Source: SevenUpDAO
Host: Nathan, Co-founder of 7UpDAO
Guest: Shu, Senior Secondary Market Trader
Editor's note: This conversation took place in March of this year and is being released now because many of his predictions have come true. In 2016, Shu left Byte's international department to become a full-time secondary market trader in the cryptocurrency field. He infiltrated the well-known GCR community and bought Solana at $9. We discussed a lot about choices, secondary investment philosophy, memes, VC coins, shorting, Solana, and the mysterious GCR.
Experience Entering the Circle
Nathan: What was your experience entering the circle? What opportunities and stories have you had in the past few years?
Shu: In 2013, while studying in the United States, I heard that a friend had bought Bitcoin and started mining. I paid attention to it but didn't buy any at the time. Later, in August of the same year, I saw a post by a popular figure on Renren Network mentioning Bitcoin. This piqued my curiosity, and I started paying attention to this field and later bought some Bitcoin. At the time, I was still a student, so I only used pocket money to buy a small amount. I remember very clearly that the price of Bitcoin soared from $200 or $300 to $700 or $800, and by the end of November, it had surged to $1,000. However, the price then experienced a significant drop in December. Although I was just investing for fun at the time, I later realized that this experience played an important role in my growth, especially in the 2016 and 2017 cycles.
In 2016, after returning to China, I joined Byte to work on internationalization. One day, I noticed one of our engineering colleagues browsing a Bitcoin-like altcoin exchange website. This reminded me of my experience in 2013 when I had also purchased some similar cryptocurrencies like Litecoin and Ripple. Because I hadn't sold them, their prices had increased many times over. This could be considered my second foray into this field.
In 2016 and 2017, I made some money from my initial investments, some of which multiplied significantly. Many friends issued coins, and some friends joined Binance, and so on. I remember in December 2017, BTC reached $20,000. In January 2018, there was a crazy surge in altcoins, but about 2-3 weeks later, the prices started to decline. At the time, I had a mindset that was completely non-trader, didn't understand how to trade, just bought and made money. Then I invested in new coins, and later lost a lot because I didn't know how to trade or read charts.
The real turning point for me came in March to April 2021 when the cryptocurrency market became active again. However, on May 19th, Huobi and many other exchanges suddenly liquidated, causing me to lose millions of dollars in a single day, which made me very frustrated. In April 2021, I also noticed some trader KOLs on Twitter. Because of my limited understanding of this field at the time, I followed many of them. I followed someone I thought was quite good, named GCR. He had issued a warning at the end of April, but at the time, I didn't know how great he was. Because you have to follow a KOL for a while to know if they are good or not.
During the period of July to August 2021, I was in a period of recuperation because of the huge loss I experienced, which made me feel very uncomfortable. At that time, I began to systematically learn various trading techniques, almost starting from scratch, including learning about candlestick charts, and more importantly, I found that there were many excellent English-speaking traders on Twitter. However, it was a big problem to distinguish them from many KOLs.
For example, during the 2017 cycle, the biggest lesson I learned was that most of the Chinese KOLs had poor quality. The reason is actually very simple. You can see the A-share market or some experiences in China over the years. Because there are so many people in China, including the digital maniacs in 2017 and other similar accounts. Many people made a lot of money, had a lot of fans, and for them, the easiest way to make money was to fleece their fans, rather than providing some alpha to their fans. I think this is very different from the United States. Although there are also fleecing groups in the United States, there is indeed a very small number of people who are truly outstanding. They don't set up paid groups but share genuinely useful information. However, it is very difficult to find such people, and it took me a lot of time to observe at that time.
By August to September 2021, I truly began to pay attention to some people worth following, and my trading skills gradually improved, and I started to make profits, gradually recovering the losses. I remember in October 2021, GCR predicted that the Bitcoin futures ETF would be approved soon, and he posted a message on Twitter saying he was going to create a "ReBirth DAO." I rushed in within the first ten minutes of seeing this post. Later, the post was closed within an hour, and he created a Discord group. After joining, I started to communicate with many Western traders, understand their trading styles, and found that their styles were very different from ours. Gradually, I also got to know some very outstanding traders on Twitter.
