Everyone who enters the crypto world with dreams of wealth harbors a burning dream in their hearts—to achieve financial freedom through cryptocurrency, bidding farewell to the days of being stressed over rent, no longer having to watch their boss's face. As Munger said: 'To become rich is not for anything else, but for freedom.'
But reality is like a cold wind, ruthlessly beating against everyone's fantasies. The crypto world is more brutal and ruthless than the stock market; 'nine losses for one gain' is the true survival rule here. The vast majority can only helplessly become inconspicuous backdrops in others' wealth stories, while only a very few can accumulate wealth like rolling a snowball with small funds.
I have struggled in the crypto world for 12 years, starting with an initial capital of 50,000, and have worked my way up to now. Over the years, I have summarized 4 ironclad rules for small funds to grow, and I hope you can engrave them into your bones.
First principle: deeply analyze the project, far surpassing just watching the price.
Not deeply researching a project before buying coins is like crossing the road with your eyes closed—full of danger. You must at least clarify:
Which track is this project in? Is it a public chain, DeFi, or NFT? Does this track have explosive potential in the next three years?
Is the project team reliable? Does the founder have practical experience in the blockchain field? How is the code update frequency (you can check it on GitHub)?
Is the token economic model reasonable? What is the total token supply? What is the circulation ratio? Is there a massive unlocking leading to selling pressure?
How is the project's ecology? Is the TVL (total value locked) continuously growing? Are there real users participating?
Take Ethereum, for example; you need to know it is the 'infrastructure' for smart contracts. After the merge, the deflationary mechanism begins to take effect, and the more prosperous the Layer 2 ecosystem, the higher its value. Avoid those projects with vague white papers and unclear team backgrounds, no matter how cheap the price; most new projects in the crypto world are essentially 'air.' Seeing through a project may be difficult, but it's not impossible. Excellent projects are like excellent people, with a clear 'growth logic.' As long as you are willing to take the time to study, you will always find some clues.
Second principle: reverse operation, picking up chips when others are in despair.
The money-making opportunities in the crypto world are always hidden in the extremes of panic and greed.
In 2022, when LUNA collapsed, the entire market was filled with wailing. BTC dropped to $16,000; those who dared to add positions at that time have at least doubled now. At the peak of the 2021 bull market, everyone was shouting 'BTC to $100,000'; those who chose to exit at that time successfully avoided the subsequent halving market.
The core of reverse thinking is: be brave to buy when it drops deeply, and decisively sell when it rises crazily.
Short-term operations are even more so: if a currency continuously plummets and the community is full of curses, if a volume rebound occurs at this time, it is an excellent opportunity; conversely, if it suddenly surges and Twitter is full of 'get rich myths,' quickly take profits in batches—don't wait until the tide recedes to find that you've been swimming naked.
Third principle: Be bold to invest heavily when the timing is right; otherwise, don't act easily.
Small funds wanting to grow quickly rely on 'placing heavy bets at critical moments.' Today you buy $100 and earn enough for a cup of milk tea, tomorrow you lose $50 and get a bowl of noodles. After a year, the fees won't even cover your costs.
But the premise for heavy investment is 'seeing through the project + reverse operation.' Before the DeFi explosion in 2020, I studied Compound for half a month, confirming it was the leader in the lending track. I decisively invested heavily when it dropped to $50 (60% of total funds at that time), and it later rose to over $300, multiplying six times in one wave.
Remember: heavy investment is not blind gambling, but a certain bet based on deep research. If you don't have full confidence in the project, it's better to try with a small position than to gamble recklessly.
Fourth principle: Patience is the most precious quality in the crypto world.
I have seen too many people sell after a 5% rise in coins, panic after a 10% drop, and end up watching it double, regretting it while slapping their thighs. The real money-making opportunities are all 'endured' through.
Before buying, have the patience to wait for a good price: BTC hovered between $26,000 to $29,000 for 5 months, during which there were countless opportunities for low buys, and those who rushed to chase high got caught.
After buying, you need to have patience to hold your stocks: ETH rose from $2000 to $4000, with three corrections in between, and each time people were scared and ran away. Only those who can endure the patience can benefit from the main rising wave.
My experience is: as long as the project's logic hasn't changed and the trend hasn't broken, just grit your teeth and endure the fluctuations. There is too much short-term noise in the crypto world; patience can help you filter out 90% of the interference.
Livermore's cryptocurrency buying method (proven to be super effective)
Start by testing the waters with 20% of your position; for example, if you have $1000, first buy $200 worth of BTC.
If it drops by 10% (to $180), decisively cut losses—at most lose $20, which won't be a serious blow.
If it rises by 10% (to $220), then increase your position by 20% (buy another $200); if it rises another 10%, increase by 20%... Finally add 40%, letting the profits snowball.
As long as it hasn't dropped below the 10% stop-loss line, hold on. Once it drops below, clear out completely.
The core of this method is 'low trial and error cost, large profit space,' which is especially suitable for the high volatility environment of the crypto world.
Why do you always lose? 90% of people fall for this.
Not understanding the broader environment is the root cause of retail investors' losses in the crypto world.
At the end of a bear market, funds will flow into the severely undervalued mainstream coins (like BTC, ETH). Those that have dropped 90% but whose teams are still working hard often rebound the strongest.
In the early stage of a bull market, focus on those 'tracks that start ahead of the market' (like the Solana ecosystem in 2021); they are often the main characters of this round of market.
At the peak of a bull market, don't touch those 'suddenly surging air coins'; funds are quietly withdrawing, and those picking them up are greedy retail investors.
Lastly, I want to say to everyone: the crypto world is not a casino, but a battlefield of 'cognitive monetization.' Your depth of understanding of the project, your grasp of market sentiment, and your control over your own greed and fear will ultimately translate into numbers in your account.
