Bitcoin has already adjusted as it should, so let's consider looking at opportunities in the US stock market.
Host: Alex, Research Partner at Mint Ventures
Guests: Jiang Xin, Crypto Investor; Yuzhong Kuangshui, Crypto KOL
Hello everyone, welcome to WEB3 Mint To Be initiated by Mint Ventures. Here, we clarify facts, explore realities, and seek consensus in the WEB3 world through continuous questioning and deep thinking. We aim to elucidate the logic behind hot topics, provide insights that penetrate the events themselves, and introduce diverse perspectives.
Alex: Today, we have two guests. The first is Teacher Jiang Xin. I remember the last time Teacher Jiang was on the show was in September 2023, before the wave of altcoin bull market officially erupted, where we discussed the so-called main wave of the bull market. The other guest is Yuzhong Kuangshui, who is making his first appearance on our show and is a well-known KOL. Could you both introduce yourselves?
Yuzhong Kuangshui: Hello everyone, I am Yuzhong Kuangshui, a KOL on Twitter, mainly sharing narratives and fundamentals. Currently, I am focusing on how to use data to improve trading.
Jiang Xin: Hello everyone, I have been involved in VC investment and have done a lot of research. Recently, I have been paying more attention to the secondary market and US stocks, as well as some AI-related topics, so I have transitioned from primary to secondary markets.
Judgment and Reasoning on the Current Stage
Alex: Today's topic may be different from previous episodes. In the past few episodes, we focused on specific sectors or narratives, including stablecoins, RWA, etc. This time, we will discuss more subjective, emotional, and personal experience-related topics. The theme of this episode is "My Experiences and Lessons from This Cycle," and we want to talk about what insights can be summarized, reused, and shared with the audience from this cycle's experiences. The first question today is about the current stage of the cycle, which many people are concerned about. What stage are we currently in this bull market cycle? What are your judgments and reasons?
Jiang Xin: I think it's quite difficult to define what stage of the bull market we are in; it depends on whether we are talking about the Bitcoin bull market or other bull markets. From the perspective of the Bitcoin bull market, I believe we are still in the mid-bull market, but it's hard to judge exactly where we are. However, in terms of altcoins, I think we have entered a very deep bear phase. I believe this phase has transitioned from bear since January or February until now, and we should be in a deep bear phase for altcoins, which most players can feel. Currently, I still have expectations for Bitcoin, but I think altcoins may need a period of adjustment, possibly more than six months. So during this time, players in the crypto space may not feel particularly comfortable; that's my personal feeling.
Yuzhong Kuangshui: My view is quite similar to Teacher Jiang's. I think the current cycle has completely deviated from the previous four-year cycle theory. I believe we should not think about what stage the entire crypto market is in. It is currently in a very chaotic state, with BTC standing out, altcoins being lifeless, but stocks related to crypto concepts can soar, making it impossible to determine what cycle we are in. I think we should break it down: stocks are stocks, BTC is BTC, and altcoins are altcoins, each market operates under different logic. For example, I am optimistic about BTC; I have better expectations for BTC because I believe the number of BTC buyers will continue to increase, making it hard not to be bullish on BTC's price performance. For major altcoins, we look at fundamentals, such as AAVE and HyperLiquid, which have buybacks. These can be held long-term, waiting to buy at relatively low prices, as their fundamentals and prices are strongly correlated. For small-cap altcoins, it mainly depends on the main players, and liquidity is poor. The main players are likely to manipulate the market through contracts, so you need to observe the main players' behavior through contract data, such as large holder positions, long-short ratios, open interest, and trading volume to make predictions about future price movements.
Alex: Let me summarize the views of both guests. In this cycle, it has become increasingly difficult to encapsulate Bitcoin, altcoins, and crypto-related US stock concepts within a complete cycle. The differentiation is very clear; Bitcoin has its fundamentals, altcoins have theirs, and within altcoins, there are those with solid fundamentals and those lacking both narrative and fundamentals, showing different price performances and cycle stages. Additionally, there are new business models like "coin stocks" emerging, which previously might have only had a micro-strategy, but now there are many such projects, all at different stages of their cycles.
