Moderator: Alex Mint Ventures Research Partner
Guest: Lao Lu Lao Lu’s Blockchain Notes, TG’s channel author, ArkStream Capital investment research partner, Lawrence Mint Ventures researcher
Program recording time: 2024.01.04
Hello everyone, welcome to WEB3 Mint To Be sponsored by Mint Ventures. Here, we continue to ask questions and think deeply, clarifying facts, exploring reality, and finding consensus in the WEB3 world. I am Alex, a research partner at Mint Ventures. We have specially invited three teachers to talk about the 2024 opportunity outlook today.
Disclaimer: The content we discuss in this podcast does not represent the views of the institutions where the guests work, and the projects mentioned do not constitute any investment advice.
Alex：We have invited three senior Web3 investors in this podcast. Please introduce yourself.
Lao Lu:Thanks for the invitation. I am Lao Lu, the channel author of Lao Lu’s Blockchain Notes TG. From 2019 to 2020, I studied early blockchain games, CryptoKitties and the like. The product manager who worked as a wallet in 2020 and 2021 caught up with the Defi summer, and then experienced two rounds of bulls and bears, and gained a lot of experience. At present, I mainly use free funds to participate in some first- and second-level opportunities in the market. I also provide consulting services for some projects and run my own community. Thats about it.
Mohist:Hello everyone, I am Mo Ke, an investment research partner at ArkStream Capital. ArkStream is a primary market investment fund and one of the first VCs to focus on Defi. The most famous investment project recently is Sei, which has a relatively high growth multiple recently. Then we have recently started to do some secondary layout. I personally have always been paying attention to the second level, and I have known Lao Lu for a long time. We will pay attention to every new hot spot in the market very early, experience it personally, and feel some changes in the market.
Lawrence：Hello everyone, I am Lawrence, a researcher at Mint Ventures. I usually see more about Defi and some new projects on the chain.
Investment goals for 2024
Alex：Let’s talk about two things today. The first is probably more abstract and methodological. We know that the three guests have a lot of secondary trading experience, and they are all experienced investors who have experienced basically two or three rounds of bull and bear markets. I would like to hear if you have any methodologies and methods for secondary trading and investment that you can teach. experience. In addition, we have just arrived in 2024 and the new year is about to begin. Everyone has a lot of expectations for the market this year. I would like to hear your analysis of the opportunities in 2024. The first topic is investment objectives. Everyone may have different goals and even motivations when entering the crypto market. Have you designed a long-term or short-term investment goal for yourself? For example, the year 2024, or the investment goal of this bull market cycle. Let me ask Teacher Lu first.
Lao Lu:I actually havent set a very precise goal myself, because I think the market is always changing, and it might be better to follow the market. The goal all along, whether in a bull market or a bear market, is to outperform BTC, but it is very difficult, and it is difficult for most people to do it. But I feel that after one or two rounds, I am now more experienced in outperforming BTC than I was before. The overall goal in 2023 is to recoup the losses that did not escape the top in 2022, which will be completed in early December 2023. The completion of this goal also had some impact, resulting in some slack from early December to January. Sometimes we slack off after setting goals and fail to update them in time. The goal I am anchoring now is to compare it with my past positions. Whether it is changing positions or trading many times, I compare it with the positions I held on a certain day a month ago without moving. Compare and constantly adjust your position strategy. Of course, this is comparing with yourself, so you can better see whether you have done right or wrong during this period. At the same time, you should also try to avoid comparing the profits and losses of others, because it will greatly affect your own strategy and make you not believe in what you insist on.
Alex：I saw that Teacher Lu, in addition to hosting his own channel, also has a concept, which I watch every month. At the beginning of each month, he will preset and deduce the strategy for the month, and then review it at the end of the month. I think this is indeed a very good way. The second one is to invite Mr. Mo Ke to talk.
Mohist:I just happened to be feeling quite emotional about this recently. Recently, a friend, I won’t say who he was, had his position liquidated and there was a big retracement. Before this, in fact, in the third and fourth quarters of last year, a particularly good friend also liquidated his position. In fact, when I was trading, my position was liquidated in 2019, and there was a very large retracement. To a certain extent, I dont like to set a goal based on the amount of the transaction. This will become an obstacle. Especially at the high point of a bear market, such as the recent plunge, no one can jump out and say with certainty whether the future will be a bear market or a bull market, and everyone will have a lot of guesses. Suppose today is the end of a Maverick, then this goal may become an inner demon, causing people to do some twisted actions. Overall, I personally dont like to set a long-term investment goal because it is difficult to define. I entered this industry in 2017, so it’s been seven years now. My experience is that in the end, how high you can be, that is, how high you can be from the perspective of investment income, is actually given to you by the market and the FOMO emotion of the market, and cannot be decided by you personally. My goal will be another axis. For example, we actually want to capture some hot spots in the market or create some resonance with the market. I would like to talk about some hot spots that appear in the market, whether it is the hot spot of secondary trading, like TRB, it has happened, or it may be the occurrence of things like Inscription, some new sectors or some very important events. Sometimes, I can relate to it or pay close attention to it deeply. Regardless of whether I participated in it or not, I watched deeply from the side. This catch on hot spots is a goal of mine. If I can catch a third, I think this year will be considered a pass. If I can catch two-thirds of them, I think Im pretty good. I think it is impossible to catch 100%. Another long-term goal of investment, I think to put it more humbly, is to survive. Because everyone will also feel this way, many people come and go around me, and many friends who were once outstanding at the same time have withdrawn from this circle. I think this is the ultimate goal. As long as you survive, you can actually see the future. When we enter this industry, we are full of hope for the industry, whether it is in terms of the rate of return on investment or the underlying logic, because we all look at some fundamental things and believe that blockchain can be very promising in the future. Deeply related to real life. This is an idea I had.
Lawrence：My goals are relatively simple. Generally speaking, we hope to outperform the market and obtain excess returns in the bull market. To outperform the market here mainly depends on what your main position is. My current main positions are BTC and ETH, so my goal in the bull market stage may be to outperform BTC plus ETH, and the lower limit is to outperform BTC plus ETH divided by two. This may be relatively quantitative. In a bear market cycle, the hope is to outperform BTC plus ETH divided by two. I use this relatively simple indicator to quantify. In 2020 and 2021, more positions were on Ethereum, so the target may be calculated based on Ethereum as a benchmark. My long-term and short-term goals are probably like this.
