For the investor community, the most important thing at the moment is to reasonably control risks, seize the tail of the bear market, scientifically improve the efficiency of capital utilization (increase the number of chips), and then wait for opportunities to arise.
Author: 0xFat
From July 12th to August 17th, Bitcoin fluctuated slightly within the range of $31,000 to $29,000. On August 17th, it began to fall below the half-month support level, reaching a low of $24,300. The panic and greed index on the 18th was 37, and the level changed from neutral to fear, with panic reaching a new low since March 19th.
Since June 2022, the narrative of Web3 innovation has sharply decreased, and the L2 track centered on Ethereum, as well as the Bitcoin inscription craze, have not become the driving force for the overall market growth. Now, as the only activity that can attract incremental funds, the speculative frenzy has also encountered a cold wave. At the macro level, the Fed's interest rate hike is still ongoing, and overall, the outlook is not optimistic.
Galaxy Digital's research director, Alex Thorn, also pointed out that the rapid decline this time has cleared a large amount of leverage. The Bitcoin market has completed the most thorough layout reset since the collapse of FTX. In the absence of strong positive catalysts, short-term risks still prevail. $24,000 and $25,000 are seen as key supports. If there is no rapid rebound in the short term, nearly 90% of short-term holders will be in a loss state, leading to further downward pressure. However, both long-term holders and small holders continue to increase their holdings.
Although this round of leverage clearing is relatively thorough, macro policies continue to tighten. However, compared to the previous bear market, the infrastructure of the crypto industry is already very sound, and some technological innovations are still ongoing. Many practitioners believe that the US Treasury RWA may drive the entry of new funds, and the landing of Bitcoin ETF is a clear positive. Just wait patiently. In addition, the entry of international payment giant PayPal into the stablecoin market and the gradual implementation of new crypto regulations in Hong Kong still provide huge development space for the market.
Therefore, for the investor community, the most important thing at the moment is to reasonably control risks, seize the tail of the bear market, scientifically improve the efficiency of capital utilization (increase the number of chips), and then wait for opportunities to arise.
Below is a guide to improving capital efficiency for your reference.
I. For those trapped, earning more coins is the first choice
Small Mei, who entered the market in 2017, heavily invested in a project she had always believed in in the first half of the year. "At that time, I thought it was the bottom! Now my position has shrunk by more than 40%," she said, feeling really uncomfortable being trapped, but because she has long believed in the founding team, she really can't bear to cut losses.
There are many investors like Small Mei, especially newcomers attracted by meme coins such as Pepe in May, most of whom are trapped with hope. In their perception, there is no concept of cutting losses at all. In that case, it is better to choose a platform with a high safety factor and use financial tools for coin generation. The more coins you have, the faster you can get out of the trap and accelerate profit expectations when the market warms up.
OKX's Simple Earn, On-chain Earn, and Accumulated Coin are all good choices.
Simple Earn is a product that helps holders of idle digital assets to earn coins at a low threshold. It is easy to get started, with different options for the duration. The current Simple Earn corresponds to the remaining coin treasure, earning income by lending to leveraged trading users in the lending market, and the regular Simple Earn earns PoS income or project rewards by locking in coins. It supports 24-hour subscription and redemption. The redemption of the remaining coin treasure is immediate, and the redemption of the regular Simple Earn is within 30 minutes.
Link: https://www.okx.com/cn/earn/simple-earn
On-chain Earn mainly provides holders with opportunities to earn on-chain income, including Proof-of-Stake (PoS) and DeFi protocol. Investors can participate in PoS staking or DeFi projects on OKX at any time without paying network fees.
Link: https://www.okx.com/cn/earn/onchain-earn
Accumulated Coin is an automated strategy that can intelligently rebalance in the selected coin combination to earn coins and accumulate coins, lock in profits, and increase the holdings of potential coins, thereby obtaining excess returns.
It is important to note that after the Accumulated Coin strategy is created, the funds invested will be isolated from the trading account and used independently in the strategy. Investors need to pay attention to the risk of the overall position in the trading account after the funds are transferred out. In addition, if the coin encounters unpredictable abnormal situations such as suspension or delisting during the operation of the Accumulated Coin strategy, the strategy will stop automatically.