Changes in Investment Difficulty in This Cycle
Alex: Now let's discuss the second question. I wonder which cycle this is for both of you in terms of entering the crypto industry or starting crypto investments? Personally, do you feel that investing has become more difficult or easier in this cycle? What might be the reasons?
Yuzhong Kuangshui: For me, it has become more difficult. For someone who experienced 2021, this cycle is really tough. Previously, it felt like if you just focused on narratives and accurately grasped their direction, you could easily make money. You might buy the second or third narrative, and their gains would far exceed the first. For example, during the GameFi and DeFi boom, when Ethereum's performance was not great and couldn't accommodate more users, concepts like altcoin Layer 1s, such as BSC and Avalanche, emerged. At that time, as long as you bought in during the PVE phase, you could easily make money. If you understood how the products and tokens operated, you could easily profit. There were many ways to earn, such as providing liquidity, playing games, or yield farming, all essentially PVE games. I was just entering the industry then, but I still made some money. Sometimes, just holding would yield dozens of times in returns, which was quite terrifying. Now, my experience is certainly more seasoned, but the difficulty of making money is worlds apart. First, market liquidity is not great, which forces some projects not to seek larger profits and instead just aim for a quick launch on major exchanges, creating a high FDV, and then they just give up.
Alex: They also don't dare to take risks.
Yuzhong Kuangshui: Right, this is what many funded projects want to do—launch at a high price. For small projects, launching with tens of millions might actually be their hope to make some money through IDOs on Binance Wallet or Alpha contracts. This cycle is roughly like that. Of course, there’s also the on-chain aspect, which for many people has actually been quite profitable. But I don't consider myself good at on-chain PVP. Although I made money during the AI agent wave, it was more because I correctly identified the narrative and positioned myself with some tickers, leading to a significant price increase over about a month.
Jiang Xin: I think everyone feels it has become more difficult. I believe this is due to macro issues; there has been no monetary easing. The main problem is that we are still in a high-interest-rate environment, and everyone is still relying on the money that the Federal Reserve has injected. Secondly, from the perspective of the secondary market, Bitcoin's market cap is already quite high, and pushing it further up indeed requires a substantial amount of capital, which is an objective reason. From a micro perspective, perhaps because I have a deeper understanding from my previous VC experience, there is an imbalance between supply and demand. On the supply side, VCs raised a lot of funds after 2022, especially in North America, where fundraising amounts are in the hundreds of millions or even billions. However, Web3 projects of this scale find it hard to absorb this amount of funding, leading to a situation where many projects have raised a lot of money but don't know what to do with it, resulting in an oversupply. This situation also exists in the AI field, although AI does not have the same token issuance issue, but its private market valuations are also in a bubble state. So this is a structural issue in both primary and secondary markets. Additionally, I want to add a detail: as Teacher Yuzhong mentioned, holding onto assets was rewarded in the previous wave. I actually have an impression that very few people mention market making or chip analysis. In the last bull market, liquidity was too abundant, so those who wanted to manipulate the market, whether project parties or market makers, ultimately couldn't hold onto their chips. They wanted to buy low and sell high, but once they sold, funds from unknown sources would directly push the market up. So in the last wave, what I heard most was that the manipulators sold off or the project parties sold off. In this wave, what I hear most is that manipulators are cutting losses or some market makers are pushing the market down. I believe the crypto space is still a long-tail financial market or a global market with relatively lower liquidity compared to the US stock market. So from a financial perspective, I think it still cannot escape the laws of financial bubbles. However, I believe the subjective reason is that the endogenous creativity in the crypto space is somewhat weaker in this cycle. While AI has a significant bubble, it also has real value, as seen with ChatGPT growing to hundreds of millions of users since 2023, and Cursor now possibly having tens of millions of users. Therefore, its actual value can offset this bubble. Even though Nvidia has a bubble, its graphics cards are still in high demand. So I feel that there are fewer endogenous factors to offset the bubble. There may be more stablecoins, but stablecoins are still somewhat distant from tokens. In the last wave, DeFi and NFTs were also in a bubble-bursting state, but they also created bubbles. Especially NFTs, when they were sold outside the crypto space, the non-Web3 crowd that bought them was in a bubble-bursting state, which was a form of consumption. However, in this cycle, we have hardly seen external participants come in to buy, except for Bitcoin, which is the only one with this attraction.