As for GCR, his full name on FTX is very long, and GCR is just his abbreviation. He ranks at the top of the profit list on FTX, probably in the top two or three if not considering institutions. He is a very outstanding trader. His track record on Twitter is that if he posts 100 times, maybe 99 of them are accurate about trading, so his hit rate is the highest among our group of traders. This is actually the most important principle we focus on as traders: you cannot post analysis after making a lot of money, that's "hindsight bias." Many of the English-speaking fleece groups in China also analyze this way. But GCR usually gives predictions in advance and sometimes provides specific trading points. However, he is not very active in the public eye now and communicates more in our small group.
Nathan: Are you currently a full-time secondary market trader?
Shu: I am a full-time secondary market trader because I basically idolize GCR, and many of his trades have indeed been accurate. In fact, at the peak of 2021, he said that during the crypto bull market, you shouldn't do anything else but fully immerse yourself, spend 24 hours in front of the computer, trade coins, and learn various trading techniques. In a bear market, you should start building relationships with various projects, depending on whether you are engaged in primary trading or working with project teams. Fully engaging in trading during a bull market is an important opportunity to gain alpha returns, and such opportunities may only occur once every ten years in the cryptocurrency field.
Investment Style and Approach
Nathan: What is your current style and approach as a secondary market trader?
Shu: My trading style is relatively aggressive because most of the money is my own, and I naturally want higher returns, so my risk preference is relatively high, which means I am definitely more left-leaning.
Within the left-leaning approach, there are actually two types. The first is technical traders who focus on charts, various quantitative indicators, and trading based on the long/short ratio analysis. The second is narrative traders who pay more attention to the stories behind the market and emotional factors. There is a lot of discretion in this approach. I mainly use a narrative trader approach with some quantitative analysis, but quantitative analysis is not the most important in my strategy. In the cryptocurrency market, due to the relatively small number of participants and the close relationships between regulators, exchanges, and large holders, the market is not as fair and transparent as traditional stock markets. Therefore, many technical indicators may be ineffective or severely lagging in the crypto market, unless only focusing on mainstream currencies like Bitcoin and Ethereum.
So I mainly focus on left-leaning, narrative-driven trading, with a small part belonging to insider trading. For example, in the bear market, when it comes to Solana, there may be 5 or 6 people in GCR's group, and the orders may start at $3-5 million. However, they usually don't directly reveal the specific order amount but give a general direction and hints.
In the crypto trader community, including our group, most of the time, we have our own password system or code, a lot of slang, so the outside world may not necessarily understand. Many times, if you create a fund, it definitely requires stability. If the drawdown is too high, it won't work. Stability is the first priority. For example, a configuration of BTC+ETH, plus 20%-30% of SOL, and 5%-10% of Meme coin is good. But if I feel that this Meme coin is taking off, I might allocate 50-60% and add leverage, so it's definitely different.
Nathan: So, to summarize, your trading style is primarily left-leaning, and in making decisions about a specific coin, there may be more narrative, trend, turning point, and event analysis components?
Shu: Yes, there are many influencers on Twitter, such as Willy Woo (@woonomic), who has a significant impact on the market and is very famous with a high hit rate, probably one of the most influential public speakers at the moment. There is also Anatoly (@aeyakovenko), who is the Co-founder of Solana Labs and a spokesperson for the Solana ecosystem. These major KOLs are one part, and the other part is more technical. They will analyze the order book and use outflow and inflow data from Binance or Coinbase. I also look at some macro aspects, but actually, macro is not that important because everyone knows it will be strong, it's just a matter of how strong, and there is definitely a difference of opinion.
When it comes to a specific project, such as Solana or other coins, I will see if I have some internal connections or information. This kind of connection must be internal to the project. If it's not from the project team or a core position within the project, the information they provide may not be accurate. The most important thing in crypto is to judge at which level your information is in the information pyramid. Most people are not good at judging this. They may think they are at the second or third level, but in reality, they may be at the fifth or sixth level, so they are much slower, and once you are slow, your trade is useless because the volatility in crypto is very fast.
