Survival Guide for Cryptocurrency (Professional Edition)

1. The wisdom of waiting for opportunities: Long-term value investing

1. Market cycle laws

The cryptocurrency market is highly volatile, with prices often exhibiting a cyclical pattern of 'bull and bear alternation'. As mentioned in the hunting example of a cheetah, excellent investors should remain patient like a cheetah, gradually building positions at low points during a bear market, and waiting for the market recovery to bring value back. Data shows that Bitcoin has historically broken previous highs after every crash, and sticking to a regular investment strategy can effectively average down costs.

2. Value screening system

A project evaluation framework needs to be established: focus on underlying technological breakthroughs (e.g., ZK-Rollup scaling solutions), ecological development data (on-chain TVL, daily active addresses), team background (core technical members' resumes), and other hard indicators. For example, Layer 2 projects in the Ethereum ecosystem have become a key focus for institutional holdings due to their practical value in solving gas fee pain points.

2. The deadly trap of chasing highs and cutting losses

1. Behavioral finance analysis

Neuroeconomics research shows that when cryptocurrency prices surge, the brain's nucleus accumbens (reward center) is activated, producing an addictive impulse similar to gambling. This physiological mechanism leads 85% of retail investors to buy high due to FOMO emotions. The surge and crash of the DOGE meme coin in 2021 is a typical case, where most late buyers suffered an 80% drop after buying at the $0.7 peak.

2. Quantitative data warnings

According to statistics from Bybit exchange, in Q1 2023, contract traders who operated frequently (more than 3 trades per day) had a loss probability of 92%, while users who traded on average once a month had a profit ratio exceeding 67%. The slippage loss and transaction fees caused by high-frequency trading consumed most of the profit.

3. Survival rules of contract trading (high-risk warning)

1. The mathematical lethality of leverage

Assuming using 10x leverage to long BTC, a 10% price drop triggers liquidation. Data shows that during the LUNA collapse in 2022, the contract market experienced $4.68 billion in liquidations within 24 hours, with 83% being high leverage (5x or more) positions. Even with low leverage below 3x, extreme market conditions could still lead to forced liquidation due to liquidity exhaustion.

2. Black Swan defense strategy

For investors who insist on participating in contracts, a risk control system must be established: no single trade should exceed 2% of the principal, set dynamic stop-loss and take-profit (e.g., automatically exit if the moving average drops by 5%), avoid holding overnight positions (to mitigate volatility during US stock market openings). During the US banking crisis in March 2023, Bitcoin surged 20% within 2 hours, and shorts without stop-losses collectively faced liquidation.

4. Recommendations for a robust investment framework

1. Asset allocation pyramid

It is recommended to divide investment funds into three parts:

• Bottom layer (60%): Regular investment in mainstream coins like BTC/ETH

• Middle layer (30%): DeFi blue chip protocol tokens (e.g., UNI, AAVE)

• Top layer (10%): Experimental positions in emerging sectors (e.g., LSD, RWA concepts)

2. The art of cash flow management

Adopt a 'currency-based + fiat-based' dual-track strategy:

• In a bear market phase, regularly buy BTC with fiat currency (currency-based appreciation)

• In a bull market phase, gradually convert to stablecoins and conduct USDC savings through compliant platforms (e.g., Coinbase) (current annualized rate about 4.2%)

Conclusion

Real investment is a process of cognitive realization. It is recommended to spend 1 hour each day studying CoinDesk industry reports and Messari annual research reports to build an understanding of the underlying logic of Web3. Remember Buffett's famous quote: 'Risk comes from not knowing what you are doing.' Use knowledge to build a moat, so you can advance steadily in the wave of cryptocurrency.