Retail Investor's Handbook: 3 Tips to Avoid Being Eliminated by the Market

As for the current cryptocurrency market, it is still similar to a wild PVP (player versus player) market due to the lack of widespread adoption. In such a market, the ultimate goal for most people is to make money through speculation, meaning you are actually competing with everyone who might have the same thoughts as you. In this environment, the prerequisite for making money is that you must first protect your wallet well, rather than blindly trusting or relying on others. So, how can you ensure that you avoid being eliminated in such a competitive environment?

1. Focus on Uniqueness and Narrative Ability

In this field, not only do some individuals (including some KOLs) like to boast, but some project teams do the same. For example, some projects casually create a PPT or copy a white paper and claim they are going to overthrow Bitcoin or Ethereum… Anyway, whenever I see such superficial projects, my first reaction is definitely to stay away.

I believe a good ecosystem should be colorful and inclusive. If a project can claim to solve everything just by throwing something together, then that ecosystem has little future for development. On the contrary, if the ecosystem consists of different dApps, each with unique products, teams, token economics, and communities… then this ecosystem will inevitably become distinctive.

Of course, this diversity can also encourage and allow for the emergence of pioneering and leading projects, just like a good social structure is composed of different people, while a small elite group leads the way.

Thinking from this perspective, it should be understood that when looking for projects, it is quite important to try to find or discover the differences (uniqueness) of the projects.

In addition to the uniqueness of the project, we should also pay attention to the project's marketing or hype ability (the hype here is not a derogatory term), that is, whether the project can create events that attract widespread attention (narrative ability) and quickly drive market demand and people's interest, thereby pushing up the project's token price. For example, everyone knows Bitcoin's uniqueness as the future of finance, but if, on this basis, the top few Bitcoin whale holders simultaneously announce that they will send 20% of their Bitcoin holdings to a black hole address, such an event could likely lead to a short-term surge in Bitcoin.

Moreover, even if you can find those projects you are fond of, it is advisable not to "fall in love" with any project. Given that the current cryptocurrency market still has a strong speculative nature, in a zero-sum game, market fluctuations are often influenced by various emotions. This means that your insistence on certain projects may lead to losses if others lose confidence and exit.

Therefore, when investing (or speculating) in the cryptocurrency market, a good practice is to manage your positions well, maintain appropriate diversification, and ensure that your positions always have a certain level of liquidity.

Of course, if you must "fall in love," I would only suggest you pursue Bitcoin/Ethereum and be prepared for the long term. For example, although I have always been a staunch Bitcoin supporter, I have only invested a portion of my real-life funds, and in this cycle, I have only used 80% of my position to dollar-cost average into Bitcoin. Similarly, in the next cycle, my dollar-cost averaging position in Bitcoin will still be controlled at around 80%.

2. Maintain Enthusiasm and a Rational Understanding of Opportunities

We mainly mentioned two key points to focus on when searching for/discovering projects: uniqueness and narrative ability. We also provided two basic suggestions for investing in the cryptocurrency field: avoid "falling in love" with any project and manage your positions well.

In addition, if you want to persist in this field, what remains is probably your enthusiasm.

In other words, if you enter this field purely to make quick money, without any passion or interest in deeply learning and understanding blockchain/cryptocurrency, or if you do not believe that blockchain has any development prospects and future, then it may be your best choice to exit this field as soon as possible before you lose all your principal.

For me, over the years, I have indeed made some money through the cryptocurrency market, but looking back, what truly supported me through three bear market cycles seems to be my passion and firm belief in the blockchain field. It is also this passion that has allowed me to continue writing about new media (for me) over the past two years.

The cryptocurrency field has never lacked stories of overnight wealth, and I believe many people initially entered this field because they heard some similar stories to some extent. However, for most ordinary people, seeking quick wealth is not a good plan or idea. Only by persisting and not being eliminated by the market can one have the opportunity to truly make money. In this long process, what we need to do is to maintain patience, continuously improve our cognition and knowledge level, conduct research in the areas (tracks) that interest us the most or that we are optimistic about, and then seize a few opportunities.

