Forward the Original Title‘保住收益的3个基本思路、做好迎接新一轮熊市的准备’

Our previous article mainly made some basic thinking and sorting on the issue of altcoin swaps, and then a friend left a message saying: I have finished reading the article, but still don’t know what to do. I just entered the circle a few months ago and invested 100,000 yuan. I bought a lot of altcoins and local dogs. Now I only have about 10,000 yuan left. I want to sell all I have now and swap for some better altcoins to get my money back. Can you directly recommend some altcoins that can increase 10 times?

This kind of question is also a type of question that many friends who are new to Hua Li Huawai like to ask. From the perspective of the questioner, what the other party needs is a single definitive answer, that is, they hope that the person being asked will recommend a cryptocurrency that will only rise (not fall). But from the perspective of the person being asked, no one can definitely guarantee that a certain cryptocurrency will increase by 10 times in the future. Moreover, there is also a time consideration. If the person being asked replies that a certain currency will increase 10 times in the next 10 years for sure, then even though this may be a definitive answer, for the questioner at the current stage, The words seem to have no meaning.

A few days ago, a friend told me: I re-read an article by Huali Huawai last year (2023) and found that the RWA tokens mentioned in the article have increased a lot, basically by 10 times or 20 times.

Even so, this will vary from person to person. Last year alone, I shared/mentioned hundreds of projects through Huali Huawai. This range may be suitable for those who don’t like to study further on their own. For humans, it’s still a little too much. But if you have a clear narrative (track) choice, for example, you only want to delve into projects in AI, RWA or GameFi, then in fact, under a single narrative, there are not many projects listed by Huali Huawai last year. You can definitely spend a little more time doing research on the basis of the article, so that you may get twice the result with half the effort.

But to be honest, when I was sorting out the projects and writing articles to share them last year, I was not sure how much those projects would increase, or even whether some of them (some of which were new projects at the time) could survive normally. In this year’s bull market, the quality of projects is sometimes not necessarily positively related to currency prices. Moreover, if I can accurately judge that a certain project can increase to 10 times or 20 times at a certain point in the future, then you don’t need to tell me, I will definitely go all in. It is because the market is unpredictable and I cannot judge the trend of a specific project with 100% accuracy, so I chose and adopted the DCA strategy to invest in Bitcoin for the long term.

From this perspective, many of the projects shared by Huali Huawai in the past were not meant for people to trade directly, but only to provide a reference range. From seeing the project to participating in the transaction, there are still many things you should think about and do yourself. But at the same time, I also provided another idea, which is that you don’t need to do any research. At that time (starting in 2022), you can just follow us to invest in Bitcoin. In this cycle, the return of 3-5 times is likely to be achieved.

However, it seems that people who enter this field (especially newcomers) are basically aiming for a hundred-fold or thousand-fold return. They don’t care about a return of 3-5 times in a cycle (such as 3-4 years), so most newcomers are chasing hot sectors and betting on MemeCoin with their own capital. But no matter what your goal is, the goal of investment is to make money. We are not here to gamble, so our core approach is to protect our own returns (at least the principal).

Here we give an example. Recently, as the odds of Biden withdrawing from the presidential election continue to soar, as of the time of writing this article, the price trend of BODEN (Jeo Boden), a MemeCoin, has almost returned to the starting point, as shown in the figure below.

I remember that a friend of mine also bought this BODEN before, and he participated in it relatively early, but he never sold it after generating profits, thinking that it would rise a lot. Then a few days ago he complained to me that all his efforts were in vain.

In fact, we mentioned the PolitiFi track in our article a few days ago (July 14), and we said at the time: PolitiFi is still a short-term hot narrative, and the rise and fall of tokens are mainly based on various events or hype. Trump being shot can cause the TRUMP token to soar. Similarly, if Biden announces the withdrawal of the presidential election one day, then BODEN will definitely continue to plummet.

In addition, yesterday, I also saw friends in the group discussing a Twitter user with assets worth tens of millions. This Twitter user rolled over his assets from hundreds of thousands to more than ten million, and then in a short period of time his assets shrank to about one million. It can be said that he experienced a roller coaster investment experience. Although he still made a profit from hundreds of thousands to one million, the psychological changes here can probably only be truly understood by him or people who have experienced similar things.

In fact, we have seen a lot of similar situations or things, and even worse things, such as the tokens held directly becoming zero, or all the principal being lost/liquidated… So, how can we avoid such things as much as possible?

