Woody's Column: Things Cryptocurrency Investors Should Know

This article is authorized to be reproduced from Woody Tsai Medium

Foreword

Taiwanese cryptocurrency figure Woody Tsai, currently serving as a GP at Evernew Capital, has been involved in cryptocurrency investments since 2017 with a wide range of experiences and a certain level of community recognition. The article will explain community terms and events, with additional footnotes at the end for reference by beginners.

Things to Know About Cryptocurrency Investments

Recently feeling quite bored, to the point of showing off trades, or forcing myself to do something meaningful, I want to share my insights in the cryptocurrency field over the past 17 years, speaking my mind without too much concern.

Stop Blindly Trusting KOLs and Teachers

Any trade involving following calls can lead to losses. Even seasoned experts can make mistakes. They can be a source of information, but one should still make their own judgments, plan their stop-loss and take-profit strategies, instead of treating others as infallible. KOLs often advertise for money.

Even oneself may experience a period of continuous mistakes, more extreme than a madman. Would you still dare to follow?

Participate More in Groups and Lay Low

Groups with active participation are worth spending time on. The cryptocurrency market is very practical, and the wealth effect of a group is directly proportional to the number of conversations. A few good groups can achieve twice the result with half the effort. After all, the cryptocurrency market values information asymmetry. Knowing 10 minutes earlier than others can determine victory or defeat.

Don't Be Too Low-Key If You Have the Ability

If you have good abilities, such as being good at discovering new projects or being a scientist, don't be too low-key. Letting others know about your capabilities appropriately can bring a lot of help in various aspects. In groups, almost every active group has its own smaller groups that often have higher-quality discussions and faster information access. They won't let freeloaders in unless you can prove your abilities, giving you a chance to join.

Interact More with People of Similar Levels

Perhaps those with similar wealth and age, each with their own strengths and weaknesses, forming a team together can increase the chances of success in the cryptocurrency market. There's no need to try to please the big shots. Trying to suck up to them before proving your worth and hoping they will help you will make you look like a clown. It's better to find a few people with common goals and work hard together.

Listen to Criticism and Admit Mistakes

Personal judgment in the cryptocurrency market may not be strong and mistakes are common. Fortunately, there are always people willing to criticize or give advice, serving as a driving force for growth. Being able to improve oneself promptly and admitting mistakes without shame is essential. Insisting on being right after making a mistake is just silly.

Special thanks to anyone willing to give me the opportunity to improve.

Avoid Opening Contracts as Much as Possible

If you lose money in spot trading, opening contracts will only accelerate your demise. It's better to buy platform coins like being a shareholder in a casino. Gamblers never stop, and every bull market has its rags-to-riches stories. Contracts play only a small part in wealth accumulation. The bigger wealth comes from accumulating platform coins or mainstream coins. Choosing to gamble usually leads to losses. Buying BNB or FTT and riding the devil's pace for long-term gains should be an easier choice.

Why Am I Winning in Contracts?

During my university days, I had systematic training and was lucky to make some profits. However, it was all based on an abnormal tolerance for losses to squeeze out profits. It's very difficult for most people to achieve, such as being willing to accept small losses for big gains, being ruthless in cutting losses, and not holding on to losing positions. It's not easy to practice until you've lost a few hundred times first. Also, having a good mindset even when losing all the money in contracts is crucial. As a word of advice from experience, it's better not to get involved, but those who can make money should keep going.

Many Ponzi Schemes in the Cryptocurrency Market

There's no need to resist ponzi schemes too much. Many coins operate on a ponzi scheme model, which often turns out to be the most aggressive way to make money. For example, the previous GameFi project "CryptoMines ETERNAL" created a long-term surge on the BNB Chain. Harsher terms like Axie Infinity also fall into this category. If a new item can tell an attractive story, even if it's essentially a ponzi scheme, it's worth a bet. Resisting often leads to missing out on many opportunities.

Back in 2020, when I first encountered COMP mining, I arrogantly thought it was a ponzi scheme and missed the earliest opportunity in DeFi. Fortunately, the DeFi bull market lasted long enough, or else I would really regret it. Regardless of the scheme, as long as the story is compelling and the market is willing to buy, that's where the real money is made.

Let Go of Arrogance and Prejudice

Previously, I was among the first to join NBA Top Shot and made good profits. Later, when the NBA craze faded, the NFT story shifted to Bored Ape Yacht Club (BAYC). I started hearing that many people were buying, and based on previous experiences in DeFi, I thought these people might lose money. As we all know now, BAYC has become a dominant force, and I only realized the reality and bought in around 15 ETH. Without arrogance and prejudice, my entry cost would have been lower.

Know Smart and Hardworking Poor People

Firstly, they need to be poor but have a strong desire for wealth and be diligent in seeking opportunities to make money in the market. If you know such people, congratulations, you've found a treasure. Being poor will drive them to find better money-making opportunities, and if you're their friend, just having access to information is extremely valuable. Each bull market always has people who can turn debt into financial freedom, but once they have money, they may lose motivation.

Following Big Shots Doesn't Guarantee Success

However, big shots have definitely invested a lot before promoting a coin. If you often follow big shots in buying, you're essentially helping them unload their positions. You still need to judge for yourself whether what the big shots say is right or reasonable. Often, big shots hold tens of millions of dollars, but they are private investors with very low costs. Whether you follow or not, they still make money.

Find Your Position

Beginners often feel lost and directionless. After several attempts, you should discover what suits you best. For example, if you enjoy stablecoin mining and the feeling of making money every day, then that's fine. Just keep going in that direction. Don't easily let external influences sway you. Even if you are influenced, don't use a large capital to experiment. If you have a programming background, writing contracts for arbitrage can also be a good business.

Don't do things you're not good at until you understand them.

Collect Good ALPHA

It's an era of information explosion, with many people willing to share good money-making information. By collecting information selectively and adding your subjective judgment, you can generate better ALPHA. For example, if five NFT champions I follow also mention a certain NFT, then it's likely that minting that NFT won't lead to losses. Those capable of being champions may not have many followers, but they are able to make money and share. They may be researchers, preferring to stay low-key but having substance.

Get Involved in the Industry

Whatever you do, whether it's with an exchange, a capital firm, or media, being in the industry often provides access to so-called privileged information and opportunities to meet people you wouldn't have otherwise. This gives you an advantage over those without information.

Footnotes

• Footnote 1: "Showing off trades" refers to publicly sharing investment performance.
• Footnote 2: GameFi "CryptoMines ETERNAL" is a ponzi scheme game that saw a long-term surge on the BNB Chain.
• Footnote 3: Axie Infinity is one of the most successful blockchain games, influencing the economic model of many subsequent blockchain games. Strictly speaking, it requires many new players to maintain game prices.
• Footnote 4: COMP mining was the first popular liquidity mining initiative that kickstarted DeFi, initiated by Compound Finance.
• Footnote 5: ALPHA refers to the ability or advantage in investment strategies to outperform the market, usually indicating targets with excess returns.