Source: Huali Huawai.
At this stage, the overall market sentiment is still not bad. Many seem to have lost motivation and patience for investing. Even a few days ago, some partners in the group left messages telling me that they have already exited (retired) and are no longer playing.
From the current trend or data, the market seems to be in a rather interesting (or strange) state. On one hand, the BTC balance on exchanges is declining, and the stock has dropped to 2.18 million coins, as shown in the image below.
On the other hand, the balance of over-the-counter (OTC) trades is also at a historic low, as shown in the image below.
This may indicate that the demand for spot trading is continuously dwindling, and funds (including institutions) are remaining cautious. Overall, the market seems to be in a boring state with no one buying or selling.
Since January of this year, the market has experienced significant retracement. Many people have slowly woken up from the thrill of last year’s Q4 gains. After going through a brief monkey market, we currently seem to be experiencing a crab market (sideways, as crabs walk sideways).
Now everyone seems to be waiting for the opportunity for the market to reverse. This opportunity might come from some new policies from the US (the first week of April will be crucial, as there will be discussions on tax policies, non-farm data, unemployment data, Powell's speech, etc.), or it might come from a new blockbuster innovation in the crypto field (an internal catalyst), but currently no one knows. And if we cannot wait for such external or internal catalysts in the short term, but you still wish to persist in this field, then there are two things you need to pay attention to:
- Try to stay away from things that can drop to zero at any time, and start to refocus on some truly useful things.
- Maintain a good mindset, continue to reasonably optimize your positions, and prepare in advance for the next opportunity.
Because if you remain immersed in the current volatility or PvP speedrun games and cannot come out, even if the market presents new opportunities, you may continue to suffer heavy losses (such as larger losses) without being prepared.
Many people, after experiencing a significant market fluctuation or roller coaster-like行情, not only suffer from their positions (invested capital), but may also face some psychological issues, such as hoping the market will give them another chance to break even, wanting others to tell them a coin that will quickly turn them around, and feeling compelled to check the exchange/wallet multiple times a day to see balance changes... But often, the more this happens, the more you regret your initial decisions, and the deeper you fall into a pessimistic mindset.
At this time, the market takes away not only your money but also your physical and mental health.
So, how can we avoid encountering the same problems again or overcome such issues as much as possible?
1. Try to reduce the time spent watching the market.
The market is cyclical. As long as we are still in this field, there will be new opportunities, but new opportunities often come to those who are prepared in advance. So, what have you prepared now?
As we mentioned in previous articles, if watching the market could change its direction, then I would be willing to watch it 24 hours a day, but these are unrealistic.
To put it bluntly, if you really can’t hold on and the XX coins you’re currently holding are seriously affecting your sleep quality, then it’s time to cut your losses and do it without hesitation.
It might be better to temporarily distance yourself from some market noise and use this time to think and review your past trading notes.
Learn to admit failure, and more importantly, learn to bear failure. The most important thing is to use failure to improve your strategy or trading system.
In summary, do not let 'losses' dominate your next path, but let your strategy determine your future direction. Up until now, although you may have incurred some losses, if we look at it from a different angle, you are actually ahead of many people because you have already deeply experienced the cruelty of the market, and you clearly understand what you should do next and what you should avoid.
2. Learn to respond proactively rather than just waiting.
If someone tells you that there may be a new opportunity in the market within this year, do you have a response plan?
If someone also tells you that the market has now entered a new bear market cycle, do you have a response plan?
As we mentioned earlier, although everyone is focused on bull and bear markets, the market is really composed of only three structures: rising, falling, and sideways. As long as the market is volatile, there will always be various opportunities to make money. What we need to do is explore those things that suit our time, energy, and risk preferences, and then persistently repeat them.
Many say that investment requires patience, but this patience is not simply waiting; it is about learning to respond proactively. In other words, you need to position yourself correctly and maintain patience to persistently execute your trading strategy.
So, what are some basic strategies or thoughts that are suitable for most people?
In last year's e-book (Blockchain Methodology), we have shared a lot on this topic. Here we will briefly understand several aspects again:
1) Execution strategy based on DCA.
DCA can be understood as a dollar-cost averaging strategy requiring sufficient patience. For example, if you consistently buy BTC during a bear market, you can operate weekly or monthly, and then patiently wait for the bull market to start selling in batches.
This strategy requires persistence and patience, and there are several important considerations, including:
- Large positions should only target long-term investments in BTC, with positions still being at least 50% or more.
- If you like altcoins, be sure to choose those with actual utility and long-term development visions, while also paying attention to the partial ratio of positions.
- Don't get addicted to any MemeCoins. If you want to speculate, only use a small amount of capital that you can afford to lose completely.
