Whether or not you are in the crypto market, if you pay a little attention, it seems you are always tempted by those stories of making hundreds or thousands of times your investment, unable to resist putting yourself in their shoes and stepping onto the playing field.
However, it is only after truly participating that you will find that behind the few lucky ones who get rich, the vast majority are just silent cannon fodder, often losing heavily.
If you want to dig deep into the crypto market, remember these 18 lessons:
01. Do not assume anyone will think of you
Even if you feel like you are part of the cryptocurrency Twitter community and belong to a big family, in reality, you are fighting alone in this market. The cryptocurrency market is a 'player vs. player' arena, where everyone is pursuing their own interests.
No one will genuinely consider your interests; all decisions and actions revolve around self-interest. Therefore, you need to stay vigilant and rely on your own judgment rather than depending on others' goodwill.
02. Information asymmetry on Twitter is extremely high
On social media platforms like Twitter, the phenomenon of information asymmetry is very severe. Some influential people may hold more insider information or market dynamics, while ordinary investors are often at a disadvantage. To make wise investment decisions in the cryptocurrency market, you need to be clear about who the truly valuable sources of information are.
Follow the right people, and you may gain significant 'alpha'; blindly following the wrong people can lead to total loss. Learning to discern the reliability and motivation of information sources is key to successful investing.
03. Trust your judgment
When market emotions fluctuate, others' advice is often unreliable.
When the market rises, if you ask others what to buy now, they might say: 'Buy at market highs? Are you stupid?'
When the market declines, if you ask others what to buy now, they will say: 'Everything is over, buying now is foolish.'
These feedbacks often reflect extreme market emotions rather than objective advice. Therefore, learn to trust your analysis and judgment, and do not be swayed by others' emotional remarks.
04. Stay away from the echo chamber
On Twitter, it's easy to fall into an 'echo chamber,' only hearing voices that align with your own views. Don't use social media to seek confirmation bias; instead, use it to test and challenge your investment views.
For instance, if you are considering investing in a popular token (like 'HYPE'), in addition to paying attention to the supportive voices, also actively seek out opposing opinions. You might have overlooked some key risks or issues. Keeping an open mind will allow you to make more comprehensive decisions.
05. Spend time on valuable things
Instead of arguing online with anonymous individuals, spend time on more productive activities, such as:
Read the project's white paper to gain a deeper understanding of the project's technology and business logic;
Experiment with related applications on-chain and personally experience their functionality and potential;
Interact with the community on Telegram or Discord, ask questions, and gather firsthand information;
Record your investment thoughts and write down your investment logic.
Thinking on paper can help you clarify your thoughts. Writing down your investment arguments before investing can help you assess decisions more rationally and avoid emotional trading.
06. Don't be swayed by others' profits
Seeing others make big money in a short time can lead to fear, doubt, or the fear of missing out on your own long-term holdings. But remember, the logic of long-term holding is measured in years, not weeks or days.
If your investment argument still holds, then hold on; but if the market or project's fundamentals change, sell decisively. Never 'fall in love with your position'; maintaining flexibility and rationality is crucial.
07. Emotional management in trading
In trading, emotions are often the biggest enemy. Here are some suggestions:
If you feel overly excited about a position, consider selling;
If a certain asset's price suddenly skyrockets, sell decisively.
The market cannot rise forever; the key to long-term survival is learning to lock in profits. Greed may cause you to miss the best exit opportunities.
08. Understand the sources of yield in decentralized finance (DeFi)
In DeFi platforms, if you cannot clearly explain the source of yield in two sentences, you are likely the 'source' of the yield. In other words, you may be providing liquidity or taking on risk for others without realizing it. Before investing in DeFi projects, be sure to understand their economic models and risk points.
09. Narratives determine everything
In the cryptocurrency market, narratives are the core driving force behind price movements. The stories constructed by market participants can greatly influence asset values. For example, Dogecoin once had a total market value close to $100 billion, which was entirely the result of narrative-driven dynamics.
This reminds me of a saying: 'Do you want to make money, or do you want to prove you are right?' In the market, following the narrative often yields better returns than being obsessed with being 'correct.'
10. Don't chase high prices
When you discover a new project and think, 'Wow, this idea is amazing,' but delay investing for weeks, then when its price suddenly skyrockets, don't chase the high. Your best investment opportunity has already been missed weeks ago. Jumping in now is likely to have you buying at a local high. Learn to accept missed opportunities and patiently wait for the next one.
11. Emotions are temporary
When you start making money, you may feel extreme excitement; this feeling can be addictive, and you will want to continuously replicate it. However, overtrading or frequently rotating positions often stems from chasing this feeling rather than making rational investment decisions. Learning to control emotions and remain calm is essential to avoid unnecessary losses.
12. Understand market cycles and sector rotations
In a bull market, not all assets will rise simultaneously. Typically, the market goes through different phases, where certain sectors (like DeFi, NFTs, Layer 2, etc.) will perform in rotation. Pay close attention to emerging narratives and trends, and position yourself ahead of time rather than chasing already started sectors. Planning your investment strategy well can give you an advantage in market rotations.
13. The cost of making mistakes is lower when you are young
Making mistakes in your 20s is far less costly than making mistakes in your 40s; losing $1,000 is much easier to bear than losing $100,000. When I first tried leveraged trading, I lost thousands of dollars in just a few minutes, but that failure taught me valuable lessons.
Failure is part of growth, but ensure the cost of failure is within your means.
14. Why most people can't make money in the crypto market
Ordinary investors are often at a disadvantage in the cryptocurrency market for the following reasons:
YouTubers or influencers promote a project on Twitter, and the price starts to rise;
The token enters the top 100 on CoinGecko, attracting more attention;
KOLs, venture capitalists, or early investors start selling as the price rises;
The project becomes 'well-known,' and ordinary investors start to buy in;
Retail investors buy in and push prices up, but the increase is limited;
KOLs, VCs, etc., sell all their holdings;
Token prices plummet (usually while you are sleeping), and you are forced to cut losses.
Understanding this pattern can help you avoid becoming the 'bag holder.'
15. Give yourself time
We all wish to get rich quickly, but success in the cryptocurrency market takes time. Slow and steady wins the race. Of Warren Buffett's $84.5 billion fortune, $81.5 billion (over 96%) was accumulated after he turned 65. This reminds us that patience and long-term commitment are key to wealth accumulation.
16. What you want is not retirement, but freedom
Many people think retirement is the goal, imagining themselves lying on a beach in the Caribbean. But retirement can become boring just a week later. The real goal is freedom—waking up every day to do what you want, creating value with interesting people, while having enough time to spend with family and friends. The cryptocurrency market may offer you financial freedom, but don't forget to pursue more meaningful life goals.
17. The cost of being full-time in cryptocurrency
If you want to quit your stable 9-to-5 job and dive full-time into the cryptocurrency market, ask yourself if you are ready to be online 10 to 16 hours a day, 7 days a week, for years on end. Even then, there is no guarantee of success. Full-time involvement in the crypto market requires extremely high levels of self-discipline, patience, and mental resilience.
18. Reflection after success
When you are 'successful' in the cryptocurrency market, you may find that it is not what you initially wanted. You have money, but you are still who you are. Money does not solve all problems. If your only goal is money, you may feel empty or even depressed after achieving success. Therefore, set goals that are more important than money, such as personal growth, family happiness, or social contributions, to make your success more meaningful.
