After eight years of navigating the unpredictable waves of the crypto world and experiencing the painful events of three liquidations, those experiences are like a mark etched deeply in my heart. From being on the brink of bankruptcy with nothing to later achieving stable profits, even growing my assets to 20 million, the traps I’ve encountered and the experiences I've summarized may remind future traders to take fewer detours in this tempting and risky market.
1. Cycle anchoring: Timing the rhythm is more important than entering blindly
The speed at which the cryptocurrency market transitions between bull and bear markets often catches people off guard. After numerous setbacks, I deeply realized that I must firmly grasp the key point of the Bitcoin halving cycle. I start building my base position 18 months before each halving and gradually reduce my holdings 12 months after halving; this is a rule I have confirmed after stepping into numerous traps.
Before the Bitcoin halving in 2020, I followed this rhythm and allocated 60% of my funds to mainstream coins. Even during extreme situations like the 312 crash, I gritted my teeth and held on. Ultimately, this operation yielded me three times the profit. It's important to note that in this market, smaller coins often follow Bitcoin's lead, and Bitcoin's movements are closely related to the Federal Reserve's policies. Therefore, never go against the trend; following the trend is crucial for maintaining a foothold in the market.
2. Dynamic balance of positions: Surviving brings opportunities for a turnaround
"Surviving brings opportunities," this is the primary principle for survival in the crypto world, and the key to achieving this lies in the dynamic balance of positions. I have consistently adhered to the "30-30-30 rule" for managing funds: 30% of the base position is held long-term, serving as a stable foundation; 30% is for swing trading, capturing short-term opportunities in the market; and 30% is kept in cash to respond to emergencies.
During the LUNA collapse in 2022, the market was in panic, and many suffered significant losses. It was that 30% cash that gave me the opportunity to buy the dip when Ethereum fell to $1,000, thereby recovering a substantial amount of losses. Additionally, I never allow a single coin's position to exceed 20%, effectively avoiding a situation where a black swan event leads to total losses.
3. Signal filtering must be strict: Don't let emotions dictate your actions
In crypto investments, emotions are the biggest enemy. Every day when I open the market software, I only focus on three indicators to filter out various interference signals and avoid being swayed by emotions. I take profits decisively when RSI exceeds 70, reduce positions when the MACD daily line shows a death cross, and exit decisively if the main funds flow out for three consecutive days.
In May 2021, when Bitcoin surged to $60,000, these three signals appeared simultaneously. At that time, the market was euphoric, and many were shouting that prices would rise further, but I strictly followed the signals and cleared 80% of my positions. The decision proved correct, perfectly avoiding the subsequent halving market. In this market, the ability to control oneself and not be driven by greed and fear is crucial for making rational judgments.
4. Black box response: A preset plan is necessary to cope with sudden events
The cryptocurrency market is never short of sudden situations; policy changes, negative technical news, etc., can trigger severe market fluctuations. Therefore, I developed the "extreme market formula" to cope with these black box events. When prices drop more than 30%, first check the support level, wait for a 15% rebound before entering; when prices rise more than 50%, first check the sustainability of the positive news, and decisively take profits if there is a 20% decrease in volume.
On the night of last year's FTX collapse, the market was plunged into extreme panic, and prices fell sharply. I relied on this preset formula to stay calm amidst the chaos and ultimately recovered 20% of my losses. A preset plan is like a lamp lit in the dark, allowing us to avoid being at a loss in the face of sudden situations.
5. Cognitive iteration: The market is always changing, clinging to experience is equivalent to suicide
The speed of change in the crypto world can be aptly described as "changing every day." The market is always changing, and clinging to past experiences is undoubtedly equivalent to suicide. Therefore, I have developed a habit of continuous learning and summarization: researching a new project's white paper every week to understand new industry dynamics; reviewing trading logs every month to analyze the reasons for successes and failures; updating my investment framework once a year to keep my understanding in line with market developments.
In 2018, I lost a million due to blindly participating in ICOs. That painful lesson completely shifted my focus to value investing, only investing in coins with real application scenarios. In the crypto world, one day is equivalent to a year; if you don't learn and progress with the market, you will be ruthlessly eliminated.
In summary, surviving in the crypto world does not have immutable rules, only constant summarization and adaptation. I hope my experiences can offer some help to you who are exploring in the crypto space.