Lastly, market sentiment is also an important factor that is often overlooked. Although there are many social signals, these signals are completely subjective. If you only objectively collect these signals, such as counting the number of mentions by all major KOLs and then trading based on that, your trading performance may be very poor. Because most KOLs are trying to attract more fans, and most fans don't understand trading, so they often buy high and sell low. Although buying high and selling low may be good at certain stages, such as when a KOL posts a tweet, if you follow that tweet within 15 minutes, you may find that your performance is very good. But many people may enter five hours later, and then they may lose. It's very time-sensitive.
Nathan: In terms of asset prices and FDV, do you have any preferences for selecting and trading?
Shu: I have different levels of allocation. For mainstream coins, in January 2023, I first bought Solana at around $9. Because GCR has always been bullish on Solana, and I also mentioned the reason for being bullish on Solana last time. For other L1 assets, I definitely have the heaviest allocation to Solana because its liquidity is good.
The second level is meme coins. Meme coins also have levels. The first level is OG, such as Doge and Shib from the last cycle. The second level is chain-specific meme coins, divided by different chains and ecosystems, such as Solana's Wif. We bought Wif at around $0.26, and it's about ten times now. Then there are pure meme coins, such as Pepe, which some may say belongs to the Eth ecosystem, but I actually consider it as a meme coin without a specific chain. Meme coins can also be divided by different themes, such as whether it's a dog type or a cat type. If many dog-type coins have a market cap of over a billion dollars, then shouldn't there be several cat-type coins with a market cap of over a billion dollars? If you extend further, what is the third popular pet? If you can figure out the series question, if you guess right, it may be very valuable. Overall, we think that in this bull market, it's about buying the most mainstream and strongest layer 1 or betting on meme coins.
Nathan: Is the correlation of dividing these memes into different animal attributes within this quadrant significant? For example, if the dog-type coins already have an OG valuation system, will the cat-type coins definitely benchmark against the dog-type coins, and is this a valuable support?
Shu: No, you can only look at it in the broadest sense. For example, if a dog-type coin has a valuation of $4-5 billion, then it's very possible for a cat-type coin to reach a valuation of a billion dollars, even if it's not as popular as the dog-type coin.
Nathan: How do you view the performance of Solana's memes in this bull market, often outperforming ETH's memes? Is this related to the influence of funds and traders in different regions not being as strong as in the United States?
Shu: I think the reason is actually very simple. Two or three weeks ago, I tried to buy a few meme coins on ETH, and the gas fees were very high. As someone who came from a traditional internet giant like Byte, I immediately understood that the on-board cost was too high. For example, if I deposit $1,000 or $2,000, my ETH gas fee is 10%, but Solana is maybe 2-3%, so I would definitely choose Solana. And most people, when they buy, they are not going to deposit a few thousand dollars, but maybe $100 or even tens of dollars. So when they deposit, if they see that they are depositing $50 and paying $30 or $20 in gas fees, then they won't deposit. This is the most direct reason.
Another reason is that Solana has already made some headlines in this cycle. In addition to the price increase, it has a lot of exposure in the United States. If you are in the United States, you may have already come into contact with its physical stores, phones, and so on, so whether you are inside or outside the circle, you have some degree of exposure. If Solana is bullish in many aspects, then naturally, everyone will think there is something behind it, and this is a more logical thinking.
Nathan: If many other chains, such as many L2s, also start to use memes as their market and growth engine and launch meme projects, do you think these memes are worth buying?
Shu: They will definitely all launch, but I won't buy. This is another misconception. People like to buy these things that catch up, but I never buy things that catch up, I only buy the fastest runners. This is also something I learned from GCR. You should always focus on the fastest running coins. Your only job is to find out which ones are the fastest in this meme cycle. If you didn't get on at the beginning, then find out when to get on, for example, buy on the pullback. You shouldn't buy those new things that catch up, or you can only allocate a very small portion to those that catch up. Because catching up things are basically not very competitive for your market maker or project team.
If your market maker is very skilled and has the most accurate judgment of BTC or the entire market, then shouldn't you be leading the rise instead of catching up? Or, for example, if you are starting a business and you are among the first to receive funding, but if you are not successful in the first round of funding, it can only mean that you didn't react fast enough, and being slow in the capital-efficient market of crypto has countless drawbacks. Because in crypto, everyone is fighting for attention, but attention actually doesn't gather in proportion. For example, Bome may grab all the attention in a day, but this is all backed by big investors. When we look at the price increase and the language of the calls, the price going up so much in a day or two, there are no miracles in this, and I don't know why many friends believe this is accidental, it has never been accidental. For example, at the time of Solana, when we saw the price reach $9, we roughly calculated that it could reach $18 in January, and we all had a budget. Basically, at that time, our group probably gathered around $3-4 million, with one person from GCR investing $1.5 million, and each of us investing a little.
