medium to long term. Many quality altcoins, although they have risen, still have relatively low prices. Now, the trading activity of ETH in the entire market has significantly increased, with today's coin-denominated contract open interest hitting a record high, and the landscape has opened up. Once a reversal occurs, it is likely not to end very quickly.
Recently, besides rotating ETH, I took profits from MAGIC, which had tripled from the bottom (I previously sold all my principal at $1.4, with a peak at $1.5) and bought LDO at $0.7-0.74, and I have already completed my profit-taking today. The flexibility of my positions has further increased. There is nothing that a big bullish candle cannot solve, and the market perception will change as a result.