OKX Friends Episode 9 | Conversation with the Madman: Past, Present, and Future

Introduction

The cryptocurrency world is once again in turmoil. Do you remember the top influencer of the crypto space in 2017, "Madman" @liujia0224?

That person, who updated daily and guided countless traders with an attitude of "responsibility, focus, and sincerity," was known as the "Digital Currency Trend Madman."

This public account was once a must-read for Bitcoin traders. When an article was published, it would instantly explode with over 100,000 reads, earning the title of the "weather forecast" of the crypto world, accurately predicting the ups and downs of Bitcoin, Litecoin, Ethereum, and other digital currencies.

On social media, he was a top-tier presence, known by all. His large group had a threshold so high it was astonishing (rumored to start at 10 Bitcoins); those who could enter were either wealthy or influential, making it an unspoken symbol of status.

However, after several rounds of bull and bear markets, KOLs shifted their focus to YouTube and Twitter, and rumors of the "Madman" retiring from the scene circulated frequently. Now, as the crypto world stirs again, what is that once-dominant "Madman" doing?

This is the "Friends of OKX" series of interviews, aimed at providing new users with insights by exploring the stories, industry thoughts, and lessons learned from KOLs of various backgrounds. This issue features Mercy @Mercy_okx. Welcome everyone to follow along!

Main Text

Article Overview:

Chapter 1: Madman Speaks ------ The Past

Chapter 2: Madman Speaks ------ The Present and Future

Chapter 3: Madman Speaks ------ Advice for Newcomers

Chapter 1: Madman Speaks ------ The Past

1. What brought you into the crypto space? The first time you saw BTC, it was only over 600 RMB?

Hello Mercy, hello everyone. I'm very happy to have a space with the friends of OKX. Let me briefly introduce myself. I have a master's degree in finance and have worked at several large financial institutions, including brokerages, trust companies, and insurance companies, giving me a deep understanding of various financial products and derivatives.

I started trading stocks in 2008, and that's when I fell in love with trading. Of course, like every trader, I experienced all the necessary accidents, such as leveraged liquidations. I lost profits that took me years to accumulate in just a few days during that year's stock market circuit breaker.

While trading stocks, I also enjoyed exploring new trading targets. It was 2013 when I dabbled in precious metals, postal currency cards, and Bitcoin. What left the deepest impression on me was Bitcoin. At that time, a new exchange had just been established and was promoting wildly on Baidu, offering 0.1 Bitcoin for registering an account. The first time I saw Bitcoin's price, it was over 600 RMB, and during the month I participated in trading, Bitcoin skyrocketed from 600 to 8000 RMB, marking the accelerated bull market of 2013. I didn't have much money invested, as my focus was on A-shares, but I still made 100,000 RMB. However, as the market declined, I kept trying to buy the dip, and eventually, I didn't have much left.

But it planted the seed of my love for Bitcoin trading. Bitcoin trading has three advantages over A-shares: first, no trading fees; second, 24/7 trading; third, T+0 trading flexibility. For someone who loves trading, these three points are truly heaven. However, Bitcoin entered a bear market in 2014 and 2015, with too little volatility, and at that time, A-shares were in a bull market, leading to less attention on Bitcoin.

By 2016, as A-shares turned bearish, I remembered Bitcoin again. I thought, since I couldn't forget it, why not try working at an exchange? So, with my years of experience in A-shares and cryptocurrency trading, I smoothly entered the exchange as an analyst.

Thus began my journey in the world of virtual currencies, or as we say today, the crypto industry.

2. Why did you start writing a public account? How did you become the top self-media in the crypto space?

Writing a public account was a matter of chance. At that time, public accounts were particularly popular, marking the beginning of the self-media era, and I liked trying new things. I casually wrote on Huobi, focusing on financial content rather than crypto. My second article had 2.5 million reads, making me realize the power of public accounts. I thought, if I could share my years of stock trading experience with the crypto space, wouldn't that be a significant advantage?