1. Create an exit plan and execute it

Most of the time, many people are thinking about what to buy and how to buy, but rarely think about when and how to sell at the same time.

In previous articles of Huali Huawai, we have mentioned more than once that whether it is a long-term investment plan or a short-term investment plan, you need to reasonably customize the stop-profit/stop-loss plan according to your position and risk tolerance. If you don’t do this, you may miss the best time, and the final result will be the situations we mentioned at the beginning of the article.

Usually, when the market is growing rapidly or showing a clear trend, people’s greed will often take over, and with the added stimulation of various news events, stories of getting rich quickly, etc., it is easy to get FOMO and get carried away. Even if some people are lucky (right time, right place, right people) and make 10 million in a short period of time, they may continue to firmly believe that they will make 100 million next, and completely ignore their original plan (perhaps there is no plan or the plan is unreasonable).

At this time, they will only think about how to use the existing strategies or ideas to make more money, but will not think that when they reach their original goals, they should exit in stages and appropriately readjust their strategies. In other words, when an investment behavior reaches its goals, they can consider cashing out (selling) part of it to improve their lives, and customize a new and more stable investment strategy based on the new amount of funds (the larger the amount of funds, the lower the risk preference).

Money is yours only when it is in your pocket. Otherwise, it is just a string of numbers that change at any time. Don’t let greed turn into regret.

Of course, the idea of ​​taking profits here may need to be expanded. In my opinion, there are mainly two types:

One is that you convert your crypto assets into corresponding legal currencies (such as USD/HKD), and then you can use these legal currencies for any necessary consumption. This has nothing to do with the crypto market.

The second is that you store a portion of your core assets (BTC) directly in a cold wallet. This portion of assets will never be moved unless it is absolutely necessary. It is the last guarantee for you (including your next generation) on this planet.

So when should we exit (take all or part of the profits at a certain stage)? This topic has been discussed in some detail in my previous articles, so I will not repeat it here.Friends who are interested can refer to the previous article, as shown in the figure below.

In short, formulating and implementing an exit plan is very helpful for investment. It allows you to face reality. Otherwise, your fantasy may dominate and make you forget about reality and rationality.

2. Treat the altcoins you hold reasonably

Remember in the previous article of Huali Huawai, we also mentioned: In terms of investment, no matter how much your principal is, my advice has always been the same. The crypto field is a very high-risk field. You must be aware of the risks. If you can’t control the risk yourself, then just choose between BTC/ETH. This is the simplest and least error-prone investment path.

Specifically, as long as you can stick to a certain strategy (such as using the AHR999 or FGI index) for long-term operations, you should be able to get good returns after a complete cycle, and even be ahead of most ordinary traders in terms of yield. I just found that the group has been discussing this matter these two days, and some partners seem to have been operating according to this strategy. As shown in the figure below.

If we look at a complete cycle, it is easy to find that many altcoins tend to plummet by 90% to 99% in a bear market. Take me as an example, although I will also invest about 10% of my positions in individual altcoins, the ultimate purpose of investing in these altcoins is to be able to convert the proceeds into Bitcoin in the end.

We have also sorted out and analyzed the topic of altcoins in the previous articles of Hualihuawai. Although most altcoins may not have the opportunity to create new ATHs due to the particularity of this bull market (liquidity issues, a large number of new altcoins, VC coins with high FDV, etc.), we believe that this bull market will still usher in an altcoin season.

In the medium and long term, for ordinary people, large currencies such as BTC, ETH, SOL, etc. will be more suitable for investment. Of course, at this stage, you should not expect to generate more than 10 times the return on yourself with the help of these large currencies. I remember when I started to invest in Bitcoin on a monthly basis again in 2022, the goal of Bitcoin was 3-5 times in this round of bull market. As of now, the book has achieved 2.64 times, which is a little short of the goal of 3 times. But if you just start buying Bitcoin now and want to continue to get 3 times the return, then Bitcoin needs to reach more than 200,000 US dollars. Although I also believe that Bitcoin will reach 200,000 US dollars, it is highly unlikely to happen in this round of bull market.

In the short term, there are still certain opportunities for the new narratives born in this bull market (but it is recommended to only focus on the corresponding head projects), the so-called value coins in popular tracks (compared with those air coins that have no ecological use value), and MemeCoin (tokens affected by people’s FOMO emotions). However, it is relatively difficult for ordinary people to seize these opportunities at this stage. It is not recommended to speculate with heavy positions. Small and diversified investments are sufficient, unless you already have your own set of strategies or methods and are mentally prepared to lose money.