OTC asset allocation
Alex：Let’s talk about asset allocation. According to our previous observations, there are actually quite a few people who want to enter Web3 or want to invest in crypto assets. They may not have joined yet, but they are very interested in this world. Including many of our friends, in addition to holding some crypto assets, they may also allocate stocks, funds, etc. From the perspective of several senior investors, will you allocate some assets other than crypto assets in your investment behavior, such as buying a house? Whats the reason?
Lawrence：If you think about it from now on, you will definitely not consider it, because there are currently many opportunities in the market, and the income of stablecoins has been 30% on a regular basis. Basically, the funds in the market will not consider going out. The same is true for me in 2022, the money on the floor has not gone out. But I reduced some positions in 2021, mainly in Ethereum, and allocated some Hong Kong stocks, including some real estate. However, the Hong Kong stock market is relatively miserable, and now we are still waiting hard to get our money back. Looking back, if we slice it according to this time node, judging from the decline, holding BTC and ETH may be a little less. Of course, this is my personal experience. At this stage, I would not consider doing asset allocation off-site anymore.
Alex：What about the long term? What you just talked about is this round. At the current time point, a lot of risk-free returns on the market are very high. So if you look at the entire family or long-term asset allocation, do you have a rough idea of the ratio? For example, Web3 is one of my jobs, and maybe 60, 70 or even 89% will be allocated to encryption. Asset, I am optimistic about this thing. Will you still spend 10 to 20% to buy a house or even buy some insurance?
Lawrence：Assume that by the end of 2024, BTC may have risen back to US$70,000, or even US$100,000. If I feel that market sentiment is overheated again, I may allocate some other undervalued assets. However, I personally feel that this reduction of holdings is still short-term, and I still hope that I can buy it back at a better price in the future.
Mohist:Personally, I dont think about it at all. There are two aspects: offense and defense. From an offensive perspective, Im talking about return on investment. The investment rate of return is actually related to two points. The first is whether the cycle of your target is within your cycle. For example, cryptocurrency is currently in a rising cycle. In this cycle, we will definitely place larger positions in cryptocurrency. The other is how well you know it. I actually don’t really study other information about stocks, so I think that my knowledge does not allow me to obtain excess returns elsewhere, so from an offensive perspective Generally speaking, I will choose the encryption industry that is in an upward cycle, and I am deeply involved in and have high awareness of the industry to make some profits. From a defensive perspective, I will only consider the simplest operations such as buying a house or exchanging it for gold or US dollars. This does not consider profit at all, and you can even accept a part of the loss. The advantage is that it will be there no matter what. However, there are occasionally some black swans in cryptocurrency now. For example, some exchanges such as FTX or Luna were hacked. Such black swan events are completely unpredictable to me. I believe that many people should have also experienced the 312 stage. At that stage, many real crypto entrepreneurs around me had doubts about the industry. I think appropriate defense is necessary, which can make us live longer. .
Lao Lu:Maybe what you want to hear is the experience of all-round asset allocation, but in fact, neither Mo Ke nor I prefer to invest in all-round investments. We have also recognized the fact that the returns in other fields are far lower than Crypto industry. Therefore, U.S. stocks, industries, and some real estate actually do not spend so much energy on research and allocation. Many people think that if you have a certain understanding of a single investment field, you will quickly get started in other fields. In fact, this kind of confidence will lead to many pitfalls for people with this idea. I have also seen that many people may have done very well in the encryption field, but they have stepped on many big pitfalls in other investment fields. I want to learn these lessons. I will not borrow some of my experience in the encryption industry in areas that I am not familiar with. I will take it for granted and look at other peoples industries, so I did not enter these industries. But I have some assets that I have cashed out to buy a house to live in. This is purely for living needs, not asset allocation. Of course, I also envy some friends who can trade in U.S. stocks during a bear market and then avoid bear market transactions. It is recommended that everyone invest in areas that they are familiar with.
Mohist:Let me add something. At that time, when the U.S. stock market started to become popular, several friends around me bought U.S. stocks or some domestic stocks, and basically lost money. We all joked that money was made in the currency circle and spent in the stock circle. I think what Lao Lu said is right, including that I think that I am actually an ordinary person with good luck. It is very important to know the boundaries of ones abilities. Dont think that you are such a powerful person. Like the friend Lao Lu mentioned, I know he admires him very much, but not everyone can do it. If we want to develop in his direction, I think there is actually a lot of silent effort, which he himself did not say. from.
Alex：clear. Judging from the results, it seems that the answer is that several guests basically do not allocate assets other than crypto assets. The common logic behind it is the same as that of many price investment masters, that is, don’t do things you don’t understand or are not good at. , just do what you are good at, and then dont try to cross the railing that is too high for you.
Secondary investment strategy
Alex：We enter the methodology part, which is the investment strategy. If you had to use three to five sentences to summarize your secondary investment strategy, how would you describe it?
Lao Lu:My investment style. Anyone who knows me may know that I am a very left-sided investor. I like to buy low prices, buy undervalued projects, and buy cheap ones, but I am afraid of chasing high prices. In a bear market, you can pick up a lot of cheap and undervalued chips. At the beginning of the year, it is almost time to harvest, and you can use some of the chips you have spotted before to get profits. Then until the middle or late stages of the bull market, the reaction of funds on the market is that there is no chance of bargain hunting or cheap opportunities, and the valuations are very full. Just like at the end of the last cycle, the valuation of the primary market has not dropped, and there will be no opportunities for bargains. The valuation has not dropped to a very low level until now. This is also a phenomenon. I personally am a player on the left side, and some methods depend on the specific project. First-level targets are easier to compare, because what needs to be compared may be the team, participating investors, or the specific progress of some projects and your personal prediction of the track, whether it will become a popular one in the future. , the main track. There are also some tracks that are unpredictable. When rollup did not rise, the track for rollup as a service did not exist. After a lot of rollups came out, everyone was sure that rollups would become a hot topic and Cancun would happen. Everyone will lay out the rollup as a service series of sections, and there are many differences. At the second level, there are mainly three steps. The first is to screen the target, the second is to analyze the chips, the third is to open a position, and maybe the fourth is to make a plan to trade and sell, just like one, two, three, four, A little more, maybe one, two, three, four, five, step by step, it will be easier. Just keep repeating your strategies and find a strategy that you are comfortable with.