Alex: Yes, so regarding whether investing in this cycle is more difficult or easier, the general consensus is that it is clearly more difficult. The first issue is liquidity; there has not been a clear indication of interest rate cuts or monetary easing. Another point is what Teacher Jiang mentioned, that our endogenous innovation and product attractiveness, both for insiders and outsiders, are quite weak compared to the last cycle. In the last cycle, DeFi attracted a lot of funds, and NFTs and games attracted many external entrepreneurs and players. I remember a representative project from that time was NBA Top Shots on the FLOW platform, which used NFTs to create digital trading cards, and many outsiders were trading this, bringing in a lot of users, funds, developers, and industry capital to drive the market. This cycle has completely lacked such phenomena, leading to poor fundamentals and business data, which has kept valuations from rising.
The Most Correct Operations in This Cycle
Alex: So in this difficult cycle, what do you both consider to be the most correct investment operation or strategy you've made so far? Just one or two examples will do. What was the background for formulating or executing this strategy?
Jiang Xin: In this cycle, I feel like there are mostly lessons learned, and I can't really point to any correct operations. I can think of many wrong operations, though. To be honest, I've done fairly well this year because the market has indeed been quite challenging, and I haven't lost much money this year, which is already quite good. Last year, I performed poorly; I was still in the process of adapting to the strategies from the previous bull market. Last year, I bought a lot of altcoins and lost a lot. This year, I've become disillusioned with altcoins. I can mention two things: the first is that during the two Bitcoin crashes in February and April this year, I did buy some. Of course, I didn't go all in or use leverage; I bought some Bitcoin with cash and have held onto it since then. I think this is an improvement compared to before because I used to hold very little Bitcoin, and now I have about half of my portfolio in Bitcoin. I see this as a shift, and I bought at decent prices, not at the highs. I think capturing the beta is quite important. The second point is that I managed to exit the altcoin bubble quite timely. I remember the peak of Deepseek was around January 30, when it came out, and the US stock market crashed. At that time, I basically sold all my altcoins, regardless of the pullback, and cut my losses. Later, in February, when altcoins dropped by about 80% to 90%, I managed to preserve most of my gains. I think these two moves were quite good.
Alex: You just mentioned an important point: previously, you had a relatively low allocation to Bitcoin, but this year, during the bottom-fishing, you allocated half of your portfolio to BTC. What motivated this change in thinking or strategy?
