I often ask my newbie friends who bought digital currencies: How can you firmly hold onto the digital currencies in your hands? Some say it's about having a good mentality, some say it's about buying and holding without fear, and some say it's based on belief...
In general, my response to similar answers is simple, direct, and blunt—nonsense!
I ask you four questions,
First: How can one firmly hold onto digital currencies?
Second: Who are the people making hundreds or thousands of times their investment?
III. What is the essence of digital currency investment?
Fourth: What is the best investment strategy for digital currencies?
Speaking of mentality, what is a good mentality? Maintaining a good mindset in the face of tremendous wealth effects and extreme market volatility is easier said than done. If the coins in your hand have risen hundreds or even thousands of times, can you really remain calm? If a coin that has risen hundreds or thousands of times suddenly drops, won’t you be torn about whether to sell? Or if you've bet all your wealth, or even bought on leverage and the coin's price has halved, can you really stay calm? Only deities can remain calm; we mortals should not deceive ourselves by saying we can keep a good mindset during such times. I can guarantee that during such times, the vast majority of people will think: as long as I can break even, I’m done.
Those who say to hold blindly are mostly newcomers to the crypto circle who have never experienced a bear market. In a bull market, anything bought makes money; even if there are occasional adjustments, it quickly rebounds. Of course, they don't feel any risk, thinking it will rise back anyway, so they dare to buy and hold blindly. This kind of blind holding is not due to courage, but ignorance. When the market turns bear, everything bought loses money, and the losses are huge. These people will panic. At that time, if you ask them whether they dare to hold, I estimate that most will explode: only fools buy coins! You buy coins, your whole family buys coins!
And those who say holding relies on faith, I want to ask: What is faith? How many people don't even know what Bitcoin and blockchain are, yet talk about faith? If you don't have a deep understanding of something, and do not have a profound sense of identification, where does faith come from? Many people’s so-called faith is simply from making money in the bull market, becoming enamored with the wealth gained without great effort, which then turns into faith. I dare say that the vast majority of such people will have their worldview changed in an instant by a single bearish candle!
I can clearly tell everyone: The fundamental reason for investment success, aside from luck, is strategy! Strategy is the most reliable factor for success, not those vague beliefs.
I. Adaptive analysis of core strategies
5%-10% position management principle
Current situation: In 2025, the total market capitalization of cryptocurrencies is approximately $2.8 trillion, with Bitcoin's dominance rising to 59.1% and market differentiation intensifying. MEME coins and other speculative projects are highly volatile (e.g., TST's single-day increase of over 13,000% followed by a 90% crash), validating the risks of high positions.
Optimization suggestions:
Maintain a 5%-10% risk exposure, but adjust dynamically: it can be reduced to 5% in the mid to late bull market, and increased to 10% in the mid to late bear market.
Introduce a 'stablecoin reserve' mechanism: retain 20%-30% of funds in compliant stablecoins like USDC to meet liquidity demands during extreme volatility.
30%-40% base currency allocation
Current situation:
Bitcoin: The influx of funds from U.S. pension ETF strengthens its strategic position, with Standard Chartered predicting it may break $200,000 by the end of 2025.
Ethereum: Dragged down by the Layer 2 ecosystem, the price plummeted from $3,336 to $1,805, but may see a tech-driven rebound after the Cancun upgrade.
Ripple (XRP): Legal risks have been lifted after the SEC dropped the appeal, but institutional sales remain restricted, so control the allocation ratio (recommended not exceeding 10% of total base currency).
Optimization suggestions:
Adjust the base currency allocation to: Bitcoin 50% + Ethereum 30% + Layer 2 leaders (ARB/OP) 20%.
Introduce 'technical validation indicators': prioritize projects with on-chain TVL growth exceeding 50% and active developers (e.g., ARB's TVL surpassing $25 billion).
No swing trading principle
Current situation:
Market volatility remains significant, with Bitcoin's daily fluctuation often exceeding 10%.
Corporate leverage risks emerge: Some listed companies use convertible bonds to finance cryptocurrency purchases; a drop in prices may trigger forced selling.
Optimization suggestions:
Introduce a 'dynamic profit-taking' mechanism: when the asset price exceeds its historical high, sell 10% of the position for every 50% increase, locking in profits while retaining upside potential.
Combine with a dollar-cost averaging strategy: activate 'double dollar-cost averaging' when the price falls below the 200-day moving average, for example, doubling the investment amount each month until the price rises above the moving average.