Alex：Let me ask a more specific question. Regarding the secondary screening targets, if you rank them in terms of importance, what factors will determine whether a target should be included in your screening list? Can you rank them from most important to least important?
Lao Lu:The first thing to check is whether it is on a centralized exchange. This is more important. I will divide these targets into two categories, one is on centralized exchanges, and the other is on decentralized exchanges. In decentralized exchanges and those that do not issue coins, I would put them in the same category, and the liquidity may be relatively poor. This is a point that will affect your trading decisions. You can slowly build a position on a decentralized exchange, because your position is transparent and easy to find, and you can also find traces of other peoples positions. In centralized exchanges, the liquidity will be better and the flexibility will be better, so it needs to be handled differently. The second more important thing is trading volume, market value, and circulation rate. Probably these three points. Another important thing is that if you have spotted a track, configure it in proportion as much as possible and dont make multiple choice questions. When it comes to multiple-choice questions, most people must have chosen two out of three or one out of two, and in the end they will always choose the weaker one. In fact, if you configure it half and half, or in proportion, this problem will be avoided. Of course, the absolute rate of return will be lower, but the average rate of return will be better than doing multiple-choice questions.
Alex：According to your standards, which one is better, a project with a low circulation ratio, or one that is close to full circulation?
Lao Lu:Close to 60% or above is already very good, and it is almost difficult to have selling pressure. For general projects, when the circulation reaches 60 to 70%, only the teams and some funds will be left unlocked, while the investors funds should basically be unlocked and changed hands. The circulation has reached 60 to 70%, and he may have done one or two rounds of OTC, so everyone’s average price cost may be higher and the chips are relatively clean.
Alex：You just talked about trading volume. For your target, especially the position on the left side, do you want its trading volume to be relatively thin and no one pays attention to it, or would it be more in line with your standards to be in a state of obvious amplification in the short term?
Lao Lu:I hope it is relatively low, but the depth is relatively good, which shows that there is active market making in this market. Then the trading volume divided by its circulating market value is also a parameter worth observing.
Alex：Trading volume is divided by circulating market capitalization. How to understand this indicator?
Lao Lu:The lower it is, it means that people tend not to trade. If you hold it, it will be more uncomfortable to experience this stage, because most of them are low points. Only when the trading volume divided by the circulation market capitalization coefficient is relatively high, you can judge whether A large number of hands change, and liquidity is at its best at this time. You can consider selling or reducing your position. Expanding the selling strategy, there is also the question of whether the contract holdings exceed the total circulating market value of the centralized exchange. Maybe the circulating market value of a certain token is 80 million, and the FDV is 100 million, but it may only be 30 million on a centralized exchange. If its transaction volume exceeds 30 million, it can be used as a stage. If its trading volume exceeds 80 million and exceeds the circulating market value, it is another stage. Trading volume exceeds FDV, another stage. The underlying contract position exceeds 30 million, which exceeds the circulating market value on the centralized exchange. This is also a stage, which means that the positions in the contract no longer have coins to sell, and the contract guides the spot price, which means that the contract position exceeds spot circulation. This time may also be a signal that some decisions need to be made at many such key nodes. Of course there are many side reactions. For example, everyone is talking about this matter, or many people who are not in the industry are also talking about this matter, which may be some signals. Keep looking for selling signals and then act on them. But the best operation is not to sell it all at once. It is actually very difficult to sell it at the highest point at once. I recommend a relatively good strategy. According to the cycle, you may sell 10% every day for ten days. Of course, for a relatively long-term target, which may be BTC or Ethereum, sell it for ten days. If it is shorter, like yesterday, people can increase five times in one day. At this time, they may sell 10% in ten minutes and 10% in ten minutes. If you make a Twap, the selling strategy will be better.
Mohist:Let me first talk about a basic strategy. The basic mentality is to respect the market. You sometimes feel that you can predict the market, or that you are smarter than the market. But sometimes the market comes out of things that are completely beyond your knowledge, such as inscriptions. We looked at it in May and felt that Inscription was actually a step backwards in terms of technology. It was using remark information to issue assets, which was a rather convoluted approach. In fact, it was better to use smart contracts directly. So we don’t recognize this thing, but eventually the market came out. When the market breaks out, it may be a short-term distortion of the market. Then you must respect the power of this distortion, because this distortion can make you profit. In addition, there is another possibility, that is, you have seen it wrong, and you need to reflect on it. The second point is to respect the fundamentals of the project. When you look at a project, you should clearly know whether the project is short-term or whether it really has long-term value and can be held for a long time. For example, blur, because it has always been a leading NFT exchange. The third point is to have the mentality of a retail investor. This is very important especially in a bull market. You must define your mentality as a retail investor. You have to resonate with the entire market, because the biggest source of profit in this market is FOMO, which is a bubble. Therefore, if you cannot adjust yourself to the mentality of a retail investor, it is easy to miss this largest profit. The fourth point is the faucet, the faucet, the faucet. Say important things three times. In most cases, your income cannot beat the leader of the sector. You can make some subdivided layouts, but the leader must be configured. Take a specific case, such as Ordi, how did I use this mentality to invest in Ordi. Lao Lu has just talked about the specific operation process, so I won’t talk about it anymore. I will talk about how to open a position in Ordi from a mental perspective. We learned about inscriptions in April. Inscriptions were very popular at that time. We had an understanding of inscriptions and thought that they were not long-term. We also talked about many projects at that time, including unisat, which is a part of ordinal. Exchange. After we talked at that time, we recognized the team very much. We felt that the unisat team was very agile, had strong development capabilities, and knew exactly what it wanted. But because they did not plan to issue coins at that time, there would be some lack of liquidity for us, so it was a pity that we did not invest. So when we were reviewing this matter internally, we were saying that assuming that the inscription matter would be sustainable, in fact, if you buy Ordi, the return rate in the secondary market may not be lower than that of investing in Unisat. A seed was left there. So how did we look at ordi at that time? We would think that we were still technically unable to understand it. We think it is still a step backwards, but we can understand this thing from another angle. It is the first meme on Bitcoin. Taking meme as an example, it doesn’t actually require how good your smart contract is, as long as it can issue coins. Bitcoin happens to have one thing