Jiang Xin: I think many people in the crypto space, especially those who entered after 2019, have very little Bitcoin. Those who entered before 2016 were primarily trading Bitcoin and were Bitcoin-centric. The later entrants tended to focus more on altcoins and Ethereum because that’s where they made their money. In the last cycle, I mainly profited from Ethereum and some altcoins. So, people tend to rely on the path they’ve taken and buy Ethereum and altcoins. However, they will find that in 2024, most of the negative returns are from altcoins, which makes you question whether your strategy is flawed. You also notice that new entrants are generally not buying altcoins; they are only buying meme coins. The market structure is such that many institutions are buying Bitcoin, not altcoins, and even not buying Ethereum. I previously worked at a family office where the people there were very traditional; they only understood Bitcoin. If you talked to them about Ethereum or Solana, which you thought were solid, it was hard for them to accept. With Bitcoin, people have been sufficiently brainwashed; even if they have doubts, the reality is that everyone is buying it. The new entrants are only buying meme coins, and altcoins are left to the old players or long-time altcoin investors. But the supply of altcoins keeps coming, which means the market structure is very poor. I used to know many project teams in the primary market, and they all felt that projects are not profitable now. After distributing funds to exchanges, airdrops, agencies, and market makers, they find that it’s better not to launch a project at all. So, in this case, altcoins lack growth momentum. Project teams also lack motivation to develop, and there are no willing buyers, leading to a very poor ecosystem. So, when you calculate it, Bitcoin's returns are the most stable, even if they may not be the highest multiples. I also compared Bitcoin with other major asset classes in the market. In the US stock market, aside from some very speculative stocks like Nvidia, Palantir, and Rocket Lab, Bitcoin generally outperforms most US stocks. So at least I think it is a relatively high-quality asset class. After lowering my expectations, I believe Bitcoin is still a good choice.
Yuzhong Kuangshui: I want to talk about the narrative of AI Agents. Last year, I wrote an article saying "All In on the Agent Narrative," and I indeed reaped a lot of benefits from that wave. For example, I bought Virtual at around 0.35 and started selling when it hit four times, selling everything above three times. The background at that time was that Goat had just come out, and I realized that the market was very interested in this ticker's sector. Considering that by the end of the year, OpenAI seemed to be launching an Agent module, there was an expectation, and the Federal Reserve's interest rate cuts would boost market confidence, I invested in related sector tickers. This is what I consider to be a correct investment operation. However, I also previously bought a lot of OLAS because I was optimistic about the Agent narrative and ended up losing money. At that time, there wasn't an environment conducive to a large-scale narrative explosion. I essentially learned from that previous lesson and jumped in as soon as I saw a hint of it.
Alex: I understand. So the most successful or rewarding operation in this cycle for you was that you detected the AI Agent sector or the narrative's early explosion, and the ticker you chose was Virtual, right?
Yuzhong Kuangshui: Yes, there were also some on Solana, and I made over a hundred thousand dollars, but I ended up losing money because I was too ambitious.
Mistakes and Lessons from This Cycle
Alex: Alright. Just now, Teacher Jiang mentioned that this cycle has been difficult for all of us, and perhaps the lessons we can summarize are more than the points we did well. So our next question is, in this cycle, what are the mistakes we should avoid in investing, and what lessons might accompany these mistakes?
Jiang Xin: I think the main thing is to do simple things and not always try to chase alpha or aim for tenfold or hundredfold growth. Everyone knows that the broader financial environment is quite tight, but no one wants to admit that they can only earn beta and can only buy Bitcoin. Everyone is fixated on the top players like 0XSUN, thinking they can print money and achieve tenfold or twentyfold returns, which creates anxiety. So people think, "I can do it too; I want to print money." But this is somewhat losing sight of the fundamentals. It’s great if you can be at the forefront, but most people actually can’t make that money. Instead, they expend a lot of energy trying to be at the forefront, even going for high-leverage contracts or large positions in altcoins or meme coins. I think many people lose money mainly because they are too impatient. I have also made some foolish moves, like buying altcoins at high prices with large positions and using high-leverage contracts that ended up liquidating. Fortunately, I didn’t suffer major losses; I was rational enough to keep most of my positions in Bitcoin, USDC, cash, and large-cap coins. So I think it’s important not to rush. In a generally poor market environment, it’s better to use small positions to experiment. If you can catch a hundredfold meme, that’s great, but if you can’t, it’s important to maintain a calm mindset and acknowledge that you are just an average investor. I think most people are just making money from the market, and that’s enough. You don’t need to make a hundredfold or thousandfold on every investment. First, very few people can achieve those kinds of returns—maybe only ten to twenty people in the entire market. Second, the effort required to achieve those returns is disproportionate; you might have to sit for days and nights, but the returns might not even match just holding Bitcoin. I remember Wang Yishi once said that he entered the market very early, in 2011 or 2012. He did a lot of things, invested, and started projects, but in the end, Bitcoin was only a tenth of what it was back then. I think it’s best to stick to the simplest strategies. However, this is indeed difficult to do; I remind myself every day to persist in doing the right and simple things, the long-term things. Everyone knows Bitcoin will rise and that US stocks will likely rise, but why can’t people hold onto them? I think it’s important to reflect daily on why I can’t adopt a more long-term perspective and consider problems from that angle. This is the most important lesson I’ve learned in this cycle.
