Written in front:
I entered the cryptocurrency industry in 2016 and have witnessed many ups and downs, including myself. I have many friends who have worked in the industry, including those in technology, private equity, and project teams. They have been in and out for many years...
As time goes by, we have a deeper understanding of the roles involved in the cryptocurrency circle and various aspects of the industry (exchanges, project parties, VCs, small investors, market makers, media, KOLs, miners, big investors, dog dealers, secondary quantitative investment, on-chain arbitrage, etc. Each role has different interests and ways of survival).
Especially for the small retail investors who account for the largest proportion, I don’t know how to describe many of their behaviors. It’s outrageous and very stupid! For example, there are people who recharge A7 and A8 level funds to enter the market. In reality, they are also business owners. They heard about an analysis article of less than 200 words from a certain self-media, and they dared to rush in. In the end, there is a high probability that they will lose money. These people will definitely not make such impulsive and hasty decisions in real life and when doing business. Why are they so stupid in the financial market?
Many people do not even have the basic knowledge of trading, but they dare to open contracts right away, hoping to become the one chosen one among thousands. The result is often cruel.
There are too many examples like this. The most common one is that when the market turns good, a bunch of leeks ask everywhere for the "wealth code". Can what you can tell in public be called the "wealth code"? Who would post a message to tell you that there is such easy money to be made in the financial market?
There are also many misunderstandings in trading, especially for newcomers who have been in the circle for one or two years. Their reason for buying spot is to see a piece of news in the media (actually, it is what others want you to see and believe), or to read two pieces of analysis on self-media (actual analysis and trading are completely different things!). Most of the contract orders are opened without any logic, randomly and at will, with 800 directions a day (there is no concept of trading system and model).
The most popular thing on the self-media in the Chinese circle is to directly give a support and resistance level number, and then write two simple indicator data based on the number, without any analysis or reason, and then give a long or short direction. There are a lot of posts like this because small investors like to read them and believe them.
Is it so easy to make money in the financial market? Have you ever understood the cruelty and bloodthirstiness of the financial market?
I have thought deeply about these issues. The biggest problem of small investors comes from cognition - lack of cognition of the financial market! In the end, most of them leave the market with losses, including those who once made money by luck, but they will eventually lose money by cognition.
Most small investors may rarely stop to think seriously. Just look at what topics they pay attention to. One of the most popular people in Douyin’s financial circle is the “Loss King” “Wang X Yu”. The same is true in the cryptocurrency circle, without naming names. I don’t understand the point of paying attention to these things.
Finance is a zero-sum game, and cryptocurrency finance is a negative-sum game (because there are large vampire groups and trading platforms).
Negative-sum game + Dark Forest + unregulated and highly manipulated market. First, you need to survive for a long time, how to avoid losses and how to avoid pitfalls. Only by surviving can you make money later.
Some obvious pitfalls and trading misunderstandings have been encountered by countless people in the century-long financial history, and many celebrities, masters’ quotes and books have warned against them. Unfortunately, history keeps repeating itself...
Next, if I have enough time, I will do a series of cognitive courses, instead of those specious, general and useless articles on success.
It must be close to the present and close to actual combat, and should be something that few people in the circle dare to talk about, and it should hit the key points.
Including how to avoid pitfalls, practical methods of trading and entering the market, etc.
A few days ago, I wrote a long article about the copycat season. I stayed up for several hours typing it by hand, but only finished half of it. After I posted it, my friend said that no one would read an article that was too long. They all like short, concise and quick articles.
I don’t want to write any more. I wanted to share some useful information as the spot market is not in good shape recently, but the result is so disappointing.
I originally planned to write a long and systematic article on the topic today, combining multiple current cases and the experiences of various masters in financial history. Once it is expanded, it will be very long, possibly tens of thousands of words.
It takes a lot of time to explain a cognitive misunderstanding in depth in combination with actual combat, and no one likes to read long articles. So forget it.
In today's first lesson, I will briefly talk about the media section, but I won't go into detail. If there are many interested people and the response is good, I will discuss it in more depth later.
A compulsory course for the recognition of leeks—01: Media is one of the sources of leeks’ losses!
The first big loss I suffered was in the September 4th incident in 2017. At that time, I knew very little about the cryptocurrency world and financial games. One or two months before 1994, I entered the cryptocurrency world by negotiating a cooperation agreement with a friend who was an LTC miner.
After the 9.4 document was released, it was over-interpreted by mainstream media, who thought that the industry was going to be destroyed and all exchanges would be shut down. I was so scared by the panic that I quit the cryptocurrency business. In the end, I missed the big market at the end of 2017. There were a lot of 100x coins, and the scariest thing was that a young man from Shenzhen named Ohzora Tsubasa bought IOTA for more than 10,000x. The media and the group reported and promoted it, and I couldn't help but rush into the market again, but I didn't even get to drink the soup.
