What should we do when most people are breaking down?

Source: Talking Li, Talking Outside

At this stage, the overall market sentiment is still not bad, but many people seem to have lost motivation and patience for investment. Even a few days ago, some partners in the group left messages telling me that they have already exited (retired) and are no longer participating.

From the current trends or data, the market seems to be in a rather interesting (or strange) state. On one hand, the BTC balance on exchanges is decreasing, and the current supply has dropped to 2.18 million coins, as shown in the figure below.

On the other hand, the balance of over-the-counter (OTC) desks is also at a historical low, as shown in the figure below.

This may indicate that the demand for spot trading is continuously depleting, and funds (including institutions) are remaining on the sidelines. Overall, it seems that the market has fallen into a boring state where there are neither sellers nor buyers.

Since January of this year, the market has experienced a significant pullback, and many people have slowly awakened from the thrill of the rapid gains in the fourth quarter of last year. After experiencing a brief bull market, we now seem to be going through a crab market (i.e., sideways movement, as crabs walk sideways).

Now everyone seems to be waiting for an opportunity for the market to reverse. This opportunity may come from some new policies in the U.S. (the first week of April will be a key week, as it will involve tax policies, non-farm payroll data, unemployment rate data, Powell's speech, etc.), or it may come from a new innovative hit in the crypto space (i.e., an internal catalyst), but currently, no one knows. Assuming we cannot wait for such external or internal catalysts in the short term, but you still hope to persist in this field, then there are two things to pay attention to:

• Try to stay away from things that could go to zero at any moment and start to refocus on some truly useful things.

• Maintain a good mindset, continue to reasonably optimize your positions, and prepare in advance for the next opportunity.

Because if you remain immersed in the current volatility or PvP speedrun game and cannot step out, then even if new opportunities arise in the market, you may continue to suffer heavy losses (such as larger losses) without being prepared.

Many people, after experiencing a significant market fluctuation or a rollercoaster-like market, find that the harm is not only to their positions (invested capital) but may also involve psychological issues. For example, you hope the market can give you another chance to break even, you wish someone could directly tell you a coin that would allow you to turn your fortunes around quickly, you find yourself checking the exchange/wallet dozens of times a day to see the changes in your balance… But often, the more you do this, the more you will regret your initial decisions, and you will increasingly fall into a pessimistic mood.

At this point, what the market takes away is not just your money; it can even take away your physical and mental health.

So, how can we avoid encountering the same problems again or overcome such issues as much as possible?

1. Minimize the time spent staring at the screen

The market is cyclical. As long as we are still in this field, there will be new opportunities, but new opportunities often come to those who are prepared in advance. So, what are you prepared for now?

As we mentioned in previous articles, if staring at the screen could change the market direction, I would be willing to watch the market 24 hours a day, but that is unrealistic.

To put it bluntly, if you really can't hold on and the current XX coin you hold is seriously affecting your sleep quality, then you should cut your losses in a timely manner without hesitation.

It might be better to temporarily distance yourself from some market noise and use this time to reflect on and review your past trading notes.

Learn to acknowledge failure, and more importantly, learn to endure failure. The most important thing is to use failure to improve your strategy or trading system.

In short, do not let "losses" dictate your next steps; instead, let your strategy determine your path forward. Up to now, although you may have incurred some losses, if we look at it from another angle, you are actually ahead of many people because you have deeply experienced the cruelty of the market, and you clearly understand what you should do next and what you should not do.

2. Learn to respond proactively, rather than just waiting

If someone tells you that there may be a new opportunity in the market this year, do you have a response plan?

If someone also tells you that the market has now entered a new bear market cycle, do you have a response plan?

As we mentioned in previous articles, while everyone is focused on bull and bear markets, the market is fundamentally composed of three structures: up, down, and sideways. As long as the market is volatile, there will always be various opportunities to make money. What we need to do is to discover those opportunities that suit our time, energy, and risk preferences, and then persistently repeat them.

Many people say that investing requires patience, but this patience is not simply waiting; it is about learning to respond proactively. In other words, you need to find the right positioning for yourself and then maintain the patience to persistently execute your trading strategy.

So, what are some basic strategies or ideas that are suitable for most people?

In last year's e-book "Blockchain Methodology," we shared a lot on this topic. Here, we will briefly understand a few aspects again:

1) Execution strategy based on DCA

DCA can be directly understood as a dollar-cost averaging strategy that requires sufficient patience. For example, if you persist in buying BTC during a bear market, you can operate on a weekly or monthly basis and patiently wait to sell in batches when the bull market arrives.

This strategy requires persistence and patience, as well as several important considerations, including:

• Large positions should only be for long-term DCA in BTC, with a position of at least 50% or more.

• If you like altcoins, you must choose projects that have actual utility and long-term development vision, while also paying attention to the proportion of positions.