that every other project doesnt have, and thats legitimacy. No matter how well others do, there is still no way to deprive Bitcoin of its legitimacy, which is the concept of a blockchain that created the world. So from this perspective, it actually has a very strong value support as a meme, so we made a definition of it at that time. This is the first one, respect the hot spots of the market. The second is to respect its fundamentals, which is that it is a meme leader. Then the concept of inscriptions became less popular and the price kept falling. We were right at the time because we believed that inscriptions were not sustainable. Because of its meme attributes, we put it in our repository for observation. Then there was a very iconic event in October, when Bitcoin exceeded 32,000. Breaking through 30,000 is a very critical point and window. After it exceeded 32,000, our team thought that the bull market was coming and has been looking for some varieties with high explosive power. At that time, the price of ordi happened to break through at a key point, probably around 5.7. At that critical breakthrough point, we start to open a position. After the position was established, an unexpected thing happened, that is, Ordi was listed on Binance. We will find that the first decision we face is whether to ship after listing on Binance. Because under normal circumstances, most of them should be shipped after being listed on the big platform, but after it was listed on Binance, we were actually thinking about one thing, which was why Binance wanted to list it, and how would these retail investors view it? it. For Binance, a currency like ordinal actually has its value. Of course, control may be one aspect. This is our guess. We have no direct evidence to prove that Binance actually controls a lot of chips. . Many of our senior market maker friends who engage in secondary trading will also tell us that their judgment is that Binance has high control. This is one aspect. On the other hand, coins like ordinal are also a brand new user group for Binance, and it is willing to list such coins. At that time, around 12 to 1 3d ollar, when everyone was looking at whether to ship, there was actually a very critical piece of information. Many people misjudged that ordinal had fully changed hands before being listed on Binance. As a brand new asset, many retail investors actually support it. At that time, there were actually a lot of Chinese people going to make inscriptions. All the retail investors, the people you think of as leeks, had been making inscriptions and playing with inscriptions. So at this time, I had to plan to adopt the mentality of a retail investor to resonate with them. So in fact, we continued to hold it from 12 to 13, and it did rise after holding it. In the second half, because after the ordinal has finished rising, you will find that all the inscriptions are being typed, such as ETHS and so on. At this time, we were considering a question, that is, whether we should deploy Long Er, which has higher explosive power, so we actually spent a lot of time looking at the inscriptions of all other chains, including the update of some new chains. . In fact, in about a month now, the effect of our review is not good. Of course, it may be that our knowledge and experience are not enough to catch it, or it may be that our layout is too late. In fact, for most people, you will find that the increase in this period from ordi around 20 to now, if you choose some so-called targets with inscriptions of dragon two and dragon three, in fact, they really cant beat it. ordinal. So we have a very important conclusion, that is, even if you think you can reach Long 2 and Long 3, then you must hold a certain proportion of Long 1 position. In terms of the secondary investment process of the project, it is actually the same, that is, the quality of the project, building a position, and selling at key nodes. In addition, I personally would prefer to watch some exchanges and OI. There are two things worth looking at in OI. The first one is OI divided by market cap. This higher value may be a sign of high market control. The other one is that its turnover rate is relatively high, or its OI is short-term. The rise is particularly strong. For example, yesterday, people participated in my secondary trading. It was really just a lottery ticket, and I didn’t buy a lot. At that time, I saw that the ratio of OI to market cap had increased significantly. I saw that it was around 23, so I told my colleagues about it and bought some at around 25. After that, the currency rose seven times, and the economic benefits were considerable. I think this also represents a signal. Of course, you have many other indicators to look at, but the core point is whether there are funds paying attention to it. , because if there are no funds to pay attention to these sectors, these sectors actually have no value. For example, like the current defi that has been ignored for ten thousand years, everyone knows that it still has value, but if funds don’t pay attention to it, it’s quite uncomfortable. Then I would like to add a little bit about shipping. I think we can actually adopt a method of shipping at a critical time point. In fact, many people don’t know how to look at the K-line. We are not very strong when looking at the K-line. Then you can choose to go to Binance, for example. It has made a breakthrough time window, or its market continues to have FOMO to a certain extent. . So what do you call FOMO? You can refer to an indicator, such as its trading volume, whether it is a contract or spot, if it is in the top three on Binance, it basically represents a certain market FOMO popularity. If you hear this coin being discussed all over the street at this time, it may actually be a peak in the short term. The one that can be used as a case is probably ordinal on December 5. Its trading volume at that time exceeded that of Ethereum, which was considered a short-term high. At that time, it was close to 70, and it also disappeared for a month. But there were a lot of changes in the middle, because later Binance added rats and sats, which raised the fundamentals of this inscription. The second case is solana. This does not mean that solana will not rise in the future, but you can see that solana has a relatively large correction, or a wave of upward stagnation. The coins in the solana ecosystem had a big correction. Solana itself was in an offensive stagnation state, which happened on the day when its transaction volume exceeded that of Bitcoin, which was probably on the 126th or 25th. I personally have always had a habit of looking at Binance’s trading volume rankings. At the same time, I can give you a suggestion on how to maintain a sensitivity to the market. It is best to pull out the price increase board on the market cap every day and take a look at it to see what the target is. It is possible that Cancun-related concepts suddenly appear. An increase means that this area of the project needs to be paid attention to to see if it is necessary to divert funds. You just had another question about the difference between the secondary market in a bull market and a bear market. There is actually no difference in mentality. The main difference is that when it comes to a multiple of the pattern, it may be because the entire capital cannot drive it to a higher level, so you must lower your profit expectations. In a bull market, you can raise your expectations higher.
Lawrence：My main position will be to trade value and some consensus assets, and then I will trade on the left. Those with small positions will trade bubbles and some non-consensus assets. They will trade on the right side, and then try to force themselves to do some IQ 50 operations and try to buy those things that they can’t understand the most. Personally, I feel the difference between a bull market cycle and a bear market cycle. Recently, I have a profound feeling that during the bull market stage, I need to pay more attention to trading and less to trading fundamentals.
Daily work of investing
Alex：You are all practitioners who have been in this market for a long time, so go back to your daily work every month, every week or every day, what kind of investment-related work do you do repeatedly, and it is very valuable to verify it? some things?
