Note: This article is from @riyuexiaochu's Twitter account.
1. Although the bull market sees widespread gains, speculation remains primarily driven by specific sectors. Furthermore, a surge in the price of one coin can trigger speculation across its entire sector.
2. Opportunities abound in a bull market, but if you are greedy and try to seize them everywhere, you will not end up well.
Conversely, catching the main upward wave of a single sector is enough to make you incredibly wealthy. If you're lucky enough to catch two main upward waves during sector rotation, you can amass unimaginable wealth.
3. This bull market is different from previous ones in that there is a lot of money, a lot of people, and a lot of professional institutions.
Therefore, the trading strategy has been adjusted as follows:
1) Instead of chasing trends, it's more profitable to focus on developing good projects/sectors in depth.
2) Form a group of professionals for mutual support;
3) The market value of popular projects is relatively fully valued, while non-popular sectors may see high valuations;
4. It's important to distinguish between being amazing and having potential returns. A truly amazing project doesn't necessarily make you money , because the market will fully price it out. In other words, just because everyone is optimistic about something doesn't guarantee a huge price increase.
I would choose:
1) Items that have some market recognition but are not widely favored by the general public are the focus of our research, as they have high potential returns and low risks;
2) Sectors with low market activity, such as the mini-storage lottery sector;
5. While investing cross margin capital in one sector can be exhilarating, it could also cause you to miss out on the entire bull market , and given the high risk involved, it's not recommended. A more effective approach is to concentrate your investments in a few key sectors and then add less important ones, keeping the total number of shares held within a single sector.
There are three scenarios for speculation in the six sectors:
1) Major, certain events, such as the Shanghai upgrade leading to speculation on LIDO and SSV, and the Arbitrum airdrop triggering a surge in the value of its ecosystem projects;
2) Sudden events. For example, the sudden popularity of ChatGPT triggered an explosion in the AI sector, and the release of Sora also caused a surge in prices. Another example is the popularity of Metaverse in the second half of 2021, which sparked a GameFi craze in the crypto .
3) After a certain coin experiences a surge, it becomes the leader, causing a surge in interest in projects within its sector;
Speculation in certain sectors is mostly uncertain, which is why you have to wait for the right opportunity during a bull market. The timing of such speculation is unpredictable. Only major events like the first type are relatively certain. However, its drawback is that because of its higher certainty, the gains you can participate in may not be very large. This is because many people will position themselves in advance. The most typical example is this year's Cancun upgrade; ARB and OP's gains lagged behind other cryptocurrencies.
In previous bull markets, there were two strategies:
The first approach: Investing all assets heavily in certain sectors.
All you need to do is wait for the wind to rise in a bull market. The advantage is its simplicity, making it suitable for most people, especially those with busy work schedules. The disadvantage is that you need to hold on. Holding on requires patience and will test your self-control, especially when you see other cryptocurrencies making huge profits while yours remains stagnant.
I recommend having 2-4 specific sectors. You can have just one if you prefer, but that requires a good eye. Too many sectors are risky and not recommended.
The second approach: allocate part of the position to long-term holdings, and add the remaining portion during sector-specific speculation.
The advantage is its flexibility, allowing for both expansion and contraction. However, the disadvantage is that it requires a high degree of market sensitivity, demands significant effort, and necessitates constant market focus.
