In this field, many people dream of getting rich overnight. While having dreams is a good thing, what if they come true? However, there is a vast difference between dreaming and daydreaming, and many people’s so-called dreams are merely a form of self-indulgent daydreaming.

Typically, the market constantly tests human nature. Even if you hold high-quality assets, you might still get shaken out. For example, the following situations might occur:

When the price of core assets (such as Bitcoin) drops, many people panic and sell off their holdings.

Time is a luxury many cannot afford. Although they have endured the dark times, they often choose to sell off their holdings just before the dawn.

When prices rise too quickly, such as when an asset you purchased has tripled, the fear of a subsequent drop leads many to sell off their holdings and take profits.

Therefore, it is often said that market trading is more of a psychological game among people. In the current stage of the crypto market, any decline can generate fear, and any rise will trigger fear of another decline, creating an intriguing atmosphere.

This leads to two different mindsets:

Fear of buying when prices drop, and even more fear when prices drop further.

Fear of buying when prices rise, and even more fear when prices rise a little more.

If I remember correctly, when Bitcoin’s price fluctuated around $17,000 and $28,000, similar market sentiments seemed to appear.

Perhaps the current market needs more time because more people need to develop greater fear. Only when more people experience this fear and their patience wears thin, will the market enter a rapid growth phase in the late bull market stage (which will be shorter compared to the mid-term stage). At that point, the accumulated FOMO (Fear of Missing Out) sentiment will encourage more people to “bravely” chase high prices and go all in. Then, the big scythe will ruthlessly plunge most people into utter despair, pushing the market into a new cycle. History does not repeat itself, but it often rhymes.

Many people enter this field hoping to create wealth. There are two main ways to create wealth: passive investment and active investment. So, what are passive investment and active investment?

Passive Investment

Passive investment involves putting your money into investments that require minimal effort to maintain. Examples include:

Index Funds: Investing in funds that track a specific index, such as the S&P 500, where the investment grows with the market.

Staking: In the cryptocurrency world, staking involves holding a cryptocurrency in a wallet to support the operations of a blockchain network. In return, you earn rewards.

Holding (HODLing): Buying cryptocurrencies and holding them for a long period, regardless of market fluctuations.

Active Investment

Active investment requires a more hands-on approach and involves continuous monitoring and decision-making. Examples include:

Trading: Actively buying and selling cryptocurrencies to take advantage of market fluctuations.

Participating in ICOs/IDOs: Investing in Initial Coin Offerings (ICOs) or Initial DEX Offerings (IDOs) to get in early on new projects with potential for high returns.

Yield Farming: In the DeFi space, yield farming involves lending or staking your cryptocurrencies in DeFi protocols to earn high-interest returns or rewards.

Three Basic Ideas for Finding Potential Projects

When looking for potential projects to invest in, consider these three basic ideas:

Project Fundamentals: Look at the core technology, team, and vision behind a project. Does it solve a real problem? Is the team experienced and credible? What is the project’s long-term vision?

Market Trends: Analyze current market trends and how the project fits into these trends. Is the project in a growing sector of the market, such as DeFi, NFTs, or Web3? How does it compare to competitors?

Community and Adoption: Evaluate the project’s community support and adoption rate. A strong, active community can be a good indicator of a project’s potential success. Additionally, look at partnerships and real-world adoption of the project’s technology.

By understanding these strategies and ideas, investors can navigate the cryptocurrency market more effectively and increase their chances of creating wealth.

1. Passive Investment

I personally prefer to call this investment approach steadfast investing, meaning consistently investing and accumulating positions over time according to a plan, rather than frequently trading (not selling immediately). This is the investment method I have been using in recent years.

Take investing in Bitcoin during this cycle as an example. As I shared in previous articles, I started dollar-cost averaging (DCA) into Bitcoin in 2022, buying once a month for 20 months. This strategy can be summarized in one sentence: persistently buy Bitcoin during the bear market and gradually sell during the bull market.

While this strategy is simple and easy to understand, not many people stick with it. Why is that?

I believe the main reasons are:

Many people enter this field hoping to find so-called “100x” or “1000x” coins and disregard Bitcoin and Ethereum, which have limited theoretical upside.

Many seek quick profits, aiming for the highest returns in the shortest time, and won’t consider a long-term investment strategy spanning at least 2-3 years.

Their initial capital is small, and Bitcoin and Ethereum seem “expensive,” so they don’t consider buying them.

They lack understanding and knowledge of the field, and don’t have a customized investment plan and position management strategy.