Nathan: What are your thoughts on the so-called "VC coins" now?
Shu: Personally, I don't touch any tokens dominated by VCs unless the VC has been washed out, like Solana. The reason is also very simple. VCs invest with the money of the wealthy, so the pressure is not that great. For example, a VC fund may have $300 million, but it's not their own money, so their motivation is not that strong. The big traders in our group, whether they are using 10 or 20 times leverage with other people's money, it's completely different from using their own money. So I don't pay attention to anything VCs say, I pay more attention to how ordinary people think.
Secondly, I pay attention to how the real powerful houses think, such as the biggest market makers for BTC, BlackRock, Jane Street, and so on. To some extent, VCs are just pure bulls. Because of their work nature and cognitive genes, they will only be bullish. If they are not bullish, they won't be able to raise funds. It's hard to say whether their optimism is genuine or just to deceive LPs, but this one-sided bullish rhetoric will influence and mislead the public. An accurate market must have both long and short positions. For example, in 2022, I made 70% more money from shorting than from longing. In crypto, a large part of the money is made from shorting. It's a sure thing that BTC will have a 50% drawdown in the future. If you find the right time to short with double leverage at the peak of the bull market, you can make a lot of money, and you don't even have to worry about the pullback, but your margin needs to be sufficient (this is not financial advice). Also, shorting must be done on the right side, and you shouldn't go all in, and you shouldn't try to guess the absolute top. However, ordinary people should not short easily; shorting requires a lot of skill. But someone skilled at shorting will definitely not be bad at longing, because shorting requires more judgment than longing.
For many people, patience is the most important thing when shorting, and secondly, you need to ensure that your margin is sufficient because sometimes you need to use leverage. I remember in 2021, I shorted a small coin on a certain exchange, and the price of that coin surged 15 times in an hour, and I got liquidated. This is not good for the exchange either because such a drastic price fluctuation within an hour will seriously damage the reputation of the exchange. Generally, this kind of situation is not tolerable. If a coin surges by 3 to 5 times within an hour, it means that the exchange's liquidity and order depth management are not in place. Exchanges like Binance hold 30% to 40% of the supply of a coin and act as market makers themselves, so even if the price fluctuates, the surge within an hour won't be that big. You will find that on Binance, it's common to see a 2 to 3 times surge in a day, but a 10 times surge within an hour is very rare, it hasn't happened in the past two to three years. A 10 times surge within an hour will lead to many people getting liquidated, and it also indicates that the sell-side liquidity of the exchange is very poor, and there isn't enough selling pressure. Of course, I have some friends who have been liquidated on Gate and other exchanges, with a two to three times surge within an hour. They are all very skilled traders in the group, so later, we stopped using that exchange.
I think some exchanges with Chinese backgrounds are a bit short-sighted. Because this field is very profitable in the long run, there is no need to ignore risk control for a little profit. It's like a casino, how can you let someone lose everything in an hour? The best management is to let the gambler lose slowly.
Discussing "Shorting" and Leverage
Nathan: From the perspective of ROI and taking risks, what is a good range to control leverage in?
Shu: Leverage depends on the coin, and then it depends on your conviction for that trade. For example, if you think this is possibly the absolute bottom or close to the absolute bottom, I might use 7 to 8 times leverage. Generally, I avoid using leverage of over 10 times because a 10% drawdown is very common, and you could say that a 10% drawdown is to liquidate those positions with 10 times leverage. 7 to 8 times is probably the highest I've used, and generally it might be 4 to 5 times. Also, it depends on the position. For example, if I have a lot of money in the position, then maybe 2 to 3 times leverage. If a trader tells you that they often use 20 times leverage, either their position is not large enough, so it's meaningless, or they are close to getting liquidated. Because in crypto, any coin can have a 5% drawdown, and 20 times leverage will be liquidated. If BTC has a 10% drawdown, 10 times leverage will be liquidated, and in fact, 10 times leverage is very easy to get liquidated; many small coins may have a 30% to 40% drawdown, so 3 to 5 times leverage will be liquidated. And generally, positions should not be fully loaded, they should be gradually added.