- Don't always try to buy at the bottom; DCA ≠ bottom fishing.
- Ignore noise, stay focused, and persevere. The core pursuit of this strategy is the idea that 'slow is fast.'
2) Entry based on narratives.
As mentioned above, if you like altcoins, make sure to choose projects with actual utility and long-term development visions. The key here is a choice, and we believe the best strategy for selection is based on narratives.
The market first has narratives, and then drives the corresponding tokens in the sector to rise. Therefore, when selecting projects, we should prioritize considering narratives rather than just thinking about buying a certain token.
For example, if you think which narrative among AICrypto, RWA, DeFi, DePIN, etc. may have new opportunities coming up next, you should explore the corresponding narrative in advance. This way, before the new round of bull market or new phase opportunities arrive, you are more likely to grasp the chances better than others.
Of course, regarding the narrative issue, we can also appropriately use some on-chain tools to assist our research, such as:
First, let's see which narratives are starting to gain traction currently. As shown in the image below, the heat for Oracles seems to be on the rise.
Next, look at the corresponding project list in the relevant narrative, as shown in the image below, and continue to see what projects are under the Oracles category.
After selecting the narrative goals and some alternative project lists, what we need to do next is to conduct research on different projects based on some dimensions we believe to be valuable.
For example, we can score projects through a breakdown method. Here, we continue to list several dimensions for project research:
- Team dimension, that is, whether there is a reliable and experienced team behind the project that can continuously build on the project.
- Development dimension, that is, whether the project has a clear business model or a sustainable profit model.
- Market fit, that is, whether the project’s corresponding product can find a fit in the market, or whether the project product has a clear PMF (Product Market Fit).
- Token economics, that is, whether the project has good tokenomics, including the distribution ratio or method of tokens, whether the tokens can be smoothly sold in case of release (having continuous buyers), etc.
- Narrative attributes, that is, whether the project can align with market trends. For example, if the market is hyping AI, then AICrypto will have a tailwind advantage. Similarly, if major institutions are trying to promote asset tokenization, then RWA will also have a tailwind advantage, etc.
You can organize the above dimensions into an EXCEL spreadsheet, then set different scores based on your priorities (the priorities you focus on) for each project, and finally choose specific projects based on your actual scoring results, combined with on-chain indicators (including K-line) to determine the timing to enter, and long-term bet on the corresponding projects.
We have provided specific demonstrations on scoring projects earlier, and interested friends can look back at the corresponding historical articles, as shown in the image below.
According to data from Dextools, the current number of tokens in on-chain DEX has exceeded 16.81 million (note that these are tradable tokens; if we sum all the tokens created on-chain, the estimated total is already 40 million). Therefore, through the narrative-based approach mentioned above, you can somewhat reduce the time and energy spent blindly selecting tokens.
In summary, if you don't have much time or energy for research but don't want to miss out on opportunities in this field, the simplest way is to stick to DCA strategies and invest in BTC. If you still wish to obtain more and higher return opportunities through altcoins, you can try to customize a project research plan for yourself. As for those who still hold onto the mindset of getting rich overnight and hope to quickly change their lives by asking others for wealth passwords, we have no good advice, only wish you good luck.
3. Other choices besides trading.
Additionally, in this field, aside from making money through trading spot, contracts, and futures, there are actually other methods to choose from, depending on your interests and willingness to invest effort.
For example, almost zero-cost testnet airdrop interactions. You can experience various dApp interactions without worrying about wallet theft (using wallets with multiple small assets), and you can also gain a good understanding of specific projects for learning purposes, such as the recent interactions in networks like Monad and MegaETH.
For example, on-chain financial products that at least won't incur losses. If you have some principal but don't want to bear market volatility, participating in some financial products is also a good choice. Some new projects' financial products (staking financial products) might even come with additional airdrop opportunities. If you research well, achieving an annualized return of 10-15% is still possible. Of course, you need to pay attention to the risks of the project, such as only choosing stablecoin financial products and not buying any altcoins for staking just for the sake of high returns, while also carefully assessing the risks of the project (running away or being hacked).
Alternatively, if you also enjoy writing, consider starting a content column similar to Huali Huawai. If you like to show your face, you can even start a video column or live broadcast column... etc.
In short, different people should make different choices (stick to 1-2 things you believe in and are willing to invest in long-term), and different choices may lead to different results. The bodhisattva fears causes, while sentient beings fear results.
The market is cruel, volatility is merciless. Only those who prepare in advance during the market silence, and those who can maintain inner peace while most people collapse, are likely to achieve the results they want amidst the new chaos. An individual’s return on investment is often determined by their trading discipline and personal mindset.
Peace of mind, Keep moving forward.