Link: https://www.okx.com/cn/trading-bot
II. For experienced traders, consider the miracle of compound interest
Einstein said compound interest is the eighth wonder of the world, with more power than an atomic bomb. Buffett called compound interest the greatest invention in the world.
In the traditional secondary market, the most commonly used arbitrage tool for traders is the grid trading robot, which automatically executes trading strategies. Investors can achieve low buy and high sell, and repeated arbitrage in the expected price range in a programmatic and intelligent manner. It was mainly used by market makers with larger capital in the past. These market makers achieved arbitrage through high-frequency trading of grid trading.
Compared to the traditional financial market, grid trading in the cryptocurrency market has some innovations. Taking OKX, the platform with the most complete grid products, as an example, its grid strategies include spot grid, infinite grid, contract grid, and heaven and earth grid.
Currently, spot grid is more widely used in the current market conditions. Its trading logic is for investors to set an upper and lower boundary range and decide to divide it into N segments in the middle. Selling a portion when it rises and buying a portion when it falls, it is suitable for oscillating markets, automatically buying low and selling high, and achieving compound interest. The advantage of spot grid is that it is easier to hold coins and not completely miss the market. It can earn grid profits and floating spreads, and investors can also withdraw profits at any time for other trades. More importantly, it can continuously buy low and sell high through the robot without having to monitor the market all the time. However, its disadvantage is that if the market's oscillation range is too small, it may not be able to trade. If there is a continuous one-sided market, it will lead to idle assets. It is important to note that under the current market conditions, the capital efficiency of ordinary spot grid is relatively low, but OKX's spot grid supports the function of moving the grid within a reasonable range according to the market conditions, effectively improving the capital utilization.
The image shows the spot grid that the author is experiencing. In a micro-oscillating market, with a principal of 20,000 USDT, the arbitrage profit over 9 days is around 250 USDT. Although the return rate is not high, the capital utilization of idle assets can be improved, and the overall experience is relatively good. However, it is important to pay attention to the setting of the price range.
III. For the bottom-fishing army, this allocation is safer!
In addition to compound interest, many investors with funds are waiting for the opportunity to bottom fish. However, the common anxiety is that they are afraid of buying in the middle of the mountain and afraid of not being able to buy at all.
History teaches us not to expect to buy at the lowest point. Gradually building positions and choosing suitable strategic tools may be a more rational choice. For example, OKX's Bottom Fishing, spot dollar-cost averaging (DCA) strategy, and spot Martingale strategy are all good "bottom-fishing" products. Of course, if you hold spot positions, you can also choose to hedge risks through coin-margined contracts.
First, let's talk about the Martingale strategy, which is commonly used in the traditional foreign exchange market in traditional finance. The basic principle is to bet on one side in a two-way market where you can buy and sell. If you bet wrong, you keep adding in the opposite direction. When the market rebounds, you can profit from buying low and selling high. OKX's spot Martingale strategy combines the basic idea of the traditional version with the characteristics of the crypto market to make a series of optimizations to balance the average cost of investors bottom fishing.
Under the current market conditions, investors can choose to buy spot DCA every 1-5% drop in the market. By using the remaining funds to add positions in batches, they can reduce the overall holding cost. When the price rebounds, they can take profits and exit. Compared to simply holding digital assets, the spot Martingale strategy is more flexible, capturing profits from small rebounds and continuously realizing "floating profits."
Next is the Bottom Fishing product, which is a structured product derived from OKX's options trading function. It is very suitable for investors who want to buy a certain amount of assets at a price lower than the market price and are worried that their limit orders at this lower price will not be executed. By using the Bottom Fishing product to place orders, even if the strategy does not drop to the order price when it expires, the system still ensures that you can buy a certain proportion of assets at a price lower than the market price.
The operation path on the web is as follows:
Finally, there is spot DCA, which is a strategy to invest a fixed amount at a fixed time period to buy a selected combination of coins. When the market fluctuates violently, using an appropriate DCA strategy, the same investment amount can buy more chips at the low point, helping investors to obtain more substantial returns. This strategy is suitable for everyone, especially long-term investors, supporting one-click DCA, redemption at any time, and free combination of coins.
The path to create a DCA strategy is to click on [Trading] - [Strategy Trading] on the OKX homepage, select [Create Strategy] and then [Average Cost] - [DCA Strategy], and then enter the strategy creation interface to set the coin, DCA period, and other content, and click [Create Strategy].
