The art of bottom fishing: How to elegantly 'pick up bargains' amidst panic in the crypto market.

When the exchange app stops pushing notifications about price changes, and the community is eerily quiet, perhaps it is the moment when opportunities quietly arrive.

'Bitcoin has halved again!' 'Ethereum has dropped below XXX dollars!' Behind such panic-inducing headlines lies a cruel yet real question: Is this really the end? Trying to precisely catch the lowest point of cryptocurrencies is harder than catching fireflies at night. However, if we shift our mindset and stop pursuing that exact 'lowest point,' but instead look for the 'bottom area,' our chances will significantly increase.

One, wisdom across cycles: how the big players layout.

Although Buffett never invests in cryptocurrencies, his investment philosophy is equally applicable: 'Be fearful when others are greedy, and be greedy when others are fearful.' This saying is even more applicable in the highly volatile cryptocurrency market.

Pantera Capital CEO Dan Morehead once shared: 'The average cycle of the cryptocurrency market lasts 4 years, with about 90% of the time in an upward trend and only 10% in a downward trend.' This means that for most of the time, you should patiently wait, only taking action when the market is in extreme panic.

Ancient Chinese wisdom is also similar: (Records of the Grand Historian · Treatise on Economic Affairs) records Fan Li's business philosophy of 'prepare for winter in summer, and prepare for summer in winter,' which means preparing goods for winter in summer and preparing goods for summer in winter. This counter-seasonal thinking is the core of bottom fishing.

Two, identifying the four major signals of a cryptocurrency bottom.

The exchange is as quiet as a library.

When the number of active users on exchanges significantly declines, and even the most active trading groups are silent, this dead silence often indicates that selling pressure has been fully released. Just like the last raindrops of a heavy rain, although sparse, it is nearing the end.

Valuation indicators return to historical lows.

When MVRV (Market Value/Realized Value) ratio, NUPL (Net Unrealized Profit/Loss), and other on-chain indicators reach historically low values, it often indicates that the market is oversold. These data serve like a thermometer, objectively measuring the market's 'fever' level.

The fear and greed index shows extreme fear.

When the index continues to stay below 20, even reaching single digits, the community is filled with voices of 'zeroing out' and 'scams,' and even seasoned players begin to doubt life, the bottom may not be far away.

Good news is ignored.

Even when significant technological upgrades and well-known institutions enter the market, if the market still declines or remains indifferent, this 'good news does not rise' is often a characteristic of the bottom.

Three, practical bottom fishing strategies for ordinary players.

1. Spot investment + pyramid strategy.

Do not go all in at once, but adopt a strategy of 'regular investment + adding positions during major drops.' For example, divide your funds into 12 parts, invest 1 part monthly, but when there is an extreme drop of over 20% in a single day, add an extra 1-2 parts.

2. Prioritize mainstream coins.

When bottom fishing, choose those mainstream coins that have actual users, active development, and stable communities, rather than buying altcoins simply because their prices are low. Bitcoin and Ethereum are usually the safest choices, like the 'blue-chip stocks' of the cryptocurrency world.

3. Diversify but don’t overdo it.

Allocate funds to 3-5 different quality coins in various sectors (such as public chains, DeFi, storage, etc.), but do not overly diversify into projects you don't understand. The cryptocurrency market has high correlation, and excessive diversification does not effectively reduce risk.

4. Patience is more important than technology.

After bottom fishing, you may continue to be trapped for six months or even longer, just like planting seeds and waiting for them to sprout. After Bitcoin plummeted to $3,800 in March 2020, many people successfully bottom-fished but still missed the subsequent rise due to a lack of patience.

Four, the must-watch traps for bottom fishing in the crypto circle.

1. Catching the falling knife

Some coins decline due to fundamental problems such as project parties running away or smart contract vulnerabilities; such coins may directly go to zero. How to distinguish? The key is to judge whether the project's fundamentals are still intact.

2. Leveraged bottom fishing

Borrowing money or using leverage to bottom fish is the most common way to go bankrupt in the crypto circle. Even if you see the right direction, you may still be liquidated due to short-term fluctuations, falling at the darkest moment before dawn.

3. Blindly bottom fishing altcoins.

Many altcoins have amazing gains in a bull market, but the declines in a bear market are even more brutal. Some projects may never return to their previous highs, and bottom fishing such coins is like trying to salvage gold coins from a sunken ship, which is extremely risky.

4. Exchange risks

Even after bottom fishing, you may still lose everything due to exchange crashes. Remember 'Not your keys, not your coins'; it's best to keep substantial assets in wallets where you control the private keys.

Five, the psychological qualities essential for bottom fishing:

Bottom fishing not only tests technology but also tests mentality. Successful bottom fishers often possess the following traits:

The courage of contrarian thinking: daring to swim against the tide when the market is filled with pessimism.

The humility of admitting mistakes: If you find that you judged incorrectly, being able to decisively stop loss and admit mistakes.

Extreme patience: willing to wait for the process of value discovery, which may take years.

Discipline in capital management: always adhere to your investment discipline and do not change plans due to FOMO.

Crypto magnate CZ once reminded: 'Bull markets are born in pessimism, grow in skepticism, mature in optimism, and die in euphoria.' Bottom fishing is not about striving to be a hero, but calmly picking up the coins it has dropped when the market collectively makes mistakes.

Remember: the goal of bottom fishing is not to buy at the lowest point, but to buy at relatively low positions; it is not a one-time gamble, but a phased layout; it is not blindly fighting, but calculated risk-taking.

The cryptocurrency market always has opportunities, and preserving capital is always the top priority. As long as you still have chips in hand, there is no fear of not having a chance to turn things around. I wish everyone a steady journey in cryptocurrency investment!