Such a big loss happened again on 3.12, and I sold all my chips at a very low price.
I have suffered a lot of small losses when trading in the secondary market, and I am often influenced by the media, including self-media, and make wrong decisions.
After the 21-year bull market, I have thought deeply about the issue of wrong decisions. In addition, I have always had the habit of reading and learning, and I have read some classic books. It turns out that the masters in the history of finance have talked about such topics and experiences. I have a deeper understanding of the root causes of wrong decisions.
Wrong decisions are often caused by "excessive emotions", and "excessive emotions" are excessive fear and greed (FUD/FOMO).
So where do excessive fear and greed come from? How are they transmitted and amplified step by step?
The emotions of fear and greed have been exaggerated, and the biggest role played by them is undoubtedly the media (including self-media).
Transmission links in the currency circle:
News/event occurs——(Dog market makers cooperate to pull up/dump the market)——Mainstream media reports——We media/KOLs follow up and interpret——Community/community sentiment spreads——Small investors’ fear/FUD or greed/FOMO deepens——Making emotional buy/sell decisions
The premise of all this is that the majority of small investors do not have the ability to conduct independent analysis and their cognition is not in place. This is the real situation and fact in the cryptocurrency world!
Comparing with the "copycat season" event, from 23 to 25, the mainstream opinion reversal of the existence or non-existence of the "copycat season" has been experienced several times, which clearly confirms the above link.
Here’s how it all happened:
Starting from the Bitcoin ETF incident in 2023, various media/self-media have interpreted and analyzed it in long and short articles, including historical cycle data of the cryptocurrency circle, halving, favorable policies, interest rate cuts, institutional entry, bull and bear indicators, project narratives, elections, Trump's new policies, etc. Almost all the events that have happened and potential events in the future have been interpreted 10,000 times.
At that time, the KOL posts that were forwarded and popular included diamond hands guides, 100x coin charts, and some beautifully made pictures that could be seen everywhere in the group. From 2023 to 2024, everyone should have seen a lot of them. What's even funnier is that in 2024, I saw several posts that guided how to live after getting rich in the bull market.
The words create a feeling that the bull market is coming and the altcoins will become rich in the future. They imagine the future altcoin bull market, look forward to it, and have a beautiful dream of becoming rich.
In this atmosphere, the emotions of small investors will definitely be directly affected, and then they will enter the market to ambush their favorite altcoins and wait for a sudden fortune. The final result is a continuous decline, and the new altcoins almost all start with an 80% drop from their highs. The worst case scenario for me was that I listened to the orders of multiple KOLs and bought a large amount of STRK and ARB, two of the four kings of ETH.
The most famous one during this period was Sha Po Lang, one of the biggest KOLs in the cryptocurrency circle, who openly called for the Shanzhai Season. His analysis post received 8.66 million views on Twitter, making him a top influencer in the cryptocurrency circle. In December 2024, he published a countdown to the Shanzhai Season every day. (In the end, the Shanzhai Season did not come, and the retail investors who were influenced by this sentiment suffered a lot.)
Back in December 2024, the media was talking about the Spring Festival market again, and there was also a historical data chart. Many people have seen it. (Another picture of carving a boat to find a sword)
In the end, the Spring Festival market did not arrive.
Recently, in the 25th year, the counterfeit market has continued to fall. Until the news of Trump's tariffs came out on February 3, the counterfeit market crashed (actually it has nothing to do with this, and will be discussed in another important cognitive class topic later).
After the collapse of the copycat, it then entered the media interpretation stage, and the self-media's overwhelming analysis and interpretation amplified the FUD sentiment (in fact, some posts are one-sided, examples will be given later).
Most people’s opinions and the message conveyed to retail investors is that there will be no more copycat season. Recently, everyone should have seen several posts every day saying that there will be no copycat season.
Affected by this kind of mass FUD sentiment, most small investors have already made the decision to sell. (We will not discuss the results after selling here, but only discuss how the decision-making process is influenced by the media)
The above is the process of small investors from the occurrence of event news to being influenced and making decisions. These decisions influenced by "excessive emotions" are often wrong in hindsight! Think about Buffett's most famous quote.
These cases keep happening and will not stop.
Careful friends will find that the mainstream views of the media have been changing during this process.