The spot Martingale strategy and spot DCA strategy both belong to the average cost section. Average cost is a strategy to reduce the overall holding cost through periodic purchases. Continuously buy at low prices during the price decline and take profits when the price rebounds, repeating the cycle to continuously arbitrage.
IV. For large capital investment, choose a reliable platform first
No matter in the traditional market or the cryptocurrency market, financial products have always been the preferred choice to improve capital utilization, especially for large fund holders. However, with the low liquidity and frequent theft incidents in the DeFi financial products, they are not very popular in the market. Large funds still prefer to invest in CeFi platforms. However, since the collapse of Fcoin, FTX, and AnYin, the requirements for the transparency and security of financial platforms by large funds have become increasingly high.
Currently, whether it is brand reputation, risk control system, high fund transparency, or product experience, OKX has been tested by the market in the past few years. They still regularly disclose the POR reserve data every month, to a certain extent, it can be said to be the first choice for large funds.
Of course, more commendable is that they are one of the few CeFi platforms on the market with a systematic financial product matrix. This matrix includes the simple options product Shark Fin, which is loved by novice investors for its ultra-short-term capital preservation, the fixed-income financial product Dual Currency Win, suitable for the current stable market conditions, and the customized strategy product Snowball, favored by medium-sized funds with professional trading backgrounds.
These three products can basically meet the financial needs of different types of investors in different market conditions. But currently, the first two are more widely used. Due to the special nature of the recent market conditions, the use of Dual Currency Win seems to have increased. The image shows the earnings from Dual Currency Win shared by an investor, for reference only.
V. Professional traders, please continue reading!
Seeing this, you will find that the article introduces only OKX products.
Yes! That's right. In the past two years, whether it is product experience or risk control capabilities, OKX has been the most outstanding player in the cryptocurrency market. In addition to the Web3 team that has always been at the forefront of the market, OKX's CeFi innovation is also strong. In addition to the above products, the CeFi team also launched a signal strategy for professional traders last week.
In simple terms, the signal strategy function of OKX allows traders to flexibly customize their trading signals on the TradingView platform to meet specific needs, truly achieving freedom in trading experience, greatly improving trading efficiency and accuracy, while reducing the risk of irrational operations.
The image shows the custom signal entry.
The core concept of OKX's signal strategy is to predict future price movements based on historical market data and patterns. Traders can observe and analyze market signals to find potential buying or selling opportunities for trading.
Its advantages can be explained with three key words. First, it is signal-driven. OKX aggregates top signal providers composed of the smartest and most professional investors and institutions globally, providing traders with the highest quality trading signal services, reducing the learning cost for traders while increasing their trading accuracy to reduce trading errors caused by emotional issues. Second, it is automatic trading. The signal strategy can help traders automatically execute trades as soon as the signal is confirmed, with stronger timeliness and higher efficiency compared to manual trading, helping traders avoid missing out on opportunities as much as possible. Third, it is low latency. Compared to platforms with delays in seconds, OKX's signal strategy is committed to providing millisecond-level latency, helping traders seize market opportunities in a timely manner. Overall, the signal strategy is to provide professional traders with a more rational and intelligent operating system, essentially helping them improve capital efficiency.
Currently, the signal strategy connects professional traders, nodes, and ordinary users. Ordinary users can use OKX's signal strategy to let professionals/institutions help them make money, only needing to pay a subscription fee or commission. Signal providers can apply to become OKX's signal provider, providing professional trading signals to realize the monetization of professional knowledge and cognition. For nodes, they can cooperate with signal providers in the future to obtain a share of the profits. The three form a complete trading loop. According to official sources, OKX will also launch a signal plaza for ordinary users in the future, integrating and displaying the completed trading signals from signal providers. Ordinary users can subscribe to and use these signals through the signal plaza, and create their own signal strategies based on this.
Looking back, every product of OKX carries a solid and rigorous attitude. Insiders say that this attitude comes from two forces within the CeFi team. One is the rationality and restraint of members with many years of traditional financial experience, and the other is the keenness and pragmatism in user operations of the Internet experts. It's quite good, the platform pursues rigor, and users value science. The irrational cryptocurrency market is finally going to produce "orderly" flowers.
Risk Warning: This article is for reference only and does not constitute any investment advice. The market is risky, and investment needs to be cautious!
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