Therefore, our current suggestion is: after Bitcoin breaks a new high at the end of this year or in 2025 (which I think is highly likely), if there is a chance to usher in a new round of altcoin market, then during the market upswing and when most people re-enter the FOMO state, you can start selling your altcoins in batches (note that it is in batches). However, due to the unpredictability of the market, if you sell all your altcoin positions in batches and still find that the market continues to rise, then remember not to chase high prices again.

Then, keep the necessary funds and be prepared for a new round of bear market. As long as you wait patiently for the bear market in 2 years (maybe 3 years), you will still have plenty of opportunities to re-customize your strategy and buy the so-called value projects at the bottom. Of course, with the continued involvement of traditional large institutions and the gradual follow-up of supervision, the crypto market will have fewer and fewer big opportunities for ordinary people in the later cycles, but at this stage, we are still in the early stages of this field, so just seize the opportunity.

3. Be prepared for a new round of bear market

So, how should we plan out before a new round of bear market arrives?

First of all, you need to consider how much of your position is allocated to Bitcoin and how much is allocated to altcoins. This needs to be set according to your own risk preference. Anyway, our advice has always been the same, that is, at least 50% of your position can be given to Bitcoin (for fixed investment). Of course, if you are very optimistic about the long-term development of large currencies such as ETH, SOL or BNB (with capital background), you can also reduce the proportion of Bitcoin according to your own risk tolerance, and then allocate a certain proportion of positions to these currencies.

The second question is when to start re-entering the market and making regular investments. According to historical experience, Bitcoin may fall by about 60% from ATH during a bear market, and ETH may fall by about 70% from ATH. As for other altcoins, we have mentioned above that many altcoins may fall by more than 90% during a bear market, and then you can consider re-positioning.

Of course, this is just a simple historical experience. In the actual operation process, it is still necessary to refer to some on-chain data or indicators to assist. At the same time, because the ETF passed this year may also lead to some new changes in the prices of BTC and ETH in the next bear market. In other words, if Bitcoin can reach $100,000 in this bull market, then theoretically, the chances of us seeing Bitcoin below $40,000 in the future are very small.

Based on the thinking, here is another small suggestion: If you have just entered the crypto field and still have only a limited understanding of blockchain and crypto, then our suggestion is that you should not mess around in the remaining bull market of less than a year. If you want to participate in transactions, simply make the necessary investments in BTC/ETH. The main thing is to experience the transaction process, and in the long run, at least you will not lose your principal. You can use your spare time and energy to increase your understanding of the field or pay attention to some projects that interest you.

I have always said that if you can become a professional trader (with a relatively mature investment theory system and technical level), then with your research skills and analysis strategies that are ahead of most people, you can participate in any trade. Go to the project and find the wealth code, and you don’t have to care about the rise or fall of the market, because whether the market rises or falls, you will have the opportunity to make money. But if you are just an ordinary investor (including myself), then you should make yourself more rational when it comes to making money. The safest way is to grasp the law of the cycle. You need to change your mentality from directly creating wealth to preserving and increasing wealth.

But if you have read/heard a lot of truths and still think that you are the chosen one in this field, or you still have no brainer to believe that strangers (XX analysts/XX teachers, etc.) can make you rich, and You must enter this field with the goal of getting rich overnight, so I won’t stop you. You can do things like leveraged contracts.

As an old investor and a die-hard investor in Bitcoin, I can also find that more and more old investors (who have gone through 2-3 cycles) will go through a process of going from more to less, and then from complex to simple in terms of investment direction. After accumulating a certain amount of funds, they will eventually use Bitcoin as the ultimate tool for wealth. Of course, some old investors will (at the same time) choose Ethereum and others.

Simply put, if we look at the time dimension a little longer, in a bull market we can only consider “selling”, and in a bear market we only consider “buying”. It is enough for us to seize a few opportunities in each cycle. Investing is a long-term and comprehensive practice.

Disclaimer：

1. This article is reprinted from [Li Huawai]. Forward the Original Title‘保住收益的3个基本思路、做好迎接新一轮熊市的准备’. All copyrights belong to the original author [Li Huawai]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
2. Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
3. Translations of the article into other languages are done by the Gate Learn team. Unless mentioned, copying, distributing, or plagiarizing the translated articles is prohibited.