Lao Lu:Let’s start with what we do every day. Most of them are done every day, because the frequency is related to the market. In a bear market, you may do it once every three to four days. In a bull market, you basically do it every day. Otherwise, in a bull market, if you don’t do it for a week, you may not be able to keep up with the market. Because the progress of our industry is quite fast, it is easy to be left behind. What you have to do every day is to read the news. It is more important to read the news from mainstream media at least once. Of course, that doesn’t mean you have to read every article. That’s not necessary. Just read the news and extract useful information. Then subscribe to some emails and channels to extract effective information. This is the information level, including many groups on WeChat and some groups on TG. Of course, I have simply compiled these things and posted them on my own TG channel, but I may not have updated them in the past half month because I discovered another problem: information overload will affect your digestion of previous information. It means that you keep getting new information repeatedly and ignore the importance of the information you got before. You become a machine that only obtains information, instead of digesting the previous information and refining decisions that are useful for trading. This is a question that I am reflecting on. Maybe when I am overloaded with information or I know more, it may also affect my trading strategy. Of course, information is the first thing to do, and the second thing is to follow up on what you are interested in or focus on, whether it is unissued coins, whether you have a position, or some updates on more popular projects, recommend There are also podcasts available. This is time-sensitive. The earlier you discover it, the faster you analyze it, and the more accurate your judgment is, the more correct your trading decision will be. Then, at the pure transaction level, we need to look at the changes in the transaction OI aggregated across the entire network, see which positions have changed a lot today, what are the abnormalities, and then infer the reasons for the abnormalities. If there are no changes in fundamentals, it can only be judged to be an act of high control by the main force. The third point is to constantly learn other people’s opinions and ideas to help judge your own positions, and then make your own trading plans and sort out hot spots. The fourth point is to learn some of other people’s opinions and ideas. There are actually many bloggers on Twitter who are willing to share. They will express some of their own ideas, and we can also think and judge each other. After completing these trading plans and hot spot judgments, you will have more confidence in your positions and your trading role.
Alex：Just doing the series of work you just mentioned, in your daily investment work, how many hours of your time might it take up on the most ordinary days?
Lao Lu:In a bear market or a bad market situation, because information is relatively scarce, reading information once every two to three days has the same effect as reading information every day. Because when the market is bad or in a bear market, that information cannot promote the market and the information may be ineffective. You only need to spend one to two hours a day. If the bull market is good, it may last for more than six to eight hours. You may enter a state where you feel that the time for eating and sleeping is superfluous. For example, after checking Twitter, then look at the chips on the chain, analyze a certain token, look at the abnormal transaction volume on blur, and look at the floor conditions of which NFT is about to be released. The daily time schedule will be quite full. For example, today there is Binance’s new coin opening, a certain token is about to be released, there are airdrop details, and there are many such things to do. In a good bull market, if you want to participate in the hot spots in the market, most of them will be quite full, because these projects are crowded at the designated time. You do not have to be busy during these times, your time There will be conflicts in arrangements.
Mohist:The first thing I do every day is to check Twitter and follow groups. This is the fastest way to obtain information, because we are still an immature market, and there is a lot of information without a particularly regular channel, especially if you want to To get first-hand information, it must be through your social groups and your twitter. This will take about one to two hours a day. There will be a lot of things in the middle, which are some valuable articles. We will take time to read them every day. I think this is a learning process, because there are many people who are more open and willing to share some of their ideas and opinions. So I should probably have an hour a day to read some of these more in-depth articles and analyses. Third, because we are engaged in primary investment, we will look at some projects and we will also pay attention to the secondary market. For some projects with relatively fair distribution, we go out and take a look at some of its gameplay, token economy, or some of its white paper concepts. These are very time-consuming. There is also a part where we need to look at some marketization. For example, there may be IPOs or some games recently. They have relatively high-profit projects. We need to spend time looking at some of its participation mechanisms or some of the optimal benefits. This method actually takes the most time, probably half of the time every day. Then talk about the deal. There are some first-level deal offers to talk about. The average time spent meeting friends may be a little more than an hour. Our company has always had weekly meetings and morning meetings every morning, but apart from this, I actually think we are more likely to go to a certain point in time after everyone realizes that something is important. Make some changes in one direction. For example, in our recent discussion meeting, we felt that we need to go through some projects that were previously passed by Level 1, because it currently belongs to a time window, and the valuation of Level 2 projects is very high, but the valuation of Level 1 projects is actually not. The correspondence is very high. It has a valuation gap. In fact, many new projects have not been launched at this time. Therefore, some old and well-done projects at this time will lose money if they issue coins in this time window. There are some very good profits. During the bear market, we may feel that it is not suitable for us to invest, or we are afraid that it will not survive the bull market due to the time window, but it is necessary to pick it up at this time point. So we will discuss this matter suddenly at a certain point in time, and after the discussion, we will switch some work of our team. This is basically the case for everyone. Daily work, weekly meetings, switching at a certain time, and then doing something, not very good at making monthly plans.
Alex：Still asking the same question, how many hours a day might the total of so many daily tasks take up?
Mohist:Basically, the bull market is crowded. I have also seen people asking whether work-life balance can be achieved. This does not exist. During the bull market, you should allocate most of your time to some work in the currency circle, and try to exclude all unnecessary social interactions, including some other time. Because the cyclical nature of the market is very obvious, a bull market may last for one year, and a high-explosion period may last for one year. In this year, you can actually get the benefits of five or six years in a normal bear market, so you must concentrate on investing at this time.
Alex：You just talked about how you would communicate with friends, but you also emphasized that you should pay attention to the efficiency of communication and dont socialize ineffectively. How do you balance this? Because we know that in fact, people in the industry come to us every day and ask us to talk about this and that. There are many visitors who come to us on their own initiative. How do we weigh this?
Mohist:I think there is no way around it. Relatively speaking, I personally hate being very utilitarian, so sometimes it is difficult to weigh it. I once met some people who came to talk to me. After the conversation, I felt that it was not helpful to both parties, but this person was a bit persistent. In fact, it was difficult for me to let go of the relationship, and it was difficult to say that we should not meet in the future. I usually do this. First of all, it is best to have a topic for communication, so that everyone knows what to communicate. If the other party does not mention a topic, you have to mention a topic. In addition, when I communicate with others, if my communication with them is not helpful, then I will try to reduce the frequency of meeting them more than twice.