Sure enough, due to my expertise, my follower count quickly surpassed the few analysts at the time, and I maintained the top spot on the leaderboard until five years later when the public account was banned.

Regarding the community, I didn't particularly build it up because I invested enough effort into writing the public account. My interaction with the community was entirely through the comment section of the public account. By writing the public account, I received continuous positive reinforcement and persisted in daily updates for over six years, five of which were on the public account. The "Madman" style community naturally formed.

The content output process was quite bumpy. 2017 was the year of the fastest follower growth due to the lucrative market, with many trading sites benefiting from a plethora of copycat effects. By the second half of 2018, the market suddenly cooled down, becoming eerily quiet. No one was reading what I wrote, and users were continuously losing money, with daily complaints filling the air, leading me to question my life. At that time, nearly 90% of the major KOLs in the industry stopped their activities, but I chose to persist because I believed Bitcoin still had a future. I believed blockchain was the technology needed for the future, and as the ancestor of blockchain, Bitcoin's future was bright.

That year, I continuously recharged people's faith, discussing Bitcoin's future and telling everyone that Bitcoin would eventually replace gold, and it was more likely to become a national strategic reserve and a global currency, ultimately being priced in Satoshis, with 1 Bitcoin equaling 100 million Satoshis. To this day, I still believe this.

By 2021, the market welcomed a new dawn. My followers celebrated, saying they were glad they held on, as they made millions and changed their lives. Many people felt that I had truly succeeded, not only changing myself but also those who were willing to believe in me. However, looking back, it was merely riding the right wave. If these efforts had been applied to A-shares, it would have been hard to achieve such life-changing results, which is why I say choice is greater than effort.

Chapter 2: Madman Speaks ------ The Present and Future

1. What impact will the U.S. treating cryptocurrencies as national asset reserves have on the crypto market in the short and long term?

First, let's discuss the short-term impact. Trump's policy is a case of good news turning into bad news. Why do I say this? Because the market's expectation for strategic reserves was that the U.S. government would use real money to buy Bitcoin, but ultimately, Trump's policy was to make Bitcoin a strategic reserve through asset confiscation. Therefore, in the short term, it clearly fell short of expectations, and the market reacted by selling the news, reflecting this announcement with a waterfall-like drop.

In the long term, the significance of the U.S. strategic reserve is enormous. First, the U.S. dollar is the most important currency globally. Previously, sovereign nations only reserved dollars and gold. Now that Bitcoin is included in the U.S. strategic reserve, it means Bitcoin will be recognized by the world in the future. Although the U.S. is not buying now, if other countries want to include it in their strategic reserves, they will need to buy to increase their holdings. The logic is similar to Grayscale's Bitcoin Trust, where you can only buy and not sell, but the scale could be hundreds or thousands of times that of Grayscale, making the long-term price expectations and boosts for Bitcoin evident.

Currently, we should pay attention to who will be the second country to propose strategic reserves. I believe it won't be long before more countries follow suit.

Additionally, beyond value storage, from a monetary perspective, the deeper significance of Bitcoin being included in strategic reserves is Bitcoin's liquidity. Bitcoin is easier to circulate than gold, more convenient to carry, and can even be memorized as a private key to be taken anywhere in the world, free from any national currency restrictions. This is a function that no current currency or gold possesses. If such a currency becomes global, it means billions of people will have a small amount of Bitcoin for circulation and payment, ushering in an era of unified global currency. At that time, Bitcoin will be the value anchor, with all goods fluctuating around Bitcoin, but this may be the ultimate form.

We just need to know that before the ultimate form arrives, its price is never too high at any time. This process will continuously push up Bitcoin's price. As for how many years it will take, I believe there is still a long way to go. My attitude towards Bitcoin is a long-term bull market; the industry is far from over, and innovation has just begun. Bitcoin needs to be left for the next generation.

2. Now that all the favorable policies promised by Trump have been implemented, what new news could further drive the market up, or do you think the market has already entered a bear phase?