In reality, many people are always afraid of missing opportunities; they either chase after trending topics every day or follow the public statements of so-called KOLs/teachers, only to find that various opportunities always seem to pass them by perfectly. In fact, the cryptocurrency field is full of opportunities, but those who can truly seize big opportunities are still few. It feels like opportunities are everywhere, but they often catch you off guard.

Opportunities can be divided into two types: short-term speculative opportunities and long-term investment opportunities. For most people, short-term speculative opportunities are hard to grasp. Do not try to think about seizing a hundredfold or thousandfold opportunity within a day or a few days. You should know that opportunities and risks are interconnected, unless you are mentally prepared to lose all your principal within a day or a few days.

Therefore, long-term opportunities are actually the most suitable for ordinary people to grasp. One of the simplest strategies for long-term investment is the DCA (Dollar-Cost Averaging) strategy mentioned in previous articles, where you can dollar-cost average into Bitcoin and other crypto assets based on certain indicators during a prolonged bear market (as long as it is a project you are most optimistic about and believe has long-term development prospects), and then patiently wait until the bull market to sell in batches. In this way, although the strategy may seem slow, the result is that you will likely outperform most ordinary people in terms of returns.

To borrow a popular saying: opportunities are often reserved for those who are prepared. This means you need to take action and prepare before new opportunities may arise. Once opportunities are fully presented to everyone, from a certain perspective, they are no longer opportunities, or this opportunity will become very risky in the short term.

If we compare the market to a battlefield, theoretically, we do not need to keep ourselves in a state of combat every day. The best way is to spend most of the time improving our physical abilities and learning various combat skills, patiently waiting for the right moment to enter the battlefield, then quickly win while ensuring defense, and exit, continuing to patiently wait for the next combat opportunity, repeating this process. Those who truly understand combat run every day just to prepare for a battle someday.

3. Wallet and Security Awareness

Due to the particularity of cryptocurrencies (facilitating anonymity and avoiding various responsibilities), many criminal activities currently use cryptocurrencies. However, if everything you do is correct and you do not make some basic mistakes (like casually leaking your privacy), then no one should target you. Regardless of how much money you make in this field, it is advisable to always remain low-key, avoid casually disclosing and flaunting your wallet address, and do not casually reveal your asset situation.

Similarly, the cryptocurrency field is also filled with various scams and hacking attacks. In addition to not casually trusting any strangers who claim they can make you rich, you should also take necessary security measures to prevent your wallet or account from being hacked.

Currently, there are many different types of attacks, and the three main types of attacks we commonly see are: Drainer, virus, and brute force cracking.

Drainer Attack: It seems that more and more hackers are starting to use Drainer toolkits for Web3 phishing. They use phishing websites to automatically prompt users to connect their wallets, obtain valuable token information, and generate phishing transactions. As shown in the image below.

Therefore, when authorizing various protocols, be sure to carefully check the corresponding links and do not casually click on links from unknown sources. If necessary, you can consider using security plugins like scamsniffer for assistance.

Virus Attack: A few days ago, I heard a story about a kind person who encountered a stranger on the road. The stranger, holding a power bank, said his phone could not charge properly and wanted to borrow this kind person's phone to test whether the charger was faulty. As a result, this kind person's phone got infected with a virus, and I believe everyone can guess the outcome. As for whether this story is true, I do not know; after all, I have only encountered people selling chargers on the road, not someone directly borrowing a phone to test a charger. However, this story serves as a reminder that we should be cautious and prevent such incidents.

In short, do not casually lend your phone (especially the one containing your assets) to strangers, do not casually open links, images, email attachments, etc., from strangers on your phone (including computers and any devices), and do not install (including scanning QR codes from strangers) any apps (dApps) they give you.