Let’s take a look at an obvious example, where the mainstream view on ETH’s future market has changed dramatically:
The main viewpoint changes of the media and self-media: from changing the world in 2021 and surpassing Bitcoin (this view was popular for a while at the time), to worshipping Vitalik Buterin as a god - to the garbage coins in 2024, even Vitalik Buterin has become a Vitalik Buterin dog.
Like ETH, SOL has also experienced several 180-degree changes in mainstream opinions - from being praised to the sky in 2021, to being stepped on the ground in 2022, and then to being praised to the sky again in 2024.
There are so many examples...
(If you are still led by the media, you are destined to be the leeks that are cut)
The most systematic and theoretical interpretation of "excessive emotions" belongs to Wyckoff. He is one of the famous people on Wall Street. I strongly recommend you to read his books. His most famous volume-price theory is still used all over the world today.
Combining his own practice with his own theory, it is also related to the background of the times he lived in. In his time, the US market was severely manipulated, supervision was not in place, and conspiracy groups were prevalent. The same is true in the cryptocurrency world today.
In Wyckoff's trading method, one of the core contents of his theory is that insiders mislead and induce retail investors' operations by manipulating market appearances and media information.
Insiders manipulate the media to influence the emotions of retail investors, causing them to do wrong things.
For example:
Distribution stage: When the main force needs to sell at a high level, it often spreads good news through the media (such as company performance growth, optimistic industry prospects, etc.) to attract retail investors to follow suit and buy.
Accumulation stage: When accumulating funds at a low level, the main force may exaggerate market panic (such as economic recession, policy risks, etc.) through the media, prompting retail investors to sell cheap chips, creating conditions for the main force to absorb at a low price.
The core of this operation is to take advantage of the herd mentality of retail investors and their dependence on media information, making retail investors passive participants in market fluctuations.
Why do media/self-media want to exaggerate the impact of events when interpreting events and news? This will naturally create excessive fear/FUD, or greed/FOMO emotions.
Mainly because of the characteristics of the media, the interests and the way of survival. The lifeblood of the media/self-media lies in traffic. If there is traffic, there is revenue. In WEB2, it is called the attention economy.
Anyone who has worked in self-media knows that if you want to have good traffic, you must have topics and hot spots. Hot spots are the most critical factor for traffic. If you don’t use hot spots, there will be no traffic, and the official will not give you traffic.
What is a hotspot?
The daily increase list shows which coins have increased and become popular. If you talk about them, they will attract traffic. (Isn’t this one of the reasons why investors chase the increase and get cut? Most small investors don’t have the time and ability to do research and analysis. When they see the analysis from the self-media, it seems to make sense and they rush in with their eyes closed.)
The topics that are currently receiving the most attention are also hot topics.
Think carefully about the self-media accounts you often see. The ones with good traffic are about which coin is rising well and what is popular on the day. Because the more it rises, the more retail investors pay attention to it. The general psychology of retail investors is to look for news, reasons and causes when the price rises. They want to understand the reasons behind the rise to consider entering or exiting the market.
It is the job of the media to take advantage of hot topics. This is where their income comes from. They never make money from the trading market. Attention and traffic are how the media makes money.
Remember, as long as there is a market, financial media will continue to chase hot topics every day without stopping.
So how to zoom in?
After an event or news occurs, the media must interpret it. However, there are many self-media interpreting at the same time, all wanting to get more attention, or "attracting attention". Naturally, in the process of interpretation, they will deliberately magnify the impact of the current event or news.
There is also an obvious phenomenon in the current cryptocurrency self-media: the proportion of posts that provide emotional value is increasing. This is because such posts can gain the empathy of the leeks and thus attract their attention.
For example, those who curse CZ, those who curse Vitalik, and those who curse ETH. When SOL and SUI were growing rapidly, there were emotional articles praising them.
Most of these posts come from self-media, and there are a lot of them. This type of post is the most harmful and has a huge impact on retail investors' decisions. Many retail investors who bought SUI and DOGE at high prices and sold ETH at low prices were influenced by such posts.
This type of post resonates with you through the subjective expression of empathy, subtly dominating your emotions without you even realizing it.
Always remember: stay away from any self-media that provides emotional value in the financial market! Because it deviates from rationality, and the foundation for long-term profitability in the financial market is rationality!
Regarding the interpretation of the role of the media in the financial market, the most exciting one I have seen is the one by star trader Anton Kreil, a former top trader at Goldman Sachs, who turned 25 million into 400 million in just 2000 to 2004.
I watched an interview with him, which focused on the role of the media in the financial market. He never watches or trusts the media. He completely revealed the role, survival methods and underlying logic of the media in the market, and his explanation was very eye-catching. I was very surprised at the time. Great people really have different perceptions.