In the short term, the favorable news has indeed all been realized, and there are no new policies to look forward to. The only hope we have for this year is that the Federal Reserve might reintroduce QE in the second half of the year, increasing market liquidity. From Trump's series of actions since taking office, it seems he is creating an artificial economic crisis to force the Federal Reserve to loosen monetary policy. Therefore, we are currently in this artificial crisis, and feeling uncomfortable is quite normal. However, we need to understand the term "crisis" more profoundly; there is no opportunity without a crisis. Each crisis washes away a large number of unsteady bulls, but ultimately, the market will always rebound. Those who dare to add positions in the pit will eventually reap great rewards. Since we know Trump is creating a crisis, this pit will eventually be filled; we just need to think about how deep it will be.

Regarding bull and bear markets, I believe Bitcoin is still in a bull market. Currently, based on on-chain data and funding conditions, it does not align with the logic of a bear market. It is more likely in a bull market correction phase, and historically, bull market corrections often range from 30-40%. So, if we trace back from 110,000, the correction low is likely around 66,000-77,000. The market has already touched this range, but whether it has bottomed out can be assessed by looking at the U.S. stock market. The U.S. stock market has seen three consecutive weeks of large bearish candles, with declines exceeding 10%. Such a level of correction often does not end quickly. Historically, a 10% drop in the U.S. stock market is just an appetizer; a 20% drop might provide a successful buying opportunity, and a 30% drop is generally a sure win. Therefore, I personally believe that the 77,000 position for Bitcoin is likely not the bottom of this correction. In the short term, 77,000 is a good support level, so as the U.S. stock market rebounds from oversold conditions, touching above 90,000 is highly likely. For medium to short-term traders, reducing positions above 90,000 and buying back after a drop might be a good choice.

Overall, Bitcoin does not yet meet the standards of a bear market, but the correction is likely not over, and it is a high sell-low buy market.

In the long term, I believe there are several messages that will drive Bitcoin towards new peaks:

First, the Federal Reserve reintroducing liquidity, as mentioned earlier.

Second, the globalization of Bitcoin as a strategic reserve, with countries following suit will bring significant incremental demand for Bitcoin.

Third, and most importantly, if cryptocurrency is legalized in mainland China, it will be a huge boon. In terms of purchasing power, no other country can compare to the Chinese. Ordinary people have money in their pockets but lack good investment targets. The stock market has been stagnant at 3,000 for over a decade, with constant expansions but no growth in indices, and the loss-making effect is evident. Now, the real estate market is also not doing well. With the end of the demographic dividend, real estate has been in a bear market for over ten years.

So if this really opens up, trillions of funds could flood in in no time, making it easy for Bitcoin to double. However, if China opens up, it will definitely not be allowing current cryptocurrency exchanges but rather creating a Chinese version of an ETF, where money can be traded within the wall but not withdrawn, with prices pegged to global Bitcoin. In simple terms, it would create a pool to hedge outside, as the foreign exchange wall cannot fall; this is the foundation of the economy.

3. Which sectors should we pay attention to in the future, and what types of projects might yield new alpha returns?

Alright, here are a few sectors I believe have opportunities, for your reference:

1. RWA: Real-world asset tokenization is a vast concept that encompasses a wide range. It can first combine DeFi with traditional finance. DeFi is already mature in the crypto space, and if blockchain technology can be applied to traditional markets, the imagination is limitless. For example, tokenized bonds can be used for collateralized lending, and tokenized equity can greatly enhance liquidity in financial markets. Additionally, splitting property ownership into tokens to secure future income and growth, and tokenizing art, are all examples of virtualizing real assets. In short, there are clear landing opportunities here, but the step of asset tokenization requires backing from traditional large institutions.

2. AI: AI is a hot topic right now and will continue to be an innovative sector in the future. The integration of AI and blockchain mainly reflects in AI algorithms. AI requires vast amounts of data for machine learning, and blockchain protects data privacy, even turning data into a form of value transfer. This can allow centralized AI to evolve into a more secure decentralized form. Currently, apart from some simple AI agents, most are still in the conceptual stage and are not as practical as centralized AI, but bubbles will always exist, as the market seeks dreams, leading to speculative expectations.

