The market keeps falling? 5 tips to remain undefeated in the market
In the past few months, for those holding a full portfolio of altcoins, it has undoubtedly been quite difficult, as many altcoins have experienced significant corrections during this time. Many individuals have not only lost all their profits from this year but some have even seen their principal amount show unrealized losses.
Moreover, with the recent market experiencing a new wave of panic selling, especially today (August 5), as of the time of writing, Bitcoin's price has dropped to around 54,000, with a 24-hour decline of 10%. Ethereum's price has fallen to around 2,300, with a 24-hour decline of 19%. As shown in the figure below.
Then, the Fear & Greed index has also dropped to 26. As a result, some individuals have started to panic again, leaving comments asking me: What should I do? Should I reduce my holdings now?
Asking me whether to reduce holdings is actually not very useful; it depends on your own position situation. If you are just seeking some psychological comfort, my view has always remained unchanged, and in all my previous articles, I have generally maintained a positive and optimistic attitude, meaning I personally still have confidence in the long-term development of this market.
As for myself, I certainly will not choose to temporarily reduce my holdings due to so-called panic. This is mainly based on my overall position and personal trading strategy. In terms of position, I have allocated 80% of my portfolio to Bitcoin, with a DCA cost of around 25,000 USD. Until I reach my previously set target, I will not make any operations. In terms of strategy, I mainly adopt a long-term dollar-cost averaging strategy, having consistently invested monthly for 20 months since the second half of 2022. In simple terms, it is the simplest strategy of buying consistently in a bear market and patiently waiting to sell in batches during a bull market.
Therefore, from a trading perspective, the recent declines do not cause me any internal turmoil; I simply ignore any short-term fluctuations and emotional impacts, then spend time doing what I enjoy (currently, most of my time is spent on studying and writing articles), and continue to wait patiently. This is also the basic trading mentality of a coin holder.
However, I can indeed understand that many people have not been feeling well lately, and many individuals are feeling quite anxious. Additionally, constantly monitoring various news can be overwhelming; when the market is good, you see all kinds of positive news, while when the market is bad, negative news will come to your attention, further affecting people's moods and mindsets.
Regarding the crypto market, the recent sentiment seems to be more about:
1. Altcoins have become cash cows for institutions/VCs
So far, retail investors seem to have slowly begun to awaken, expressing greater skepticism towards various VC coins, as the high valuations by VCs have led to significant price fluctuations after tokens are listed. Even for those altcoins with relatively small price fluctuations, you will find that continuous unlocking makes it difficult for prices to rise. Previously, a project gaining VC recognition was considered a potential positive, but now, such projects seem to have been tacitly regarded by many as symbols of harvesting retail investors. I saw some individuals in the group sharing jokes about this, which looked quite amusing. As shown in the figure below.
2. Too many altcoins have been issued in this cycle
This topic has been discussed in previous articles, where relevant data was shared. In short, too many new altcoins have been issued, leading to a severe dilution of the already limited liquidity in the crypto market, making it difficult for most altcoins to maintain sustained price growth. The market currently does not have enough liquidity to simultaneously push up the prices of every altcoin.
In the 2021 bull market, the total market capitalization of altcoins (excluding BTC and ETH) was 1.13 trillion USD. As of the time of writing, the total market capitalization of altcoins is 550 billion USD. But how many altcoins were there in these two different periods? For example, in July 2021, there were 12,223 new coins born on Ethereum, while in July 2024, there were 286,816 new coins, which is more than 23 times the number in the same period of 2021. As shown in the figure below.
Moreover, this is just the data from the Ethereum network. In previous articles, we have already summarized the Solana chain, where the growth rate of new tokens is currently around 15,000 to 20,000 per day. In summary, the newly born tokens in this cycle can be described as massive.
3. Bitcoin has become the favorite of large institutions
With the approval of Bitcoin ETFs, this product has attracted huge cash inflows from TradFi and traditional institutions. Even the inflow/outflow of ETF funds has become one of the important factors influencing the trends in the crypto market. What institutions will be doing for a relatively long time is to continue to slowly operate the market and take Bitcoin from retail investors. Besides Bitcoin, ETH will also become the next target for institutions. In the coming period, we can focus on the situation of Ethereum ETFs. If we disregard the various chaotic price predictions, from a developmental perspective, I personally remain optimistic about Ethereum in the long term.
4. MemeCoins have become an outlet for emotions
After experiencing the hype of AI, the hype of the Bitcoin ecosystem, the collective prosperity of the airdrop season, etc., MemeCoins seem to have become the best place for retail investors to express their emotions. Currently, the competition in MemeCoins has increasingly turned into a race against time.
In previous articles discussing altcoins, we have mentioned that the root of the current market mainly lies in one core issue: insufficient liquidity.
So, what is liquidity?
Simply put, we can understand the liquidity of the crypto market as the total of all cryptocurrency orders at a specific price. Moreover, every peak and trough also has liquidity; smart money generally utilizes this liquidity to fill market gaps.
The market fluctuates based on liquidity, and people's money flows among different groups based on these fluctuations. So, what psychological preparations do we need to make in this process?
Next, let’s briefly outline and share a few insights on this aspect:
1. Good trading is often boring
I remember when I started dollar-cost averaging Bitcoin monthly in the second half of 2022, the market was quite boring at that time. However, looking back, it proved that our dollar-cost averaging operation was basically correct. Making effective plans and trades during boring times, and maintaining patience, can lead to some very good trades.
Conversely, although there are constantly new stories about MemeCoins recently, and some new MemeCoins' price increases seem exciting, I generally do not participate in such trades because most of the time, hasty decisions do not yield good results.
