How to take advantage of sharp declines and spikes to achieve excess returns?

To gain something, one must lose something.

If you want to utilize spikes, you need to maintain an appropriate short position.

The previous section has analyzed;

When the price is at recent highs, leverage should not exceed 1.25x. This way, when the price reaches the lowest point (-80%), it can just avoid liquidation. However, if this is the case, there will be no room for bottom fishing. If you hope to bottom fish for higher Alpha, you need to reduce leverage at high levels and increase leverage when bottom fishing.

Short position ≠ letting money sit idle:

When prices are high, the market borrowing rate is also very high (25%±).

The simplest method is to put it into U financial products to earn reward annualized returns (35%±).

Currently, the reward annualized return on Binance is 1000 U per account, and one person can manage at least 3 accounts. Binance internal transfers are free, so that totals 3000 U.

This is just Binance; with a little learning, there are also CEXs with USDe reward annualized returns (50%). These amounts are completely sufficient for small investors under 100,000 U.

There is also on-chain staking, which I won't mention here as it requires a lot of time to find, and is not recommended for small investors.

Summary:

Leverage bottom fishing during sharp declines

Utilize low-interest U and negative interest contracts

Reduce leverage and maintain part of a short position at high levels,

While simultaneously obtaining ultra-high guaranteed annualized returns.

I have been hanging several hundred orders for years; if there's a spike, I will definitely catch it, and after catching it, I will place a sell order and never use market orders.

Current personal practice of leverage ratios compared to recent high points:

100% 0.7x

70% 1.0x

50% 1.5x

20% 2.0x

Note: When using leverage, be sure to first ensure sufficient margin (configured at 1.25x), and then engage in annualized returns. Don’t lose sight of the main goal; the margin base can be exchanged for BFUSD to automatically cover the funding fees.