The Story of Buying Solana at $9
Nathan: Tell us why you dared to buy Solana at $9?
Shu: Yes, I bought it at $9, and later the price went up to $18 or $19. I think the first opportunity was FTX's bankruptcy. At that time, when FTX went bankrupt, many people lost a lot of money. After FTX went bankrupt, I didn't really try to recover the losses for almost a month, until early December, when the emotions gradually calmed down, and I started to gradually pay attention to some things. At that time, GCR created a small group in mid-December, and about 50 people joined within the first five minutes, and we also joined and had some discussions. GCR said that the end of November might be the lowest point, and the market was at the absolute bottom. He predicted at that time that there would be a huge rebound in 2023, and the bull market would start in 2024.
Here's an aside, GCR predicts a lot of things with a very high accuracy rate. For example, in mid-2023, he predicted with a 90% probability that Trump would be elected as the next President of the United States, and according to the current trend, the probability is actually very high. GCR bought Trump's meme coin at $0.1 or $0.2, and last week he said that this token has already made a profit of over $35 million. He also predicted the crash of Luna, the emergence of friend.tech, and many other things. He is the strongest trader in history, no doubt about it.
Generally, competitors of ETH will rise more than ETH, and in this cycle, Solana is still the biggest competitor of ETH. First, Solana raised the most money among all the ETH killers; second, Solana is relatively an Americanized public chain, its name comes from a beach in San Diego, and several of its founders are from Qualcomm, which you can find on LinkedIn; third, Solana's ecosystem has produced some attractive things, such as StepN, and some wallets developed by third-party developers. Their team is very Americanized and relatively elite. Another important reason is that when I went to New York, they had a physical store there. In June or July 2022, when I returned to the United States, I found that they had opened a physical store here, which proves that they still have very good financial resources. Otherwise, they wouldn't have opened a store during that bear market. All of this proves that Solana still wants to do big things in the next cycle.
Last August, I went to Mexico to participate in Ethereum's Hackerthon, and I felt that V God was completely different from a few years ago. He had several private bodyguards and seemed to be deified, as if he had lost motivation. GCR often says, "Why would a coin pump? Because it has motivation. A team without incentive will find it difficult to succeed." I feel that Ethereum lacks motivation, including V God and other Ethereum OGs who have been resting for too long, just like Tencent and Alibaba, and cannot compete with new competitors. These reasons led me to believe that Solana is better than Ethereum, and at that time, we calculated that most of Solana's supply had been eaten up by FTX.
I remember in April or May last year, GCR predicted that the BTC ETF would definitely be approved, but the timing of the approval was unknown. So, all the wash trading before this timing was normal. And once this timing passed, if you bought Solana within two to three weeks, you would find that its price was still very low. In addition, when emotions reach the point of "fear the most," it is generally expected to rebound, based on the experience in crypto. The counterfactual may not necessarily be the best trade, but the best trade is definitely counterfactual.
Nathan: Luna is also counterfactual, so why not buy Luna?
Shu: Luna's bankruptcy is different. Luna's situation can be calculated mathematically, and it is unsustainable. The case with Solana is different because after FTX collapsed, Solana experienced a huge sell-off. After stabilizing in 2022, it proved that most of its selling pressure had disappeared. We looked at the selling pressure on the order book and observed it for a long time, about two to three weeks, and found that the sell wall of the selling pressure was very low, and it only needed a little buy pressure to push it up. If you believe that FTX is the biggest catalyst, and there is no more bearish scenario than this, then actually BTC has bottomed out. Once BTC stabilizes or rebounds slightly, which coins will rebound the most? This is a very big alpha.
Nathan: Do you think Solana's FDV will surpass ETH?
