Author: Tulip King, Head of Technology at Messari

Compiled by: Luffy, Foresight News

Alpha First:

• Let the market tell you which cryptocurrencies are good and which are not. Buy strong tokens and sell weak ones. You don't have to be the first, just not the last.
• Put in the effort. Find cryptocurrencies whose trends go against your views and try to understand the reasons behind them.
• Be unconventional. If you rely on copy-trading, the results won't be good.

The market is right, you are wrong

Indeed, when you invest and trade against the market, you may be able to make the most money. In an ideal world, we could all buy the dips and sell the tops. However, this is unrealistic. If people could more readily accept the market trend, entering when cryptocurrencies rise 40% in a day and selling when they fall over 10% for several consecutive days, many troubles could be avoided.

• The market is never wrong: The market never makes mistakes, only people's views can be wrong. This means that no matter what you think should happen, the market's trend is the ultimate reality.
• Profits verify correctness: Correctness is not about predicting the market's direction, but about whether you can make a profit. Traders may be theoretically correct about the market's direction, but may still lose money due to poor execution or timing. The true measure of "correctness" is profitable trades, not correct predictions.

You'll find that Saylor not only buys at the highs, but also in large quantities

Rather than trying to predict reversals, successful traders learn to identify and follow the strong areas of the market. This means: being willing to buy assets that have already risen significantly, quickly stop losses when market sentiment changes, and avoid the temptation to average down on losing positions.

The most successful traders focus not on being right, but on effectively managing risk. They take profits when they have them, don't stubbornly hold on during large drawdowns, and are willing to re-enter after exiting.

Price action is the only truth in the market. When your positions move against you, the market is sending a signal that your view may be wrong. The disciplined approach is to accept small losses, rather than letting them turn into large ones.

When your positions experience significant retracements, you need to step back temporarily and ask yourself why. Is this a broader market trend? Has the narrative shifted to other cryptocurrencies? What did I miss? Most importantly, you should ask yourself: do I need to hold through this downturn? When the market disagrees with your view, question your own perspective. Stay humble and adapt to the constantly changing landscape.

Market Signals: The Aiccelerate Case Study

The market's current reaction to AICC has given us a lesson in market psychology. The key takeaways are:

• The market is right, and you are wrong.
• The market's selling is due to other reasons you have yet to discover.

Either way, going against the market is dangerous. If you cannot explain why the price is falling, you are unlikely to be able to judge when it will stop falling. This is exactly what Warren Buffett meant when he said "you only find out who's been swimming naked when the tide goes out" - if you don't understand the market's movements, you will face unseen risks.

Less Dogmatism

In the ever-changing cryptocurrency space, the only asset that can truly be "bought and held without worry" is Bitcoin. This is not an extremist position, but a recognition of Bitcoin's unique status as digital gold, with unparalleled network effects, true decentralization, and institutional adoption as its support. For all other assets in the digital asset world, active management is not only recommended, but necessary for survival.

Although a16z has attracted a lot of attention, the market was signaling a shift towards the DeFAI space weeks ago

The cryptocurrency market requires a unique mindset: one must be both well-informed and adaptable. Successful traders maintain the "paranoid optimism" that Andy Grove spoke of, constantly questioning each position, challenging each view, and treating every gain as potentially temporary. This is not pessimism, but a realistic attitude in a market where narratives change as quickly as messages on Discord.

The most dangerous trap in the cryptocurrency space is not leverage or poor entry timing, but emotional attachment to positions. We've all seen traders become Hodlers after their positions lose value, investors double down on failed theses because their identity is tied to them, and community members become extremists who refuse to acknowledge market changes. This bias towards positions destroys more capital than any smart contract vulnerability.

Success in this market requires being constantly online, processing information from multiple channels. But more importantly, it requires the emotional intelligence to handle that information objectively, without the influence of existing biases. Your convictions should be strong enough to establish positions, but flexible enough to abandon them when circumstances change. Imagine yourself as a surfer reading the waves, not a captain trying to control the ocean.

The best traders seek guidance from the market and are willing to update their trading framework when needed

The most successful cryptocurrency traders I've observed share a common trait: they hold firm views, but are as loose as a comfortable shirt, ready to discard those views when the market presents a different picture. They understand that in the cryptocurrency space, being right is not about maintaining unwavering beliefs, but about maintaining constant focus and adaptability.

Remember, every position except Bitcoin requires active management, continuous validation, and a humble willingness to acknowledge when circumstances have changed. In this dynamic market, convictions should be treated as hypotheses to be tested, not fortresses to be defended.

The Power of Independence

In the echo chamber of crypto Twitter, every price move spawns thousands of conflicting narratives, and the ability to think independently has become a rare and valuable skill. It's easy to mistake information gathering for analysis, and following influential accounts for developing your own insights. But at the end of the day, the P&L statement has your name on it.

The market doesn't care which influential accounts you follow or which "alpha" you've joined. It only reacts to the collective behavior of participants acting on their own beliefs about supply and demand, fear and greed. This is why copy-trading is so dangerous when you don't understand the underlying logic: you never know when to exit, when to add, or most importantly, when the original thesis has failed.

Writing is the most powerful tool for developing genuine market insights. The act of writing forces clarity of thought. When you try to articulate your market views in writing, logical flaws become glaringly obvious. Those fuzzy concepts that seem convincing in your mind must withstand rigorous scrutiny when expressed clearly. This is why the most successful traders and investors, from George Soros to Howard Marks, are often prolific authors.

Imagine how Messari has become the incubator for some of the sharpest minds in the cryptocurrency space. The habit of regular research and writing not only records ideas, but also refines them. Each article, each topic post, each market analysis forces the author to stress-test their own ideas, pushing them beyond the surface to delve into the underlying mechanisms driving market trends.

The path to market success is not about finding the right people to follow, but about forming your own perspective. Start writing, even if it's just for yourself. Document your trades, articulate your views, analyze your mistakes, openly question your assumptions, and engage in discussions. When new information emerges, be willing to change your mind. The goal is not to be forever right, but to think clearly and independently.

"Don't just go with the flow, cherish your own perspective. Cultivate it, treasure it." - Rick Rubin

Remember, in a narrative-driven market, those who can independently construct and analyze narratives have a significant advantage. Your writing doesn't need to be polished or widely popular, it needs to be honest and analytical. This is how nascent market intuitions evolve into actionable trading theses, and how market participants grow into market leaders.