II. Iterative direction for potential coin selection
Technology-driven projects
Layer 2 track:
Arbitrum (ARB): Holds a 54% market share in Layer 2, leading protocols like Uniswap and Aave have migrated here; recommend allocating 10% of the total base currency.
Eclipse (ES): An innovative solution combining Solana's high performance and Ethereum's security, with a first-day price increase of over 200%, but be wary of liquidity risks.
AI + Blockchain:
Bittensor (TAO): A decentralized AI network, with the token's annual growth exceeding 90% and rapid expansion of its subnet ecosystem.
MKB: Optimizes smart contract execution through AI, controlling price fluctuations within ±7%, with support from traditional financial institutions.
Key points of risk control
Avoid purely speculative projects: For example, the TRUMP coin issued by the Trump family plunged 90% in market value; beware of 'political MEME coins' without actual application support.
Compliance screening: Prioritize projects that have passed the Hong Kong Monetary Authority's stablecoin regulation (like USDC) or are included in the SEC ETF approval list.
III. Strategies for responding to new market variables
Impact of regulatory policies
USA: (FIT21 Act) promotes compliance, but the approval process for altcoin ETFs is slow; attention should be paid to the SEC's classification of Layer 2 tokens.
Hong Kong: A stablecoin licensing system will be implemented in August 2025, and compliant stablecoins like USDC, DAI will become mainstream tools for cross-border payments.
Response measures:
Allocate 5%-10% of funds to compliant stablecoins to enjoy policy dividends.
Avoid holding tokens that have not been classified as securities (e.g., altcoins not included in ETFs).
Macroeconomic linkage
Federal Reserve policy: If interest rates are lowered in the second half of 2025, Bitcoin may surge to $250,000; if high rates are maintained, safe-haven assets like gold (+18%) may divert funds.
Corporate behavior: MicroStrategy's leveraged coin purchase model poses systemic risks; attention should be paid to the financial reports of publicly listed companies holding Bitcoin.
Response measures:
Allocate 5% of funds to gold ETFs (like GLD) to hedge against interest rate risk.
Track Coinbase's holding reports to avoid tokens associated with highly leveraged companies.
IV. Practical tools and technique upgrades
Smart contract audit
Use tools like Certik, OpenZeppelin to review project code, focusing on:
Reentrancy protection (ReentrancyGuard)
Access control (Ownable)
Oracle security (Chainlink aggregator)
On-chain data analysis
On-chain indicators:
Net flow of exchanges (changes in exchange wallet balances)
MVRV ratio (Market value to realized value ratio)
Changes in miner holdings (Glassnode data)
Tool recommendations:
Nansen tracks whale address movements
Dune Analytics analyzes DeFi protocol TVL
Psychological construction plan
Stress testing:
Simulate response strategies after the asset price is halved, including capital addition capability and psychological tolerance threshold.
Establish an 'emotional log' to record the psychological state during each trading decision to avoid repetitive emotional trading.
V. Risk warning and exit mechanism
Hard stop-loss rules
Technical stop-loss:
Reduce 50% of the position when breaking below the 200-day moving average and when trading volume increases.
If the closing price is below the previous support level for 3 consecutive days, liquidate the position.
Fundamental stop-loss:
The core team of the project has lost more than 50%.
Regulators explicitly classify the token as a security.
Exit timing selection
Cycle judgment:
When Bitcoin's market capitalization exceeds 65%, enter the end of the bull market and gradually reduce to a 5% position.
When DeFi TVL has decreased for 6 consecutive months, it indicates that the market is entering the mid-bear market; retain 20% stablecoins + 80% cash.
VI. Structural opportunities for long-term layout
Cross-chain infrastructure
Recommended projects:
Multichain (MULTI): Supports 30+ blockchain cross-chain, despite a 27.5% drop in Q1 2025 TVL, it remains a core hub of DeFi.
Axelar (AXL): Provides decentralized cross-chain communication, with token staking annualized returns reaching 18%.
Emerging market opportunities
Latin America and Southeast Asia: During the dollar strengthening cycle, local investors increase their Bitcoin holdings to hedge against local currency depreciation, allocate 5% of funds to USDT-pegged regional stablecoins (such as USDS).
In this uncertain market, the only certainty is change itself. If you currently feel helpless and confused in trading, want to learn more knowledge about the crypto circle and get first-hand cutting-edge information, click on my avatar to follow me, and never get lost! @加密大师兄888 Understanding the market clearly gives you confidence in your operations. Steady gains are much more practical than fantasizing about getting rich quickly.