Shu: I think it might be a bit difficult for Solana to flip ETH. Because our judgment is that the approval of the ETH ETF is basically a done deal, it's just a matter of time. It's not a question of if but a question of when. After the approval of the ETH ETF, ETH will also experience a surge. Solana will definitely also be approved, but we don't know if it will happen in this cycle or when in this cycle, so it doesn't have the legitimacy and traditional big money in, so we don't know how long it can rise. Therefore, I think it's relatively difficult for Solana to flip ETH in this cycle. I think the ETH ETF will definitely be approved in this cycle, and with traditional money help, can Solana flip ETH? It's very difficult because the scale of traditional funds is not at the same level. (This conversation took place in March this year, when the market was in a FUD sentiment towards Ethereum.)
The second reason is that Ethereum has a much longer history than Solana, and you can see that it's very difficult for later coins to flip earlier coins on CoinMarketCap. For example, Ethereum may have been bought by whales very early, and they don't care whether the price of Ethereum is $3200 or $4000. If they keep holding, it means they may not necessarily have selling pressure and selling incentive because they are not traders.
About GCR
Nathan: Let's talk about your GCR group.
Shu: GCR is very strict, and only a small number of people can stay in the group. Most of the group members are large traders, with assets ranging from several million to even billions of dollars. GCR's standards are therefore very strict, requiring rigor in every word. We mainly discuss price-related topics, but occasionally we also touch on other topics, such as U.S. politics or topics like whether Trump can be re-elected. For all discussions, we approach them from a trading perspective, so the requirements are very strict to ensure that our statements and predictions are accurate. This strict requirement may affect your life, especially if you want to become an excellent trader, which means you will have higher demands on yourself and your surroundings. Of course, this depends on personal choice, but if you choose this path, you must demand strictness from yourself to ensure that your words and actions are rigorous. For example, sometimes GCR uses coded language, mentioning a certain time period or a certain type of coin, and you need to research and understand what happened during that time and which coins may be affected. Big traders usually won't tell you directly, but will give some hints that you need to interpret yourself.
In fact, we have two small groups, one with about 50 people, and another small group with about a dozen people. There are some European traders in the group. From our summary of European traders, first, Europeans may have a unique sense of confidence; second, many of their cognitive and cultural preferences may be due to the sparsely populated nature of the region, and there is always a feeling of cynicism. Europe actually doesn't have much influence on the market, although there are also good traders in Europe. The biggest influence on the market is still American traders, including Wall Street, and so on. We say that the CEO of BlackRock saved the ETF approval. Otherwise, the bull market cycle wouldn't have arrived so quickly.
The weakness of Asian traders is that most of them don't have a deep understanding of American culture, and secondly, because of the severe homogenization of thinking, possibly due to collective education. This is not only in China, but also in Japan and South Korea. When a coin rises, everyone chases after it, but everyone is competing for operational excellence, competing for the ability to enter and exit quickly, but it's still very tiring to make money. It's best to chase a big trend, such as buying Solana at a very low price and holding it, which is a style that American retail investors like. Holding it and then selling at 10 or 20 times is much easier than entering and exiting quickly, and it's also better for the mindset and physical health of traders.
Nathan: What is the market influence or disdain chain of traders from different regions like?
Shu: From my observation, Europe has a slight advantage over Asia. The first is that they are relatively closer to white culture, so they can understand American culture relatively well, and European traders have a big advantage in that they don't have the collective thinking that Asian traders have. Like Americans, Europeans are not influenced by collective thinking and are more independent thinkers compared to Asian traders. The second point is that Europe has a certain advantage in terms of time zones. In the Asian and American time zones, traders are awake for a certain period. You will find that from the previous cycle to the current cycle, many coins have experienced major surges and declines, often in the early hours of the morning in China, which is very unfavorable for Chinese or Asian traders. But in this cycle, I recently looked at it, and I found that the performance of some mainstream coins in the Asian time zone is better, but this does not mean that Asian traders are better, because I know that some American traders have moved to Asia.
Nathan: Is it currently a trend for top North American traders to live in Asia?
Shu: Some of them move to Asia mainly because of the cost of living, as well as food and other aspects. They can live like kings in Asia for the same amount of money. But they won't say they are moving there long-term, they might come for a few months or stay for half a year, as a way to relax as a trader, because it's very difficult to relax in a familiar environment, but in an unfamiliar environment, you may need to learn and adapt.
