In the bull market, it seems easier than ever to seize money-making opportunities, but blind pursuit may lead to huge losses or even missing out on the entire bull market. This article is sourced from the book “I Made a Fortune with Satoshi Nakamoto” by Riyue Xiaochu and compiled and written by Shenchao.
(Tweet: The first story of a college student getting rich in the history of cryptocurrency: How did I collaborate with Satoshi Nakamoto?)
(Background: A review of the fourth halving of Bitcoin: How powerful was the Chinese mining tycoon Wu Jihan back then?)
1. Although the bull market is generally rising, speculation still revolves around specific sectors. If a cryptocurrency experiences a sharp rise, it will drive speculation in its corresponding sector.
2. Opportunities are everywhere in a bull market, but if you try to seize every opportunity greedily, it will not end well. On the contrary, focusing on the primary uptrend of a specific sector is enough to bring you abundant profits. If you are lucky enough to catch the rotational waves of two primary uptrends in different sectors, then you can make unimaginable wealth.
3. This bull market is different from previous ones in that there is more money, more people, and more professional institutions involved. Therefore, the adjusted trading strategies are as follows:
1) Instead of chasing hotspots, it is better to focus on well-established projects/sectors for higher returns.
2) Form alliances with a group of professionals.
3) Highly popular projects may have fully valued market capitalizations, while less popular sectors may experience higher multiples.
4. It is important to distinguish between impressive projects and potential returns. Extremely impressive projects do not necessarily make you money because the market is already fully pricing them. Just because it is highly favored by the public does not mean it will have a significant price increase.
I will choose:
1) Projects that are recognized by the market but not highly favored by the public as key research objects, as they have high potential returns and low risks.
2) Sectors with low market heat as mini warehouse lottery sectors.
5. Although it may be satisfying to go all in on one sector, it may also cause you to miss out on the entire bull market, which is not recommended considering the higher risks. I recommend using a concentrated and limited approach. Focus on a few key sectors and secondary sectors. Control the overall quantity within a certain range.
6. There are three scenarios for sector speculation:
1) Major events with high certainty, such as the Shanghai upgrade leading to speculation in LIDO and SSV, or the airdrop of Arbitrum tokens leading to the rise of its ecosystem project.
2) Sudden events, such as the sudden popularity of chatgpt triggering the boom of the AI sector, or the release of Sora causing a wave of increases. Another example is the boom of the metaverse in the second half of 2021, which ignited the GameFi trend in the cryptocurrency world.
3) When a certain cryptocurrency experiences a significant surge and becomes the leader, it triggers the hotness of its corresponding sector projects.
Sector speculation is mostly uncertain, which is why it is necessary to wait for the right opportunity in a bull market. The timing of speculation cannot be determined. Only the first type of major event is relatively certain. However, its drawback is that due to its strong certainty, the potential price increase you can participate in may not be significant. That’s because many people will position themselves in advance. The most typical example is the Cancun upgrade this year, where the price increases of arb and op lagged behind other cryptocurrencies.
In previous bull markets, there were two strategies:
The first strategy: Go all in on specific sectors with all your assets. The key is to wait for the bull market. The advantage is that it is simple to operate, making it suitable for most people and those with busy daily work. The disadvantage is that you need to have strong conviction. Having strong conviction tests one’s character, especially when you see other cryptocurrencies getting rich while your own remains stagnant. I suggest focusing on 2-4 specific sectors, but if you can handle just one, it would require a good eye. Having too many sectors increases risks and is not recommended.
The second strategy: Keep some positions hidden and enter the market when there is speculation in specific sectors. The advantage is that it allows for flexibility, but the disadvantage is that it requires sensitivity to the market and more experience, as you need to constantly focus on the market.