Yuzhong Kuangshui: My thoughts mainly revolve around three points. The first is not to predict the market; you should follow the market. The second point is to be cautious when your confidence is high. When your ego becomes stronger, you should be wary of whether your success in this market or investment operation has led to some erroneous expectations. The third point is to write more reviews. I think writing trading reviews is very important; it helps you record your previous operations, including both correct and incorrect behaviors. Looking back at them can greatly enhance your trading skills. I felt very optimistic about the impact of Trump’s rise and was overly optimistic about asset price performance at the beginning of this year. I actually made some of the mistakes I just mentioned. I thought that after Trump’s rise, there would be political certainty, as many people said, but what he actually brought was political uncertainty. I think Teacher Jiang is right; you need to accept a gradual path to wealth rather than rushing for quick success and making a lot of money all at once, which is actually a low-probability event. You should focus on doing simple and correct things.
Alex: OK, you just mentioned a point that I want to follow up on. You said that the second point to be cautious about is when personal ego becomes inflated, it can be a dangerous time. What manifestations of personal ego inflation can help you become aware of it?
Yuzhong Kuangshui: It’s quite simple: when others tell you something, you completely ignore it, thinking everyone else is foolish and that your predictions are the only correct ones. This brings us back to the first point: you shouldn’t predict the market; you should follow the market and see how it moves. Whether it’s small or large, for example, watching how BTC moves, I feel that if you try to predict based on previous cycle theories, you will definitely incur many losses this time, including the idea that BTC’s rise will lead to an altcoin season. I think this is something to be cautious about.
Alex: You mentioned writing trading reviews. Do you have a regular cycle for this, like writing daily or weekly?
Yuzhong Kuangshui: Each trade is one review. Write down the core points that led to your profits or losses; you don’t need to specify why you bought that coin, just write down the core points that caused you to profit or lose. Occasionally, take a look at them. You can also categorize them, for example, how BTC performed, how small-cap altcoins, large-cap altcoins, and stocks performed, and categorize them accordingly. Using Notion for this is particularly convenient.
Alex: Let me share my thoughts on the two questions. The first is the worst decision I made. The asset I lost the most on this round is a project called Covalent, which I previously wrote about. It provides data services and is somewhat similar to The Graph, or GRT. The main reason for my losses was that I allocated a relatively large position to this altcoin project. Although it wasn't a huge absolute position, it was a significant portion compared to my other altcoins. I invested heavily because I believed the project's fundamentals were solid and it was part of the very hot Solana ecosystem, being one of the core infrastructures. However, the project's fundamentals were not strong enough to justify such a large position. The reason I invested so much was due to a misjudgment I made about this cycle, thinking that an altcoin season would still come. Based on the past altcoin seasons in 2021, as long as the fundamentals were decent and the project was in a low-attention phase, it would attract a lot of attention and experience a massive surge, potentially tenfold or even more. But as we know, the altcoin season did not materialize. The attention and capital flowing into altcoins did not see significant marginal growth, which meant that although the fundamentals of this altcoin were acceptable, they were not on par with projects like AAVE or Hyperliquid, resulting in poor market performance. This was a significant mistake I made in this cycle. On the other hand, a relatively correct operation I executed was that I continued to invest based on fundamentals. Following this principle, I noticed early last year that Ethereum's business data, especially after Cancun, showed clear signs of deterioration, including metrics like gas fees and active addresses. So, early last year, I swapped my Ethereum positions for Bitcoin. Also, because of this mindset, I did not buy most altcoins, as their fundamentals were lacking. This allowed me to avoid the depreciation of Ethereum against Bitcoin in this cycle and prevented me from losing a lot of money on altcoins. This might be a point I did well, and it’s something I can apply in the next cycle.