When trading, you can't watch the market every day. For example, even in a bull market, there are major pullbacks, such as a 20% pullback. If you watch it every day, it's easy to make impulsive trades, like trying to catch a falling knife. So, having a sense of rhythm is very important. When there's a 20% pullback, you don't know if it will pull back 25%. At this time, it's best to take a vacation for a few days and then come back to observe. Don't try to guess the bottom. I've seen many Asian traders try to guess the bottom, which messes up their mindset. When it goes up, they regret not buying earlier, then they chase after it, and when it pulls back again, their mindset is disrupted, and their overall profits in the bull market cycle may decrease significantly.
Nathan: How to solve the mechanism for earlier and better discovery? It seems that many Asian traders are not only strong in execution but also better at early project discovery.
Shu: There's no methodology. First of all, everyone always wants to summarize a paradigm and path, but this may be wrong in crypto trading. For example, making 1000x or 2000x gains, or people who do these things, cannot form a methodology. At least you need three or more samples to form a pattern, but this kind of thing generally doesn't exceed two.
I've seen all kinds of stories in countless coin trading groups, but after reading them, you can just move on. You have to strictly control your information input, just like what you eat every day. If you eat pre-made food every day, how can you be healthy? I basically only follow two or three Chinese KOLs, and all the others are English KOLs, so my sources of information are very clean. Including the content I see on WeChat, I've quit all other groups because you will become a reverse indicator. I've also been on ByteDance and understand the subtle influence of information flow on people. The information you receive every day will subtly influence you, rather than simply being classified by your brain. You have to make sure that everything you see is alpha. Or at least strive for the maximum alpha, which is very important.
Another common mistake is that some people think it's beneficial to leave a few negative examples, but in reality, this is very wrong. For example, there's a person in the group named Alex, who once made two to three billion dollars in the last cycle and became the number one profit maker on the FTX trading platform. But he lost tens of millions of dollars in a few days. He shared an experience that is worth learning from: the wrong negative is not necessarily correct, so the concept of a counter indicator is not valid.
You have to spend a lot of time in front of the screen. You may have to track many calls from a KOL for a long time, such as a KOL who is a trader. You have to remember, and if you can't remember, you can use Excel. You have to remember if many of this trader's calls are accurate. If out of ten early calls, he is accurate in seven or eight, then you should follow him and focus on that category. This may be a method.
I've also found that very skilled traders are introverted personalities, not extroverted, and their speaking style shows a significant ego. A big ego doesn't necessarily mean a good trader, but most traders have a big ego. It's because they have a big ego that they value every word they say to the public and take responsibility for their statements. In the GCR group, we count how many statements you make each week, and you are forced to make a few price predictions each week. You will be judged based on the predictions, and the bottom 20% will be kicked out each week. In summary, first, control your information input; second, find your own alpha following.
Discussing Future Trends
Nathan: How do you view the market trends and rhythm in this bull market cycle?
Shu: As traders, we only talk about things with a high level of certainty. I'm not too confident about specific timing. Because I speak conservatively, I can only say that I'm certain it will be a bull market in 2024, but I'm not sure about 2025. It might still be in the first quarter of 2025, but after that, I'm not sure. In terms of price levels, some people say BTC will reach around 200,000, which I think is a bit too bullish. Although it's possible, to be honest, I would be very happy if it reaches 100,000. Because 100,000 is a significant psychological threshold, and many people may underestimate this. 100,000 is a six-figure number, and we are currently in the five-figure range. This is a breakthrough in psychological levels, similar to the meme coin going to zero. I suspect that when BTC approaches 90,000 or 100,000, there will be a sell-off. At that time, it will depend on how the recovery from the sell-off goes. So, I think reaching 100,000 is good enough. Anything above 100,000 is of course better, but it doesn't affect me much because when it reaches 90,000, I may gradually start reducing my BTC holdings and play more with altcoins.
Nathan: How about the trend of Solana?
Shu: Solana is now around 190 (conversation took place in March this year). I think doubling to 300 or 400 is not a problem. I'm still quite conservative. In the last bull market, BTC's ATH was over 60,000, so if it increases by another 50%, it would be around 100,000. In the last bull market, Solana's ATH was 260, so I conservatively estimate an increase of 50% or 60%, which would be around 400, possibly even higher because if BTC increases by 50%, Solana's elasticity will definitely be more than just this increase.
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