• Do not get addicted to any MemeCoin. If you want to speculate, only use a small amount of capital that you can afford to lose.

• Do not always try to buy at the bottom; DCA ≠ bottom fishing.

• Ignore noise, stay focused, and persist. The core pursuit of this strategy is the idea that "slow is fast."

2) Narrative-based approach

As mentioned above, if you like altcoins, you must choose projects that have actual utility and long-term development vision. The key here is selection, and we believe that the best selection strategy must be narrative-based.

The market first has narratives, and then the corresponding tokens rise. Therefore, when choosing projects, we should prioritize considering them from a narrative perspective rather than just thinking about buying a specific token.

For example, if you believe that narratives like AICrypto, RWA, DeFi, DePIN, etc., may have new opportunities next, you just need to explore the corresponding narratives in advance. This way, before the next bull market or new phase of opportunities arrives, you may be more likely to seize the opportunity than others.

Of course, regarding narratives, we can also appropriately use some on-chain tools to assist our research. For example:

First, check which narratives are currently gaining traction, as shown in the figure below. It seems that the popularity of Oracles is on the rise.

Next, look at the corresponding project list within the narrative, as shown in the figure below. Let's continue to see which projects fall under the Oracles category.

After selecting the narrative target and some alternative project lists, what we need to do next is to research different projects based on some dimensions we consider valuable.

For example, we can score projects through a breakdown method. Here, we will continue to list a few dimensions for project research:

• Team dimension: Does the project have a reliable and experienced team behind it that can continuously build the project?

• Development dimension: Does the project have a clear business model or a sustainable profit model?

• Market fit: Can the project's product find a fit in the market, or does the product have a clear PMF (Product Market Fit)?

• Token economics: Does the project have good token economics, including the distribution ratio or method of tokens, and whether the tokens can be smoothly sold (with continuous buyers) in case of release, etc.?

• Narrative attributes: Can the project align with market trends? For example, if the market is hyping AI, then AICrypto will have a tailwind advantage. Similarly, if major institutions are trying to promote asset tokenization, then RWA will have a tailwind advantage, etc.

You can tabulate the above dimensions in an EXCEL sheet, then set different scores based on your priorities (i.e., what you focus on), and create a survey form for each project. Finally, based on your actual scoring results, select specific projects, and combine them with some on-chain indicators (including K-line) to determine the timing of entry, and long-term bet on the corresponding projects.

We have previously provided a specific demonstration of project scoring. Interested parties can refer back to the corresponding historical articles, as shown in the figure below.

According to data from dextools, the current number of tokens in on-chain DEX has exceeded 16.81 million (note that these are tradable tokens; if we count all tokens created on-chain, the current number is estimated to be around 40 million). Therefore, through our narrative-based approach, you can reduce the time and energy spent blindly choosing tokens to some extent.

In short, if you don't have much time or energy to do research but don't want to miss opportunities in this field, the simplest way is to persist in DCA strategy to invest in BTC. If you still hope to gain more and higher return opportunities through altcoins, then try to customize a project research plan for yourself. As for those who still harbor the mindset of getting rich overnight and hope to quickly change their lives by asking others for the wealth code, we have no good advice, only wish you good luck.

3. Other options beyond trading

Additionally, in this field, besides making money through trading spot, contracts, and futures, there are actually other ways to choose from, depending on your interests and willingness to invest effort.

For example, you can engage in zero-cost testnet airdrop interactions. You can experience various dApps without worrying about wallet theft (by using wallets with small amounts of assets for interaction), and you can also gain a good understanding of specific projects and achieve a learning effect, such as the recent interactions with networks like Monad and MegaETH.

Another option is on-chain wealth management, which at least won't incur losses. If you have some capital but don't want to bear market fluctuations, participating in some wealth management options can be a good choice. Some new projects' wealth management (staking wealth management) may even offer additional airdrop opportunities. If you research well, achieving an annualized return of 10-15% is possible. Of course, you should also pay attention to the risks of the projects, such as only choosing stablecoin wealth management and not buying any altcoins for staking in pursuit of so-called high returns, while also assessing the risks of project failure or theft.

Alternatively, if you enjoy writing, you might consider starting a content column like Talking Li, or if you like being on camera, you could even start a video or live streaming column… and so on.

In summary, different people should have different choices (stick to doing 1-2 things you believe in and are willing to invest in long-term), and different choices may lead to different outcomes. The Bodhisattva fears causes, while sentient beings fear results.

The market is cruel, and volatility is relentless. Only those who prepare in advance during the market's silence, and those who can remain calm when most people are collapsing, are likely to achieve the results they desire in the new chaos. An individual's investment return is often determined by their trading discipline and personal mindset.

Peace of mind, Keep moving forward.