Judgment on Altcoin Season
Alex: Let's return to the topic of altcoins, as this issue is still relevant to most retail investors who hope to achieve wealth growth in the crypto space through higher multiples. Do you think an altcoin season will still occur? Currently, altcoins have significantly underperformed Bitcoin in this cycle. Is there a possibility that at some point, altcoins will experience a substantial rebound against Bitcoin? Do you both think this possibility still exists, and what might be the reasons?
Yuzhong Kuangshui: I think there will still be localized altcoin seasons, but not a situation where everything rises together. First, there is a lack of market attention. In this era where asset issuance is becoming increasingly convenient, the number of altcoins is growing, making it harder to operate. If you want to invest long-term, you can only follow narratives and fundamentals to buy some quality assets, like AAVE or HyperLiquid. I believe the interaction between liquidity and market confidence has made an altcoin season seem distant. If there were macro external factors, similar to the shock we experienced when OpenAI launched ChatGPT, or if the Federal Reserve started cutting interest rates again—expected to happen twice this year—then these events could instill confidence in the market, encouraging it to spend money on promising altcoins. The market would also have enough capital to engage in localized narrative speculation, but currently, the market is very pessimistic, and people are reluctant to bet. For example, regarding the AI Agent narrative, I think a significant reason for its potential is the interest rate cuts in November last year, which raised overall market expectations and increased appetite and enthusiasm for risk assets. I feel we currently lack relative events to boost market confidence in altcoins, whether it’s liquidity expectations or technological iteration expectations; we need such an event. This is my general thought; there may still be localized altcoin seasons, but the market mainly lacks confidence.
Jiang Xin: I agree that there may be localized altcoin seasons. However, I think a comprehensive altcoin season is unlikely. The current altcoin market can be likened to the A-share market. First, the fundamentals are very poor; most A-share listed companies aim to cash out, which is also the goal of most projects issuing tokens. Second, liquidity is very dispersed. In the A-share market, you see over 400 million retail investors not driving prices up; liquidity is too dispersed, and most institutions are clustered around a few stocks. I think it’s very difficult to speculate on altcoins because there are too many of them. If you were to operate in the A-share market, you would have a deeper understanding of the altcoin market, where funds cluster around certain thematic stocks, like last year’s AI Agent; we haven’t seen that this year yet. There was a small wave with RWA and PayFi, but that doesn’t count as an altcoin season. In the future, it may resemble institutions clustering around certain themes. The second aspect is insider trading and market manipulation. In the A-share market, you see retail funds hitting the boards, while in the crypto space, some coins are manipulated through contracts. I think the methods are similar, and many of the same people are involved in both markets. Therefore, I believe a comprehensive altcoin season may never happen again. Previously, I wasn’t this pessimistic; I thought that after the liquidity in altcoins cleared, things might improve. However, I believe that time may not come again. The number of people working in the crypto space, the number of projects, and the overall market size have all increased significantly compared to before. For these project teams, launching new projects is much more appealing than investing in the development of old projects. Building an old project from a $50 million market cap to a $500 million market cap is an extremely difficult process. However, launching a new project with a $500 million market cap is much easier than reviving an old project. Therefore, I think the supply of new projects will continue to increase, while old projects will continue to drain liquidity. I don’t think there will be a comprehensive bull market for altcoins, which is akin to the A-share market.
