The author of this article shares his investment experience in the AI field, helping readers understand the dynamics of the crypto market and investment strategies. This article is from a post written by terry, compiled and translated by TechFlow.
(Background: Is AI Agent the Next DeFi Summer?)
(Additional Background: AI Agent Alpha Methodology: Why are "Platform + Market" more popular, featuring Max and Alchemist AI as examples?)
First, a disclaimer: I am not the top trader, but the following are some key insights I have gained over the past two months while exploring the AI meta with some industry experts.
The goal of this article is not only to distill the concepts I have learned, but also to help you better understand and navigate this market through practical examples and suggestions.
Attention and Fundamentals
There are two main reasons for the rise in coin prices:
- Attention (hype)
- Fundamentals (actual value, technology, applications)
Attention-based coins:
The prices of these tokens soar mainly because everyone is talking about them (like meme coins that are popular on X/tiktok). In this case, the coin price can rise quickly, but it can also fall rapidly, as it lacks "true intrinsic value" and is just hype.
Fundamentals-based coins:
These coins have real value support, such as interesting technology, a strong development team, partnerships, or useful products. Even if the price drops in the short term, it is usually just "noise" because their long-term potential is still very high.
For example, a meme coin may see its price rise due to a lot of mentions on Twitter and TikTok, but once the attention fades, the price will drop quickly. In contrast, a mature project that is developing AI tools and collaborating with well-known projects or companies, even if the initial price movement is slow, the price may steadily rise as more people see the actual effects of its products.
When trading in hype, you need to closely monitor the price trend and exit in a timely manner when the momentum weakens. In fundamental investing, if you believe in the long-term potential of the project, short-term price fluctuations may not matter much (this is my personal investment style). If you find that the fundamentals of a project have weakened or changed, you must decisively cut losses. Never be too attached to any investment project.
Seeking Expansion Space
A wiser strategy is to focus on projects that have the potential to multiply in value, rather than just aiming for small gains.
Instead of focusing on a small opportunity that might grow from $1 million to $5 million in market cap, it's better to look for projects that you think can grow from $5 million to $100 million or even $1 billion. If executed properly, such trades can bring "life-changing" returns, rather than just quick pocket money.
You should always look for opportunities with significant upside potential. This usually means focusing on early-stage projects with strong fundamentals or unique innovations, rather than the well-known coins that have already been "hyped".
Seize Early Opportunities
Profitable trades often come from participating before a trend becomes mainstream. If you can discover a promising project or trend (such as AI infrastructure or collective/multi-agent architectures) before others, you can capture the greatest gains.
In simple terms, if you start researching AI-related technologies or projects before AI becomes a buzzword, you may find an excellent coin at a low market cap. As the AI hype grows, more people will get involved, driving up the price. Early participation means you can capture most of the upside.
Spend time understanding the emerging trends in AI (such as multimodal, decentralized reasoning, collectives, flow engineering, agentfi, etc.) and get involved before they become headlines. This may require you to stay ahead of developer announcements, read whitepapers, and monitor social media discussions.
Establish a Trading Process
Having advantages, such as using custom scripts, analysis dashboards, or any efficient research methods, can help you find good opportunities faster than most people.
You can use a crypto price alert bot or platforms like dexscreener to track the release of new tokens. When new projects suddenly gain trading volume, you need to investigate immediately. Review the project's website, team information, social media accounts, Telegram groups, Discord, etc. If it looks promising, you can decide whether to invest immediately.
Speed is crucial. You can even use simple tools, such as an X list of well-known "AI quantitative" groups, Telegram groups, etc., to stay on top of new opportunities. Over time, you can acquire more advanced tools, but start with free and simple ones. The key is to have a strategy, a process, to help you win in the market.
Avoid the "middle curve" trap
Usually, it is simpler to buy into proven leaders or find completely new low-cap projects. Mid-cap projects have higher risks if they lack a clear positioning, as new competitors can easily surpass them.
Suppose you have the following choices:
- Project A, $1 billion market cap, well-known and constantly releasing new features
- Project B, $100,000 market cap, novel idea but still unknown
- Project C, $50 million market cap, no innovation and always overshadowed by other projects
A beginner might think C is "safer than B but cheaper than A." However, if C stagnates, lacks growth or innovation, it is less likely to deliver big returns than finding a new, promising B or sticking with a reliable A.
The key is, if you choose mid-cap projects, ensure they have a plan to stand out. Otherwise, they may just waste your time and capital - ultimately, it's an opportunity cost issue.
Focus on industry growth (this is also why I only focus on AI)
AI is a long-term trend. We see its impact not only in cryptocurrencies but across all industries.
When an entire industry (like AI) shows massive long-term potential, the entire market may expand significantly beyond current valuations. The early leaders in that industry may see massive appreciation over time.
If the entire AI intelligence domain is currently worth around $10 billion, but you believe it will become one of the most dominant industries in a few years, potentially growing to $100 billion or more, then the leaders in that space (mature projects with strong communities and products) may see 10x or more growth as the industry matures.
Identifying the leaders in the growth story and investing in them now can be a safer and more profitable choice as the industry matures.
Adapt and continuously improve
AI is evolving rapidly, and cryptocurrencies are even faster. You need to constantly update your strategy, reflect on what's working and what's not, and learn from your mistakes.
A good practice is to write down your top 5 successful and failed trades at the end of each month. Ask yourself: Why did I buy this coin? When did I sell, and why? Could I have spotted the trend earlier? By regularly reflecting on these questions, you can identify patterns in your decision-making and improve over time.
Treat trading as a skill that requires practice. Logging trades, assessing market sentiment, and discussing strategies with other crypto traders can help you become smarter and faster.
Manage liquidity, maintain flexibility
Keep some cash on hand to quickly deploy when new opportunities arise. Don't get stuck in investments you can't exit quickly.
Suppose you have $1,000 in investment capital. Instead of putting all of it into one project and waiting for months, invest $600 in a promising project and keep $400 in reserve. When you find a new, promising project, you can quickly deploy the reserve.
Liquidity means flexibility. Being able to act quickly on excellent opportunities is often more important than "fully investing" all the time.
Become a crypto learner
Treat cryptocurrencies as a long-term profession, continuously learning and growing. Don't just see it as a lottery ticket. You're here to accumulate knowledge, skills, and capital over the years, not just chase one-time big gains. If cryptocurrencies are truly the future of finance (which I believe they are), we're just getting started on this journey.
An amateur might say, "I want to get rich quickly in a month." A long-term thinker would say, "I hope to gradually improve my understanding, become adept at spotting trends, and be able to profit from market changes in one or two years" - this can be achieved through trading, investing, or even building your own projects.
Over time, good habits - such as focused research, active reflection, patience, and discipline - will compound in their effectiveness. Ultimately, you'll develop the ability to profit effectively in major bull markets.
Maintain patience and consistency. Those who view cryptocurrencies as a profession and continuously improve themselves will outperform those who rely on luck and hype across multiple market cycles.
Conclusion
The key is - don't just chase hot projects. Build a system. Learn to identify trends early, conduct in-depth research, focus on fundamentals, and treat cryptocurrencies as a skill to be mastered over the long term. Keep some capital to seize new opportunities, regularly review past decisions, and keep learning. Over time, this mindset will help you find major winners, identify key opportunities, and avoid becoming "exit liquidity" for others.