In fact, many masters in history have repeatedly warned people not to listen to news, not to believe in the media, and not to act according to the media. These names or works are well-known.
From the originator of technical analysis (Dow Theory) that I first read, Hamilton's book, including his career, he also disliked the media's analysis. Livermore and the Reminiscences of a Great Trader mentioned it repeatedly. Wyckoff, the Japanese stock god Ginzo Ikawa, Bernard Baruch, Stan Weinstein and many others have talked about it.
Recently, a friend recommended me a book that has received good reviews in the domestic trading circle, (Thoughts of a Stock Market Geek), written by Peng Daofu. I'm currently reading it, and the first chapter focuses on the relevant issues, detailing his experiences of being repeatedly deceived by the media and mistakenly trusting them. It is recommended that friends who are new to the market should take a look.
As mentioned earlier, the media often only interprets one side of the story. Some of it may seem to make sense, but if you dig deeper, you will find that its influence is far less exaggerated than what the media conveys.
Let’s take a recent very famous news as an example to see if this is really the case? (I wrote it separately a few days ago and copied it directly here):
"There are now 36 million altcoins, an increase of more than 10,000 times compared to 2018."
You may have seen the news that has been trending recently in many media and KOLs. This news is often cited by self-media to prove the view that there is no copycat season.
This news first appeared in a post by the foreign analyst ALI on January 25, which began by asserting that there would be no copycat season. It was later quoted by various media outlets, and then exaggerated by various domestic self-media outlets.
At first glance, this data, combined with the interpretation of self-media, seems to make sense. From a few hundred to 36 million, isn't it despairing?
Is it really that pessimistic? Now let’s take a look:
Dune is a data source, but it counts all tokens issued on the chain, and most of these tokens are just zombie data living on the chain. (The long-tail junk assets on the chain are not even assets, but just codes living on the chain)
Only a small percentage of them actually enter the market. Even fewer can be listed on CEX. In the figure below, I made a confluence chart of the four major spot exchanges (not trading exchanges), Binance, K, base, XXXX. Sorry, it is difficult to mention other names here.
Among them, B has the most — 794, and Binance — 397. Most of the currencies in the four major exchanges overlap. There are only a few hundred, which is an increase compared to the previous round of data but far less exaggerated than reported.
There are 11 million digital currencies on CMC, mainly memes issued on Solana last year. Coinbase CEO said that 1 million tokens are currently created every week.
It seems like there are a lot of them, but in fact, they are all in one wave, with issuance, DEX, and death, and the cycle is very fast. To put it simply: there are many new issuances, and there are also many deaths.
Moreover, the actual transaction proportion of most of these on-chain assets is not large. I found the transaction volume data of DEX and CEX. The highest proportion of DEX is only 20% recently, and most of the time it is around 10%.
Also note that:
1. The majority of transactions in DEX are still mainstream altcoins that exist in CEX.
2. Such a large proportion can be achieved in the context of a bear market for altcoins. When the altcoin market comes, the proportion will be even smaller after the MEME chain market ends and funds flow back.
Therefore, the exponential increase of altcoins is a fact. However, its impact on the altcoin season is far less exaggerated than the media has portrayed.
Furthermore, the current volume of cryptocurrencies and global audiences have also grown exponentially, which can completely offset this. The following figure shows the growth data provided by Singapore’s payment company Triple-A in May last year.
Please note that the above are just examples, not to explain whether there is a copycat season.
In the face of media information, retail investors with low awareness follow this process:
Price drop/surge - media coverage - self-media over-interpretation and exaggeration - look for reasons/news/analysis - trigger fear/greed emotions - make wrong decisions.
The first eternal law of the financial market: only a few people can make money!
The result of media radiation is precisely the creation of the majority.
When most media outlets share the same opinion, friends, please stop and think carefully. If the result is really like this, wouldn’t most people be able to make money? This is a paradox.
When the media is jubilant and everything is going well, and you see the sky, you will see that every time is a high point...
This article is not to tell you not to read the media, but to help you avoid pitfalls and better understand the market. In the future, you can be more rational when facing the media and no longer blindly follow them. It is better to have no books than to believe in them blindly!
In addition, I have observed a phenomenon that mainstream media in the cryptocurrency circle are constantly shutting down and changing their appearance. However, since the 20-year bull market, the self-media KOL group has grown rapidly and in batches. What is the reason behind this? The answer is left to everyone.
To be able to read this far, one must be a very patient person!
There are many more examples, including some that are happening right now. I won't list them all.
If retail investors do not improve their market awareness, they will only be passive and get beaten!
I hope that everyone will remain rational in future actual combat and not be led by the media.
Every purchase and sale is a decision you make independently and rationally!