Lawrence：In fact, I talked about the same thing as the two teachers just said. Now maybe every day or every two days, I will first follow up on some projects that the fund has invested in, including the progress of some projects in some of the tracks I cover. In the previous period or during the bear market cycle, this work might have been done once a week or every half a week, but recently, due to relatively large price changes and more project updates, the Coingecko page may have to be refreshed several times a day. The main thing is to understand why these projects change. In addition, I will also pay attention to various aggregated information sources during the bear market. Teacher Lu’s TG channel, I have been paying attention to similar information sources. Pay attention to some breaking news and basically take a look at every one. In addition, I will spend some time researching some new projects on the chain. Recently, I may have opened Birdeye from time to time. I opened Dexscreener some time ago to see what projects have the highest transaction volume on the chain and what they are about. . This is similar to regularly checking Coingeckos price increase list, which is to understand what everyone is currently trading and what they are paying attention to. In addition, during this period, I will spend more time following up the projects I have a position in or that I am paying attention to, their OI data, including their trading volume, and take a look at their CVD data. The frequency of this action will be relatively high recently, maybe two or three times a day.
Secondary Opportunities in 2024
Alex：The fifth question is more concrete. What do you think of the overall development of the 24-25 year cycle? Of course, this is a relatively general question, and we can discuss some specific views. For example, judging from your judgment on the cycle, will the year 24 to 25 be as expected by most people, and it may be a bull market with a main rise and a range? And regarding specific targets, which type of track and narrative may you be more optimistic about in the next half year or next year? What are your specific views?
Mohist:We think its the beginning of the year now. In fact, if you look at a lot of assets, they have risen very sharply from the middle of last year to this year. We have gone through many projects for a while, such as all the projects on Binance, and not only Binance. The most typical ones are many of these second-tier exchanges on gate, or some coins on the chain. , you will find that these coins are actually little-known, but many of them have increased by more than ten or twenty times. Of course, it may have something to do with liquidity. There is a hidden signal here, that is, the water has begun to come out, so it will support the rise of all projects. Looking at the entire past cycle, I personally feel that it is very similar to the period from the end of 2019 to 312. The market has fallen to the bottom, and everyone is making an expected hype. For example, back then, they were speculating on DeFi, and now they are speculating on ETFs and interest rate cuts. , so in fact, we started to make some hype on these concepts in the field. Now we are hyping memes, hyping inscriptions, and AI. There may be a relatively large correction in the future, but we believe that the entire cycle is actually a bull market. We will lay out a relatively large position, whether it is level one or level two, including level one. We should try to get more bullets out in the near future. From a macro perspective, some friends believe that interest rates are definitely going to be cut in 2024. Many people are now betting on an interest rate cut in October. An interest rate cut is definitely good for risky assets. Throughout 2024, we will prefer to layout the following five tracks. The first one is the game. In fact, when the game is in a bear market, we almost don’t invest. So far, we have included more than 800 game projects. When talking to these projects, we will ask them a question, that is, what do you think is the difference between games and encryption? What does it make the essence of the game? What changes have occurred? In fact, most of the answers did not escape the play to earn approach. If you just play to earn, it will actually be difficult to get up in a bear market. This year’s fundamental changes, first of all, are the increase in the number of users. Binance now has 170 million registered users, so we can see a very obvious increase in the number of users. I remember that in the last cycle, this number was more than 100 million. You have also seen some attempts like OK to start making some MPC wallets. This attempt has achieved very good results on the Inscription side. Then we can also see that, like OK, the current trading volume of the NFT trading market is no less than that of some of the leading NFT platforms. The first point is the increase in the number of users, and the second is that the current game is actually more complex than the previous round of games. Because it is more complex, it can achieve two effects. The first one is that the complexity of its entire economy is a little higher, so even if it is a Ponzi, the life cycle of this Ponzi will be longer. The second is that because the game is more complex and more fun, it will actually capture more user time. As the user time increases, it will actually make the game more possible, reduce its Ponzi properties, and increase its life cycle. I think time is money. Once you capture the users time, when his time is immersed in it, he is willing to pay. This also forms a long-term source of support for the game. Therefore, gaming is a track that we pay special attention to. It is also easier to relate to and understand by ordinary retail investors. The second one is the public chain. Nowadays, people are looking more at the concepts of Layer 2 and ZK. We look at all of them, such as parallel EVM. Public chains will still obtain relatively good valuations in the market. The third one is that we will pay more attention to the second layer of BTC and BTCFi. Unfortunately for some of the targets so far, it is not actually a relatively pure second layer of BTC. For example, it may still use its own tokens to do some gas. This is actually not very pure, including its entire cross-chain approach. , is it gradually centralized? We will observe and see the emergence of some new indicators. The fourth is AI. Now it is more like AI running with encryption, rather than encryption running with AI. Because AI is a main narrative in the technology circle, and AI has always been iterative and innovative, we will see that there are many AI projects in the currency circle. We cannot judge whether it is usable from some basic aspects for the time being, but at least as long as AI is still developing, so the concept of AI+cryptocurrency will actually continue to develop, and AI is also a track to bet on. You can also see some AI-related projects like the two recently listed on Binance. The fifth one is Depin. In fact, this is the track we are most troubled with, because in fact, the current Depin is mostly new wine in old bottles. It is repackaged based on the previous GPN or some distributed cloud computing services. It is a new concept, so we are actually not sure what will happen to this track, because in the past, things like cloud computing power, including the most typical demonstration is Xunlei Wanke Cloud. So we are actually still observing and learning, but it is still what I said first. If the market comes out, then it must have its reason. Depin has some coins with good growth on solana, and it is also worthy of our Pay attention and learn. Mainly these five sections.
Lawrence：The price of BTC has reached 45,000 in the past two days. I feel that not many people around me think that there will be no bull market in 2024 and 2025. Everyone will think that if it is not the beginning of the bull market, the bull market will start after a wave of correction. I think I agree with everyone on this point. Regarding the promising track and narrative aspects, it is similar to what Mr. Mo Ke mentioned. The ones I am optimistic about include L1 and L2, because L2 will have a Cancun upgrade soon. Including L1 as a whole, solana has also increased a lot recently, and the market is also paying widespread attention to other paths for expansion. I think this concept has had one of the largest increases in every previous cycle, and I think this cycle will be the same. Then there are the games. In addition, I am more optimistic about the entire meme track, because the meme track has actually been regarded as a track since the last cycle and has attracted everyones attention. Later, there are also some downstream tool tracks like meme. , such as bot and the like. From my experience, if we think that crypto will reach a wider public and attract more users, the most direct, simple and straightforward thing, memes may account for a very important part of it, so I will pay attention to it. meme. In addition, I hope to find some tracks that cannot be falsified in the short term, or new tracks with some Ponds attributes.