And so on… Ultimately, everyone can find various reasons for themselves.

2. Active investment

Compared to long-term passive investing, active investing is more flexible, with various methods to choose from based on your interests, strengths, and preferences. For example, if you think you are exceptionally lucky, you can invest through contracts. If you are a technical analyst, you can use candlestick charts to buy low and sell high. I believe that the main goal of active investing is to make short-term profits.

You can also participate in financial products such as single-asset investments, dual-asset investments, or staking. Through these, you can earn annualized returns or rewards (such as token distribution or airdrop rewards). This method is relatively simple (somewhere between passive and active investing) and does not require learning any technical skills. However, single-asset investment returns are usually lower (though some platforms offer annualized rates of tens of percent, be wary of those claiming hundreds or thousands of percent as they might be scams). Dual-asset and staking investments may face issues like impermanent loss or token price fluctuations. I have discussed financial products and staking in previous articles, so I won’t elaborate further here.

In summary, most newcomers tend to prefer active investing, while seasoned investors who have weathered market cycles lean towards passive investing. There is no inherent good or bad between these two investment approaches. The best approach is the one that suits you. Moreover, many people adopt both passive and active investing, dedicating different amounts of time and effort to each.

3. Investment strategy

At the current stage, as we expected, this bull market has entered the mid-term phase. Although there may still be some good opportunities ahead, the risks will actually increase as we move forward. If you are new to this field and not fully prepared, I suggest focusing on learning and observing. The crypto space is full of opportunities, and actively preparing to participate in the next market cycle is better than blindly investing and losing your capital during this bull market. However, if you still don’t want to miss out on this bull market, you can try investing with a small amount of capital (recommended to be less than $100,000) to experience the process of building positions and trading.

So, what should you do specifically?

Firstly, as usual, position management should take precedence. Divide your positions into different levels and allocations based on your situation (capital, risk appetite, etc.). For example:

Grade A positions (low risk): Buy Bitcoin/Ethereum, aim for 2-3x returns.

Grade B positions (medium risk): Invest in top projects in sectors you believe in, such as AI, RWA, GameFi, aiming for 5-10x returns.

Grade C positions (high risk): Invest in low-cap projects with potential for significant growth, aiming for 10x+ returns.

Grade D positions: Keep at least 10% of your portfolio in cash (USDC/USDT) to hedge against rare events like market crashes due to black swan events.

Clear position management aims to avoid emotional trading. However, it’s important to note that the above is just a basic plan. You can expand upon it according to your own needs. Buying should be done gradually, either through dollar-cost averaging (DCA) to lower your average cost and risk, or by buying on dips to build positions (dipping-buying was discussed in a previous article last month). This does not mean you should go all-in at once. Additionally, target setting should be based on a longer timeframe. If you prefer short-term trading, your targets should not be too high, and you should have corresponding stop-loss and take-profit plans.

How do we define long and short cycles?

Actually, there is no strict definition. Different people have different definitions. For example, some people think holding a coin for a week is considered long-term! Moreover, the definition of specific cycles also depends on personal goals and market conditions. For example, when I started my new round of dollar-cost averaging in 2022, I set a 3-year investment cycle for myself, until 2025. However, this 3-year period is only considered mid-term for me because my original long-term investment plan was to go through 5 cycles of bull and bear markets (I am currently experiencing the 3rd cycle).

Next is the issue of your specific portfolio composition.

In previous articles, I suggested keeping the number of altcoins in your portfolio to no more than 5 (this is also my personal practice), besides Bitcoin/Ethereum. If you have strong research abilities, you can consider expanding to no more than 10. This means you should not overly diversify your portfolio.

For example, if you only have $10,000 but you bought 50 different tokens, the possible result is that you need to constantly monitor the development of at least 50 projects. Even if one of the tokens gets a 10x return, your overall return may still be very low or even negative.

Therefore, based on your time, capabilities, and reasonable profit goals, plan your investment portfolio on top of the graded position basis, and avoid spreading your investments too thinly.

4. Find projects

When it comes to selecting projects, conducting specific project research, and finding low-market-cap potential new projects, these topics have been continuously explored in the methodology series and project series columns by Hua Li Hua Wai. Interested readers can directly revisit the historical articles by Hua Li Hua Wai.

Next, let’s categorize and summarize some of these methods:

The first step is to find projects under popular narratives

The second step is to conduct a basic investigation of the list items.

Step 3: Customizing Specific Investment Portfolio Strategies

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