Alex: In fact, our internal assessment of altcoins is that whenever there is a slight uptick, it’s just a rebound; we shouldn’t bet on new highs or a comprehensive bloom. As mentioned earlier, the so-called intrinsic value is lacking, and due to this lack of intrinsic value, coin prices cannot rise, which has basically become a consensus. Therefore, I think this round of the crypto market is clearly more mature than the previous two rounds. However, I am still closely monitoring some information in the industry, hoping to catch a moment similar to 2021 when we saw DeFi, NFTs, and even GameFi, where their initial integration with traditional business models brought excitement and improvements. Perhaps this will occur at some point in the future, but I don’t know when; I can only ensure that I remain on the front lines of the market to seize opportunities when they arise.
Advantages and Disadvantages of Cross-Sector Investment and Experience
Alex: The last topic we want to discuss is that Teacher Jiang has already mentioned that he is now looking at some US stocks and other opportunities outside of crypto. There is a common sentiment that in the last cycle, there were many opportunities to make money—through yield farming, gaming, contracts, PVP, etc.—but this round, opportunities have clearly diminished. Many people are now looking at opportunities in other fields, such as starting AI ventures or trading US stocks. What is your current working state or thoughts on exploring other opportunities? Please share with us.
Jiang Xin: I think US stocks still represent a relatively certain opportunity, similar to Bitcoin. I believe that in the future, most investors in US stocks and crypto will overlap; in the crypto space, coins with liquidity and fundamentals will also enter the US stock market. For example, HyperLiquid and some altcoins, including Tron and ETH, may not necessarily go through ETFs but could enter the US stock market through reverse mergers, accessing a larger pool. US stock investors can now buy Bitcoin and Ethereum directly through ETFs, and in the future, mainstream coins like Solana may also be listed on ETFs. Altcoins without ETFs or US stock listings are akin to a pink sheet market or an over-the-counter market, or a low-liquidity market, resembling meme coin speculation. This differentiation is quite evident. I think a simple approach is to trade US stocks alongside these mainstream coins, enjoying the Federal Reserve's stable monetary growth, while using small funds to engage in high-multiple plays in the crypto space. I believe this allocation of funds needs adjustment for me. Investing in US stocks requires learning about the market's volatility and the motivations behind its changes. I think this reflects some structural changes in the market.
Alex: What is your current allocation of investment funds between US stocks and crypto?
Jiang Xin: I hope to maintain a 50-50 split. The volatility in the crypto space is too high for me, and I seek more certainty. The advantage of US stocks is that you can invest in a wider range of asset classes, such as gold, oil, and other commodities. If the macro situation changes, for instance, if you want to invest in options or government bonds, there are more types available. So, I am also diversifying into other asset types. The advantage of the crypto space is that for smaller players, the multiples can be quite high. I think it’s very suitable for newcomers who have a lot of time and smaller amounts of capital, making it ideal for chasing meme coins or yield farming. This may not be very friendly for players like us, which is another reason I am shifting towards US stocks.
Alex: In fact, our team has also been evaluating opportunities in US stocks recently because, in this cycle, there are indeed no good sectors in crypto. We all know the old saying in investing: "Fish where the fish are." Currently, the crypto space has essentially run dry. Bitcoin has been allocated as it should be, so we are considering looking at opportunities in US stocks. We have a dilemma here. For so many years, we have been investing in the crypto market, believing that focusing our energy here was wise—first, because we are optimistic about the crypto market and the high growth potential of Web3 business models; second, because compared to traditional stock traders and external investors in traditional finance, we have been in the crypto space longer and understand the industry’s patterns more thoroughly, giving us a cognitive advantage and stronger actionability. Now, if we are to jump into US stocks, from your personal experience, Teacher Jiang, do you think the experience gained in crypto can be transferred to US stock investment? What are our advantages, and what disadvantages should we be aware of?