3. Public Chains: This is a well-trodden sector. Every bull market cycle sees speculation on public chains, and each cycle produces a few new chains that are hotly discussed. However, alpha often exists in new chains rather than old ones; this is the logic of standing on the shoulders of giants. Before the unification of thousands of chains, public chains will continue to iterate and break through the "impossible triangle" of blockchain until they catch up with the current internet transmission speed and cost.

4. Payments: Cross-border payments play an important role in the process of global integration, while traditional financial settlements are notoriously slow and costly. The advantages of using blockchain for these are evident, but these gaps have mostly been filled by stablecoins like USDT and USDC. In the future, we should focus on the integration of payments with smart contracts, such as IoT devices earning data value through data transmission. Additionally, blockchain projects replacing banking systems in underdeveloped regions like South America, Africa, and Southeast Asia are emerging. Many blockchain projects are being used to replace banking systems because the cost of opening a bank account is too high for the poor. For example, a domestic helper I hired was paid in fiat currency, but the speed of settlement through traditional financial systems was slow, complicated, and costly. Later, I taught her to use an exchange, settling with USDT and then converting to local currency, which was much more convenient and reduced costs significantly.

5. MEME: The MEME coin craze has passed, but this phenomenon will not end. Low-cost, high-reward PVP will always exist in gambling environments, as it aligns with the gambling mentality. In the future, celebrities and brands may issue their own tokens on-chain, leading to more gameplay possibilities, such as tokens being used to exchange for company products. The current speculation is just the initial form; ultimately, MEME will be empowered, whether in brand value or consensus value.

From a sector perspective, the overall logic is still to speculate on new rather than old. The big opportunities in the future will still be in new projects, as 90% of old projects cannot escape the fate of declining further. After all, for most project teams, the easiest way to make money is to launch a new project rather than rescue those old projects with scattered chips.

4. Traditional financial institutions are entering the crypto space. Which crypto assets do you think these massive funds will allocate to? Where will the funds flow in the future?

Looking at traditional capital, we can refer to four directions: strategic reserves, ETFs, Grayscale, and the Trump fund.

The types of tokens in the U.S. strategic reserves, such as BTC, ETH, SOL, XRP, etc., are likely to be the first to be allocated by traditional institutions entering the crypto space. For most traditional institutions, they do not understand the crypto space at all. They invest the money of their clients with their eyes closed, simply allocating because they have to. They absolutely dare not touch projects that could go to zero. With the backing of strategic reserves, traditional funds do not have to bear the risk.

Additionally, we should pay attention to the future approval status of major ETFs in the U.S. Currently, only BTC is approved, while ETH, SOL, XRP, and LTC are in preparation.

The allocation of Grayscale Trust represents the direction and expectations of early institutional investors in the U.S. crypto space. Currently, Grayscale Trust's single asset trusts include BTC, ETH, BCH, ETC, LTC, SOL, LINK, MANA, FIL, BAT, LPT, XLM, ZEC, and ZEN.

Finally, the Trump crypto fund is also an important reference standard, currently holding BTC, ETH, TRX, LINK, AAVE, ENA, MOVE, ONDO, and SEI.

Chapter 3: Madman Speaks ------ Advice for Newcomers

1. What advice do you have for newcomers entering the cryptocurrency field? How should they start learning and accumulating experience?

For newcomers, the current threshold in the crypto space is quite high. Unlike when we entered the crypto space, where simply buying and selling was enough to dive in, now there are many more complex ways to engage, especially with the vast amount of on-chain content. It can be said that everything traditional finance has has been copied over, and what traditional finance lacks, the crypto space is innovating on. This means one needs a lot of financial knowledge, a strong blockchain background, and an understanding of the internet.