Lao Lu:I think the fluctuations may still be relatively large in 2024. I am more cautious. If the price is above 40,000, I may reduce a large number of transactions and try to concentrate funds on targets with relatively good liquidity. If 2024 is very good, because you see interest rate cuts, halvings, and ETFs, a series of things are superimposed on it, you may not be so optimistic about 2025. This may also be a consensus among everyone. Originally, everyone thought that 2024 might be mediocre and 2025 would be a big year. Now it seems that after all the funds and enthusiasm are consumed in 2024, it will enter a rest period in 2025. As for specific tracks, I listed seven or eight some time ago, so I’ll count them for you. The first one may be the continuation of Inscription, because it has created two leaders worth more than one billion, and the funds flowing out are still considerable, regardless of whether they flow to Inscription on other EVMs, or protocols like Atom, or BRC 420 or something like that. Of course, the flow of funds will slowly make these new protocols, and the yields related to inscriptions will become lower and lower, just like everyone is doing BRC 20-related launchpads. In the end, the story of creating new assets will not make sense, and everyone will Dont believe this. In fact, it is still affected by the cycle. As time goes on, the average rate of return becomes lower and lower, and finally the story ends. The second one is SOL, TIA, and a bunch of ZK systems that have not issued coins, as well as some new opportunities and new ecosystems brought by rollup and these new public chains. The third one is the Cancun mainnet at the end of February, which may be a relatively clear hot spot that everyone cannot avoid. Cancun-based tokens almost all reach new highs. If there is a better opportunity for a correction before the end of February, I may pay more attention to Cancun. The fourth is the game sector, but the game sector will be quite special. Its hot spots will not rise as a whole like other sectors. They may be concentrated in the rising or relatively new Gamefi, and then some game public chains and game unions. I think this is how it would go. If you bet on the game sector and bet on most game tokens, the rate of return may not be that good. Only the game public chain can carry the flow of hot funds in the game sector. The fifth one is the AI sector that everyone knows. In fact, in the past two or three months, except for WLD, the CEO of openAI, who left his job and came back, other AI tokens have not been much hyped, or they have not reached the level of excitement, but they are all rising silently. I think AI will be hyped one after another with the updates of AI technology. Even if they are unrelated and only have an AI label, there will still be such operations. Its cycle is still different from that of crypto-native assets. It may rely more on some updates in AI technology or another AI advancement from Apple. I think its breaking point is the upgrade of AI outside the circle, not within the industry. The sixth one may start with layer, restaking. Restaking is actually an advanced version of LSDFi. It can be understood this way, but it is actually more of a Defi application. The seventh one is the social category, whether it is FT or lens, everyone has been waiting for the social section. It may be a little weaker than the previous six, but it is also a sector that cannot be avoided. The eighth is RWA, treasury bonds and other assets. I think they have been severely weakened at this stage, because the return rate of funds on the market is far higher than that of treasury bonds, so the RWA track may have to be released when the market is good. The priority is lower.
Experience and lessons
Alex：Everyone who has been in the investment market for so long must have made some mistakes, and there must be truths that you wish you knew earlier. If you could go back three years and tell yourself some truths, what would you say?
Mohist:If I had to tell my former self not to do anything, I would tell myself to play less contracts. Of course, I am now able to open some contract positions, and still want to improve my capital utilization. When I played contracts three years ago, there was a very big retracement, so I would tell myself three years ago to try to reduce the number of contract operations, because contracts are actually not cumulative, and many people will use contracts. Lose yourself in the process. In fact, a contract is just a tool. Many people will try to control the price points too much in the process of playing contracts, but I think most people are not capable of trading these points, because it is actually many times. Random fluctuations, or some noise, or controlled by others, are beyond your ability to perceive. More time should be spent on the research of some projects, because the research on the projects and the understanding of the industry are superimposed, and the accumulation will make you go further. So I think the value of the contract is that it can improve your capital utilization, but you still have to manage everyones risk positions.
Lao Lu:Maybe the first one is the same as Mo Ke. In the past two years, I have accepted words from the future. The first one is not to play with the contract. This is also what I have warned many people. Including the past two years, it is actually the same. Except when hedging is needed, tools may be borrowed for hedging. Of course, this tool cannot be completely ignored. Don’t do things like naked shorting or increasing leverage, because there are indeed too many lessons learned. It has been going on for four years since 2020. This experience has always helped me avoid many things. I only play spot and do not pursue excess returns, because it requires strong self-control and energy to do this. I feel that I I cant do it myself, so I have reduced this matter. This is the first lesson I hope everyone will pay attention to. The second is liquidity risk. At that time, Luna and Solana were taught that the entire liquidity of the market is actually a whole. When a certain liquidity is severely damaged, even though you do not hold highly correlated assets, it will still be affected. . This is the same as BTC accounting for 50% of the market value. Especially in this market, you need to focus on it. Even if there is a problem with the assets you do not own, it is more important to do some hedging operations. Third, we need to pay attention to the cyclical nature of hot spots, and do not operate counter-cyclically. We must grasp the rising period and plateau period of hot spots and get out in time before the decline period comes. Whether it is Defi or NFT, it has been verified in various popular hot spots. Everyone can review it and find some experience. The fourth point is an experience at the trading level. This may be more helpful to myself two or three years ago and avoid some lessons in 2022. Historical positions are actually a burden of ones own. Even if you know psychologically that you have to make a new decision, your historical positions will become a burden that is difficult to get rid of. There may be two or three situations in historical positions. This is one situation where you are losing money and are reluctant to cut off the meat and sell it; the second situation is when you have a profit, but it is lower than the expected profit, and you are not willing to sell it; the third situation is when it may be close to the cost and you feel that there is a profit in the future. Earnings, but not showing yet. These positions sometimes affect your judgment on the next hot spot, which will put a lot of burden on you. It would be better to cut or sell these positions than to hold them. Clearing out these baggage will make it easier for you mentally and for position management, and will make you more flexible to participate in subsequent opportunities instead of staying in the previous version. If there are still people holding a bunch of defi coins from 2020 and 2021, then this burden is still quite big, because once your position is there, you will think about when people will speculate in defi again. These defi applications It does perform very well, and everyone has been using it, but the price is not satisfactory. I will always fall into obsession, so I need to clean up these thoughts and observe whether my position has fallen into this situation every once in a while. a situation. If this situation occurs, you must clean it up decisively so that you can enter the next hot spot more easily. I think this is more important, and it’s something that I’ve been adjusting recently.