Jiang Xin: I feel that initially, there are definitely more disadvantages. Because you are unfamiliar with this market, your experience can even be a negative asset. For example, regarding Circle, as far as I know, very few people in the crypto space buy Circle; everyone thinks Circle is expensive or that stablecoins are just a common topic. However, many people outside the crypto space are hearing about stablecoins for the first time, and they find this concept very novel and are very FOMO. People tend to give high valuations to things they don’t understand. The less you know, the more impressive it seems; the more you understand, the more you realize it’s just that. A rocket is just some chemical fuel and a few boosters, right? So, the experience in the crypto space can initially have a negative impact on your stock trading. However, the advantage is that the trend of integrating crypto and stocks is increasing, so when you trade these crypto stocks, your understanding will definitely be more advantageous in the long run. You will find it easier to grasp concepts related to Circle, Coinbase, etc. The first thing is to familiarize yourself with the mindset and logic of speculation, including some recent shell stocks, which I see are still primarily being traded by people outside the crypto space. I think it’s important to understand how the US stock market operates, what people are willing to buy, and what they are not. The mindset of manipulators in the US stock market may be completely different from those in the crypto space, and you may even need to discard some previous notions from the crypto world. However, the advantage is that there is still a lot of commonality in investing. Especially in the crypto space, trading is often driven by emotions rather than fundamentals. But sometimes, this can help you filter out a lot of noise. Everyone knows that Nvidia, Microsoft, and Apple are strong, but why do their stock prices sometimes fall and sometimes rise? Many times, it’s a game of emotions. So, if you are used to trading crypto, you may be better at navigating these emotional games, and when others are panicking, you might dare to increase your positions significantly. This was part of my thinking when I bottomed out on Nvidia and Tesla in early April, mainly looking at the emotions involved. So, this habit of trading crypto may be somewhat helpful.
Alex: Yes, for something like Circle, and many current crypto stocks, we might see them as just crypto assets wrapped up, and with such a high premium, we wonder who would buy them! But for stock traders, these are all very new things, just like Circle, so they are willing to trade such assets.
Yuzhong Kuangshui: I resonate deeply with what both teachers have discussed. When crossing into different fields, there are indeed significant disadvantages. For instance, I previously invested in script murder games and ended up losing everything; I haven’t seen any return on that investment. When entering a new field, it’s very difficult to determine whether your investment is correct. In the US stock market, everyone knows to buy Tesla, Nvidia, etc. For example, when Tesla drops, people rush to bottom fish. As Teacher Jiang mentioned, what people are actually doing is more about event-driven and emotional speculation. Personally, if conditions allow, I would prefer to invest in cash flow industries and consider more tangible assets. In terms of US stocks, I would likely only choose SPX (S&P 500 Index) to do simple and correct things; that’s the general idea. However, there aren’t many cash flow businesses in the real industry right now. Even if you conduct research, there aren’t many good opportunities available. I believe cash flow is something that can provide a sense of security, so I am currently directing my various energies or funds towards on-chain yield-related opportunities. For example, there are many yield opportunities with USD1 now, or some LPs, like those on Pendle, Pendle PT, etc. These are relatively safe opportunities for me, and about 30% to 40% of my positions are in such activities. This includes things like backpacking and Lighter score-boosting activities. I still prefer to place my funds in areas I am more familiar with. If I were to blindly invest in tangible assets, I feel I would end up losing everything.
Alex: Yes, I personally feel that when we invest, we should not step too far outside our circle of competence. If you step too far outside your circle of competence, it will be difficult to make money in the long run. However, if the opportunities within your circle of competence are gradually decreasing over time, and you stubbornly refuse to expand your circle of competence, that may not work either. So, there is a contradiction; we need to gradually adjust this state. OK, we’ve talked for about an hour today. Thank you both for participating in our program and sharing a lot of valuable insights, experiences, and lessons in investing. That’s it for today’s program; thank you all.
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