The 24/7 continuous trading can be exhausting for newcomers. Therefore, they should first understand the entire framework of the crypto space, such as secondary market trading, primary market analysis or macro analysis, exchange-related businesses, on-chain treasure hunting, DeFi, etc. Newcomers should focus on a specific niche, thoroughly understanding it, and accumulate experience through practice. Engaging with industry veterans and learning from their experiences, especially the pitfalls they have encountered, is invaluable for newcomers.

Lastly, rapid learning is crucial. Only by moving faster than others can one seize great opportunities.

2. What common misconceptions or traps should newcomers avoid during market trading?

In trading, I have been navigating the market for nearly 20 years, possibly older than many of the listeners here. I’m not that old; I just started trading while in school. Over the years, I’ve encountered many pitfalls. I believe the most important thing is to maintain the right mindset. I often say in my posts that trading is a marathon, not a 50-meter sprint. Don’t think about getting rich overnight; instead, focus on steady growth. As long as you can survive, opportunities will always be there. Therefore, I emphasize asset allocation, how to achieve stable annual growth, which assets are risky, which are cash assets, and which are value-preserving assets, and how to allocate them based on your risk preference.

If your current assets are not substantial, focus on working hard in this industry, thinking about how to make money rather than fixating on getting rich through trading. I have seen too many people who got rich quickly only to give it all back to the market. Often, the money made was due to luck, while the losses were due to skill.

Also, do not take loans or use money that affects your daily life to trade cryptocurrencies, as this will impact the most important aspect of trading: your mindset. Once your mindset is distorted, all operations will become deformed. If you notice your mindset is off, immediately stop trading, take a break, and then get back on track.

If you are using leverage, remember to set stop-losses before opening each position. This is key to survival. If you cannot adhere to this, please do not engage in contract or leveraged trading.

3. How do you suggest newcomers establish their own analysis framework and models? Are there any practical tools or methods you can recommend?

In trading, I believe the most important thing is not to read books but to start first, allowing yourself to accept failure, acknowledge every stop-loss, and admit that you are imperfect, even weak. Learn to respect the market. Therefore, my suggestion is to start with a very small amount of money to experiment and make mistakes, finding your own issues through trading and then solving them to discover a trading method that suits you.

Once you accept your failures, you can begin learning some theoretical knowledge, looking at indicators and understanding the patterns of candlestick movements. Here are a few books I recommend that I find helpful regarding trading: "The Wyckoff Method," "Japanese Candlestick Charting Techniques," "Reminiscences of a Stock Operator," "The Turtle Trading Rules," and "Stop Loss."

Ultimately, combining various types of knowledge will increase your success rate in market judgment. Trading is not a simple path; it is a system, and it is difficult to derive correct results from a single indicator. Over the years, I have been continuously improving and learning. Trading is a path of arduous cultivation, so if there are better ways to make money, I suggest not choosing this path. It is a road fraught with peril, and most people spend their lives in mediocrity. Those who can achieve stable returns are rare. More often than not, it feels like a test of talent, or whether your personality is suited for trading. The key is to find a way that works for you to make money.

Conclusion

Mercy is honored to have the legendary trader Madman share his insights today. "Responsibility, focus, and sincerity" are qualities I deeply perceive from my mentor. In the midst of a dull market, I hope everyone can gain something from his sincere and profound insights and regain confidence!

Finally, Mercy has extracted a quote from Madman's recommended reading, "Reminiscences of a Stock Operator," to share with everyone:

"There's nothing new on Wall Street, because speculation is as old as the hills. What happens today in the stock market has happened before, and it will happen again."

Risk Warning and Disclaimer

This article is for reference only. The views expressed in this article are solely those of the author and do not represent the position of OKX. This article does not intend to provide (i) investment advice or recommendations; (ii) offers or solicitations to buy, sell, or hold digital assets; (iii) financial, accounting, legal, or tax advice. We do not guarantee the accuracy, completeness, or usefulness of such information. Holding digital assets (including stablecoins and NFTs) involves high risks and may experience significant volatility. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. Please consult your legal/tax/investment professionals regarding your specific circumstances. You are responsible for understanding and complying with applicable local laws and regulations.