Lawrence：I mainly think of two points. The first point was just mentioned, which is to pay more attention to trading and less to fundamentals during the bull market cycle. Currently, I reflect that in the last cycle, I paid too much attention to fundamentals and did not pay much attention to narrative or attention. The second point Teacher Lu also mentioned, I will say this, don’t fall in love with a certain currency. This is also a lesson learned after riding many roller coasters. Another point, I also took a look and found that three years ago it happened to be 2021, and everyone was playing it safe at that time. If I could really say something to myself three years ago, I would probably say that I must hold my nose and buy OHM. The IDO they made on discord at that time really looked too tacky. So far, this may be the biggest opportunity Ive missed because of my bias. So the third point is not to be biased, and try to use your small positions to lower your IQ and participate in more things during the bull market.
Balance between investment and life
Alex：The last question is not entirely related to making money, but I feel it may be something that many friends around me, including myself, are worried about recently. I see many groups talking about how you can indeed make money in the bull market, but you feel very tired. Sometimes you even want to go back to the bear market. No one is making money, but it is very relaxing. The relaxation is reflected in the body and mood, and also in having more energy. With more time, you can look at projects in detail instead of being tired of looking at various hot topics. Do you think the balance between investment life and life is a challenge at the moment? In addition to the bull market investment year, do you have any expectations and goals in life?
Lao Lu:In fact, I am also troubled by this problem, and I have also discussed this problem with other friends. In the first two years, I was still relatively young, and my physical and emotional state was still relatively simple, which may not have a big impact on my investment status. I was alone in the apartment and could participate in industry investments very immersively. As you age and stay up late, you may experience some physical discomfort, such as tinnitus, headache, dizziness, inability to get up, or various other problems. The second is that some trivial matters in emotions and life will also have an impact on investment. I asked some friends how to balance the time you spend here and the time you spend in life while having a relationship. I feel that their mentality or overall handling is better. But I may not have grasped this middle balance point, and it will indeed have a relatively large impact. What we can do now is not to choose one of the two. We can only give up some opportunities that are impossible to do in terms of time, give up some opportunities that only come out at three or four in the morning, or give up opportunities that are available during some holidays. Give up and spend more time on life. Of course, it will reduce the rate of return and the acquisition of information, but you need to balance it and find your own state. Then there is also the need to reduce the noise in transactions, which is a very important issue, and information overload affects a lot. This is also a question that I have been thinking about recently. Acquiring a large amount of information also has a growth curve. In fact, as long as the information is enough, the later the information becomes more, the marginal utility will not only decrease, but may directly go down and become negative. The goal may be to find a better balance between life and investing, without making both parties unhappy.
Mohist:Ive been here and now have children. I think such a particularly important event in your life will definitely involve a lot of your time and energy. For example, getting married, falling in love, and having children. I think it would be better to push these key events back as far as possible during this time period, assuming you have the choice, because it is impossible to achieve a balance no matter how hard you try. For example, if my child suddenly gets hit and suffers serious trauma, it is impossible for me to speculate in coins or go to the primary market at this time. I must focus all my energy on the child. As this is unavoidable, my advice is to postpone it as much as possible. The other thing I think is subtraction, it depends on where you want to subtract. I found that many people lose weight in their health during the process of weight loss. For example, they rarely sleep, or they develop some physical diseases due to long periods of sitting and not exercising. I think this cannot be reduced. In the balance between work and the currency circle, the balance must retain necessary parts, such as a certain amount of exercise every day, plus adequate sleep, because only in this way can you ensure that you have continuous energy to move, so you cannot subtract these One, to ensure it. Another subtraction is to reduce some unnecessary work by entrusting it to others or discarding it. For example, if we are going to make inscriptions, basically I will not actually do it. I may watch a project. Is it good or not, but it will be left to another colleague to implement it, and our workload will be reduced through division of labor. Including when we look at the first and second levels, we may actually have some focus. For example, algorithmic stablecoins are more familiar to me and I will read more. Another section, such as derivatives, is familiar to another colleague of mine. I will ask him to see more of it and reduce everyones workload through division of labor. Even if there is some external cooperation, such as some new projects, there are some external cooperation teams, simply outsource it to others and pay a certain fee. This is also a subtraction method. Another is to give up completely. For example, I have been deliberately reducing my trading frequency as much as possible. Because you will find that the less frequently you trade, or the fewer varieties you focus on, the better your energy or your operations will become. I think this is also a very important point, which is to make subtractions in your own life. After doing the subtraction, if you really cant lose it, then you can only say that you have to work hard.
Lawrence：I also had a child during this cycle, and I feel the same as what several teachers mentioned. Balance is indeed more difficult than before. So I would also like to tell you younger friends that if you are single now, it may be the best situation, that is, there are too few things that involve your time and energy. You can invest most of your energy in the bull market. This time must be cherished. Im not sure yet whether Ive reached a state of equilibrium, but I still feel quite tired. I also deeply felt Mr. Alex’s foresight in fitness during the bear market cycle. My goal for 24 years is that my overall physical condition will not be worse than at the end of 2023. I hope that I can spend one more year exercising and my physical condition will get better.
Alex：The last little suggestion is that because the overall work pressure of currency circle people is very high and the hours are very long, and many of them work indoors, everyone should supplement more vitamin D. I recently went for a physical examination myself, including a physical examination of my family, and it was obvious that I was deficient in vitamin D. The main reason was the lack of sunlight. Without sunlight, it is difficult to secrete vitamin D naturally. Vitamin D has an impact on bone density, cardiovascular disease, and depression, so you can buy some vitamin D to supplement it. Now basically 90% of people are deficient. It can relieve headaches, low back pain, and calcium deficiency. I wish you all good harvests in this bull market year, and at the same time, I wish you not to suffer too much damage to your body and family. Thank you all for your time, and I hope we can have another chance to review it in 2025.