Brute Force Cracking: Sometimes, some people set very simple passwords for their accounts to make them easier to remember or log in, and enable online password saving and automatic login. This indeed makes it convenient for themselves, but it also makes it easy for hackers, as simple passwords can be easily cracked by hackers using brute force software.

Therefore, for some important accounts or websites (like exchange accounts), you must set relatively complex passwords and enable 2FA (two-factor authentication), such as always using Google Authenticator for login verification.

At the end of the article, let's summarize some recent hot events:

1. German Government's Bitcoin Sell-off

According to on-chain monitoring data, the German government address currently holds more than 50,000 Bitcoins, and now only 0.007 Bitcoins remain, which means they have sold all their holdings. The German sell-off event that troubled some people for over twenty days has thus ended. As shown in the image below. I wonder how many people have lost their holdings due to panic caused by this event.

The next potential selling pressure may come from Mt. Gox's compensation. According to news from a few days ago (July 16), Mt. Gox trustee Nobuaki Kobayashi has repaid BTC and BCH to over 13,000 creditors. Previously, court documents and related reports mentioned that about 24,000 creditors submitted claims during Mt. Gox's bankruptcy.

The Mt. Gox compensation issue seems to have been discussed for many years. If it can truly be realized this year, it will definitely be beneficial for the market in the long run. Interested friends can directly monitor the changes in the Mt. Gox wallet address. As shown in the image below.

2. Bitcoin ETF Fund Inflows/Outflows

In recent days, ETF funds have continued to flow in, indicating that institutions are still buying. As shown in the image below.

This current bull market can still be viewed as an ETF-driven bull market. From a long-term perspective, ETFs will have a lasting impact on the cryptocurrency market (Bitcoin).

3. U.S. Presidential Election and Trump

With the recent shooting incident involving Trump, according to Polymarket (a decentralized prediction platform), the probability of Trump winning the election is currently 65%. As shown in the image below.

Considering Trump's attitude towards cryptocurrencies, if he wins the election, it is seen by many as a positive signal for cryptocurrencies. In addition to recent news that Trump will attend this year's Bitcoin conference (which will be held on July 25 in Nashville, Tennessee) and give a speech, a few days ago (July 15), Trump also selected Ohio Senator J.D. Vance as his running mate for the 2024 election, and reports indicate that J.D. Vance is also a cryptocurrency supporter and holds Bitcoin himself.

4. FTX Compensation

Compared to the recent German sell-off event and Mt. Gox compensation event, it seems that fewer people are paying attention to FTX compensation.

Reports indicate that FTX is planning to repay $160 million to creditors. If the current compensation plan goes as expected, some of the $16 billion may be reinjected into the cryptocurrency market in the fourth quarter of this year (or the first quarter of 2025).

It is important to note that the compensation is not in the original cryptocurrency holdings but in USD. For example, if you had one Bitcoin on the FTX platform in November 2022, when one Bitcoin was valued at $18,562, you could expect to receive $21,903 (which is equivalent to 118% of the company's asset value at the time of bankruptcy).

5. Ethereum Spot ETF

Reports indicate that various issuers have submitted S-1/A documents for spot Ethereum ETFs to the SEC, and the fees for nine spot Ethereum ETFs have now been announced. As shown in the image below.

It seems that the Ethereum ETF is about to be officially launched, which will be the first altcoin to receive an ETF (although many people no longer consider Ethereum as an altcoin).

6. Federal Reserve

On the macro front, the biggest expectation left should be the Federal Reserve's interest rate cut, as a rate cut means bringing new liquidity to the market. Many analysts have high expectations for a 25 basis point rate cut in September, and according to the Federal Reserve observation tool, the probability of a 25 basis point rate cut in September has risen to 91.7%. As shown in the image below.

This concludes our content for this issue, which is also the 487th article updated by Hualihua.