Success cannot be replicated, but failure is often repeated. This article will omit specific figures of unrealized gains and losses, focusing mainly on lessons from failures to help newcomers avoid pitfalls.
Written by: 1912212.eth, Foresight News
This bull market has finally come true as we wished. After the market downturn in March this year and a long wait of six months, we have finally welcomed a major market explosion. With the Federal Reserve cutting interest rates, Trump being elected, and the SEC chairman about to resign, the overall market trading sentiment is high. On December 5, Bitcoin even broke the $100,000 mark for the first time, and the market generally believes that a bull market peak may occur in the first half of next year.
However, a better market does not mean that we will make money on every trade. As the saying goes, a good buyer is just a novice; a good seller is a master.
I will analyze the mistakes made in trading through the failures of two past cryptocurrencies to help newcomers avoid pitfalls.
Be Cautious of New Coins at the End of a Bull Market; Do Not Have Overly High Return Expectations
In the second half of 2021, the market was already at the tail end of the bull market, and DYDX gained attention due to its massive airdrop and its leading position in the derivatives sector. At that time, I entered around $10, and within just a week, it doubled. The market was buzzing, and it kept pushing upwards. I thought it would continue to rise, but the big market peaked in early November, and the returns on new coins were disappointing. The market began to plummet, and because I held on too long, I missed the best selling opportunity and ended up cutting losses around $2.
After this failure, I was unwilling to accept it and determined that the probability of DYDX dropping below $1 was low. So, during the market recovery in mid-2023, I kept buying spot, and with the favorable news of dYdX V4, the market indeed came back, and DYDX eventually broke through $4. It was November 2023, just as the market began to rise broadly. I thought DYDX was about to start a phase of upward movement, but interestingly, at the beginning of 2024, it dropped to half of its peak, and I exited with a maximum unrealized gain of 1/3.
In retrospect, there were significant issues with the choices I made. First, the CEO of the team had a dismissive attitude towards the token price, even leaving to pursue "ideals." Although there was an upgraded tokenomics, it could not withstand the continuous selling pressure from VCs and mining. The speed of new coin launches had also been slow, lacking any heat, causing its price to remain dormant from June 2022 until now.
Secondly, at the end of a bull market, one should not have overly high return expectations for new coins. In the last cycle, the only loss I incurred was from buying the new coin DYDX at the end of the bull market. In contrast, early investments in coins like DOT and NEAR, upon reflection, were much easier to hold and yielded decent returns.
Waiting for the Wind Can Sometimes Be Harder Than Chasing It
At the beginning of 2024, while screening CoinList projects and VC lineups, I selected the RWA token ONDO, with an average cost of about $0.3 and a heavy position. ONDO remained one of my HOLD positions, and I made several trades, resulting in a reduction of several tens of thousands of coins. I then resolutely decided not to trade anymore. However, my subsequent operations became one of my worst heavy position trades in recent years.
During the recent meme coin wave, countless meme coins surged, while my ONDO remained stagnant. Additionally, since ONDO was listed on Binance's contracts at the beginning of 2024, it has not been listed on Binance's spot market, leading to limited price increases during each rise in the RWA sector, which was quite disappointing.
This constant torment eventually turned into doubt. Holding onto the last returns based on this trend might yield less than meme coins, so I decided to split my position into three parts: BONK, FLOKI, and ZK.
I chose ZK because Ethereum had clearly started to rise, and OP and ARB had already skyrocketed, while ZK seemed to have great potential. This argument was later proven correct, but the timing for entering meme coins was extremely poor.
Who would have thought that just after switching positions, the music of meme coins would abruptly stop? Except for ZK, the other positions I switched to began to decline continuously. The most painful part was that after selling ONDO around $0.99, it soared just a week later, reaching nearly $1.95.
At the beginning of the new bull market, missing out on a 100% increase in a heavy position had a significant impact on my mindset.
Upon reflection, my mindset was overly restless. After a long time of holding a heavy position without growth, while other coins surged, it was easy to become shaken. The market sector rotation was rapid, with funds quickly flowing from meme coins to L1, DeFi, and RWA.
Many choices are made in a moment, and these decisions are often subtly influenced by past experiences.
The prolonged rotation of meme coins led me to doubt the return potential of VC coins, resulting in a mindset imbalance and missing out on substantial profits, serving as a punishment for my impatience.
Summary
In the cyclical fluctuations, there are several key points to note:
First, try not to buy new coins at the end of a bull market, or if you do, do not have overly high expectations for returns. The larger market cycle is crucial; once signs of a bearish trend appear, slow exits can lead to significant profit retracement.
Second, during sector rotations, do not easily switch positions to chase hot trends. In a bull market cycle, when a particular trend suddenly becomes popular, with many calls on Twitter, the market sentiment can be explosive, while your position remains stagnant. When you are ready to switch positions, if the market suddenly changes direction, it is easy to get trapped, and in times when you need composure, you must have the ability and courage to filter out noise.
Third, when trading, you must first convince yourself of the real reasons that move you. Are these reasons simple, direct, and compelling when you explain them to others? If many conditions do not align, then this asset may not be suitable from the start.
The planning of trades is also very important. What stage is the market currently in within the bull market? If it is just beginning, then after selling everything now, are there better assets that can outperform your current holdings? Why is now a good time to sell? If the reasons are too casual and based solely on KOL calls without your own thinking, it is easy to be swept away by the K-line charts, chasing hot coins and getting trapped at high points, affecting your mindset.
Everyone's aesthetic in the market is different, and the size of funds and risk preferences vary greatly; what works for others may not necessarily be suitable for you.
The honing of skills and mindset in trading is an ongoing journey. Finally, even if you do not sell at the top, there is no need to be overly concerned, as no one can sell at the top every time.
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