2. Strictly control your position
Everyone hopes to buy at the lowest point and sell at the highest point, but the market is unpredictable; no one knows where the lowest or highest points are. Do not casually believe those "ever-profitable masters" who can always accurately time the market. Never go all in; always leave at least 10% of your position. Try to conduct all buying operations in batches, and the same goes for selling operations.
In terms of trading mindset, do not always think about making money; considering downside risks is equally important as considering upside potential. You must optimize your strategy to ensure that your position can withstand the worst-case scenario in the market. What we are competing in this field is not about who can get rich overnight, but about who can survive longer in this game (to seize those few opportunities).
At the same time, keep a long-term perspective; do not always be influenced by current emotions and news. Do not get lost in the current hype or always chase after the latest trends. You might want to take a moment to think about some long-term prospects, such as whether you have considered whether more liquidity will flow into or out of the market in the next six months? Why do you think so?
3. Avoid excessive blind confidence
Last year, when chatting with some friends, I found that many were very confident about this bull market, setting their targets at a minimum of 10 times. They found it hard to understand my overall return target of 3 to 5 times over a cycle (3-5 years), as they thought someone like me, who seemed "impressive," would set much higher targets.
A few days ago, a friend asked me a more targeted question: "I've been following you for a while and noticed you know quite a bit. So why don't you focus all your energy on trading to make big money? Writing articles every day doesn't make money!"
Regarding this question, I have had related thoughts before:
First, I feel that I actually do not know that much.
Socrates famously said, "I know that I know nothing."
Although I have been consistently learning and writing articles over the past few years, the more I write, the more I feel there is so much more to learn and understand. I have completely fallen into a state of endless learning, which has made me more cautious in some choices.
Second, why don’t I focus all my energy on trading?
The purpose of focusing energy on trading should be to make money, but I believe there are two types of making money:
One is to do high-probability things, meaning only earning money within my understanding. Currently, by effectively utilizing each major cycle to accumulate Bitcoin, I can achieve returns of over 3 times (the actual returns in the last cycle were even higher). For me, this is already enough; I am not that greedy, and I need to ensure the safety of my overall funds first.
The other is to do low-probability things, which means engaging in speculative or gambling operations. For example, achieving hundreds or even thousands of times returns through speculating on MemeCoins within a few days. But to be honest, I cannot do this, nor do I want to. For speculative operations, I would only consider using 10% of my position to buy a few altcoins (the ultimate goal of buying altcoins is also to exchange for Bitcoin).
So why don’t I want to do this?
First, based on what I mentioned above, accumulating coins has already ensured my basic returns in this field, which is a very important premise.
On the foundation of "being full," my current time and energy are only enough to do one thing, but there are many things I could choose to do, such as delving into the MemeCoin field to uncover wealth secrets, exploring the Airdrop field for opportunities, or diving into the DeFi field to seize arbitrage opportunities… and so on. However, those who truly make big money through trading in niche areas often do not publicly share too much information or wealth dynamics; everyone understands this.
But I previously considered that I wanted to do something with long-term potential, so ultimately, besides accumulating coins, I chose to engage in media creation, which is also something I am personally interested in and allows me to maintain a certain sensitivity to the overall crypto field. Or imagine, ten years from now, looking at ten printed blockchain e-books on my desk and seeing the accumulated Bitcoin and Ethereum in my cold wallet, I should feel happy.
In summary, do the one thing you are most confident in, do something long-term and valuable, and do what you like and are interested in.
4. Don’t let temporary profitability cloud your judgment
I remember mentioning in the group a few days ago that I also lost money in the first two years after entering this field. Although I caught a wave of early opportunities and benefits, quickly earning profits that I was not prepared for, being clouded by that brief happiness led to not only losing all my profits but also incurring losses on my principal.
Then I uninstalled all the software, took some time to calm down, and seriously reflected and summarized my experiences. The subsequent story is just as I shared in previous articles; I seized the opportunities in the last cycle again and regained my vitality and confidence.
And it was on this solid foundation that what you now see as "Talking Beyond" came to be.
In conclusion, always remember that unrealized positions are not your real positions. Until you sell, your profits are merely an imagined figure on paper, and you could lose them at any time. You must know what you are doing, avoid increasing your leverage, and do not let greed stifle your existing profits or principal.
5. Keep it simple; sometimes slow is fast
More complex strategies do not necessarily guarantee 100% success; any outcome should be considered based on probability. If a simple strategy has a 99% chance of making you money, but you choose not to pursue it, while a complex strategy only has a 60% chance of making you money, if you choose it, you must be prepared for a 40% chance of failure.
Many people choose low-probability ventures often because low probability sometimes means the potential for short-term high returns, but you must understand that this also needs to consider the overall market environment, especially in a bull market, where market volatility can be very high. Even the most impressive complex strategies may lead to failure in a short time.
Instead, it might be better to narrow your focus and reconsider what strategy suits you best, making things simpler.
Most retail investors tend to chase so-called hot trends, but from a long-term perspective, most people's outcomes are destined to end in failure. Do not always think about becoming a whale in the ocean; you might first try to be a big fish in a small pond. Currently, the crypto market has nearly a hundred different fields, and one person cannot become an expert in all fields. Try to choose and stay in the niche you are most optimistic about (the small pond) and seize some niche opportunities.
Additionally, this field still belongs to the lonely; if you want to go fast, go alone; if you want to go far, go together. If you feel lonely, you can try to surround yourself with more savvy investors and crypto enthusiasts. But also avoid falling into circles of centralized exchanges or Ponzi schemes; some people's failures stem from their investment strategies (or lack thereof), while others' failures are due to ignorance in their solitude (which may also be induced by interests or brainwashing).
This concludes this issue's content. You can view more articles on the Talking Beyond homepage. The above content is merely personal perspectives and analyses, intended for learning and communication purposes, and does not constitute any investment advice.
