Moderator: Alex, Research Partner at Mint Ventures
Guests: Jiang Xin, crypto investor; Sleeping in the Rain, crypto KOL
Hello everyone, welcome to WEB3 Mint To Be initiated by Mint Ventures. Here, we clarify facts, explore reality, and find consensus in the WEB3 world through continuous questioning and in-depth thinking. We clarify the logic behind hot topics, provide insights that penetrate the events themselves, and introduce multiple perspectives.
Alex: Today we have two guests. The first one is Mr. Jiang Xin. I remember the last time Mr. Jiang was a guest on the show was in September 2023, before the official outbreak of the copycat bull market, we talked about the so-called bull market main rising wave. The other guest is a guest on our show for the first time, and he is also a KOL known to many people, Yuzhong Kuangshui. Please introduce yourselves.
Yuzhongkuangshui: Hi everyone, I am Yuzhongkuangshui, a KOL on Twitter, mainly sharing narrative and fundamentals. My main research now is how to use data to make good transactions.
Jiang Xin: Hello everyone, I have been doing VC investment and investment research. Recently, I have been paying more attention to the secondary market and US stocks, and I am also looking at some AI things, so it is equivalent to switching from the primary market to the secondary market.
Judgment and reasons for the current stage
Alex: Our topic today may be different from the previous ones. In the previous ones, we chose a specific track or narrative to talk about, including stablecoins, RWA, etc. This time we will talk about something more subjective, emotional, and personal experience. The theme of this issue is My experience and lessons from this cycle. I want to talk about some thoughts that can be summarized, reused, and shared with the audience from everyones experience in this cycle to now. The first question today is about the current cycle stage, which many people are also concerned about now. What stage are we in this bull market cycle? What are the reasons for your judgment?
Jiang Xin: I think it is difficult to define what stage of the bull market it is. It depends on whether it is the Bitcoin bull market or other bull markets. If we look at the Bitcoin bull market, I think it is still in the middle of the bull market, and it is difficult to judge which stage it is in. But from the perspective of the altcoin, I think it has entered a very deep bear stage. I think this stage has been from January to February to now, and it should be a deep bear stage for altcoins, and most players can feel it. At present, I think there is still hope for Bitcoin, but I think altcoins may need a period of adjustment, or even more than half a year. So during this period, players in the currency circle may not feel particularly comfortable. This is my personal feeling.
Sleeping in the Rain: My view is similar to that of Mr. Jiang. I think the current cycle has completely deviated from the previous four-year cycle theory. I think we should not think about what cycle the entire crypto market is in. It is a very chaotic state now. BTC is the only one that stands out, and the altcoins are dead. However, stocks will soar when they are touched by the concept of cryptocurrencies. It is impossible to say what cycle we are in. I think we should break it down. For example, stocks are stocks, BTC is BTC, and altcoins are altcoins. Each market has different logic. For example, I am optimistic about BTC, and I have better expectations for BTC, because I think there will be more and more buyers of BTC, and it is difficult not to be optimistic about the price performance of BTC. For large altcoins, we look at the fundamentals, such as AAVE and HyperLiquid. In fact, they have repurchases. As a long-term holding target, you can wait until the price is at a relative bottom to buy the bottom, and then hold it for a long time, because their fundamentals and prices are strongly correlated. For those small-cap altcoins, it mainly depends on the main force, and the liquidity is not good. There is a high probability that the main force will do so through contracts. You need to observe the behavior of the main force through the data of those contracts, such as large positions, the long-short ratio of the account, OI, and trading volume to make a prediction and predict whether the future price may be long or short.
Alex: Let me briefly summarize your views. In this cycle, it is difficult to use a complete cycle to summarize Bitcoin, altcoins, and crypto-related US stocks. Because this round of differentiation is very obvious, Bitcoin has its fundamentals, and altcoins have their fundamentals. Altcoins are divided into those with solid fundamentals and those with neither narratives nor fundamentals. They show different price performances and different cycle stages. In addition, a new industry called coin stocks has emerged. In the past, there may have been only one micro-strategy, but now there are a large number of such projects, and they are all in different cycle stages.
Changes in investment difficulty in this cycle
Alex: Lets talk about the second question. I dont know which cycle you have entered the crypto industry or which cycle you have started to invest in crypto. From a personal perspective, do you feel that investing has become more difficult or easier in this cycle? What might be the reason?
Sleeping in the Rain: Okay. Its even harder for me. For someone who has experienced 2021, this cycle is really difficult. In the past, I felt that if you make a narrative and then grasp the direction of the narrative accurately, you can easily make money. Maybe you buy the second and third dragons of the narrative, and the increase is far greater than the first dragon. For example, GameFi and DeFi at the time, for example, Ethereums performance was not very good and could not accommodate more users, it would come out with the concept of copycat Layer 1, such as BSC and Avalanche. At that time, as long as you bought it and entered the PVE stage, you could easily make money. If you buy that kind of GameFi and DeFi project, basically as long as you understand its products and how its tokens work, you can easily make money. And it will also give you a lot of ways to make money, such as being an LP, playing games, and playing games, which are basically PVE games. At that time, I was actually just entering the industry, but I still made some money. Sometimes you just hold it stupidly, and it will give you dozens of times the increase, which is still very scary. By now, I am definitely more experienced, but the difficulty of making money is very different. First of all, the market liquidity is not very good, which forces some project owners to not say that they want to make more profits, and then pull the price and then sell. Many project owners now only want to open the market quickly through major exchanges, get a high FDV, and then give up.
Alex: They don’t dare to plan.
Sleeping in the Rain: Yes, this is what a project that has raised a lot of money wants to do, which is to open high. Small projects that open like tens of millions of dollars may actually hope to make a little money by listing on Binances Wallet IDO or Alpha contract. This round is probably like this. Of course, there is also an on-chain thing in this round. For many people, it is easy to make money on the chain. But I am not a person who is good at on-chain PVP. Although I made money in the AI agent wave before, it was more because I saw the right narrative, and then ambush or layout some Tickers. In the end, the narrative found that there was a big increase in about a month, which is about it.
Jiang Xin: I think everyone feels that things have become more difficult. I think this is a macro problem. There is no macro liquidity. The main problem is that in the high interest rate environment, everyone is still living on the money released by the Federal Reserve. The second is that from the perspective of the secondary market, the market value of Bitcoin is also relatively high. If it continues to rise, the amount of funds required is indeed very large. This is an objective reason. From the perspective of the general trend, it is indeed the case. Then from a micro perspective, I may feel it more deeply because I worked in VC before, that is, the imbalance between supply and demand. In terms of supply, because VCs have raised a lot of funds after 22 years, especially North American VCs have raised funds of hundreds of millions or billions of US dollars. It is actually difficult for Web3 projects of this size to accommodate this scale of funds, resulting in a large number of projects that have raised a lot of money, but do not know what to do, resulting in such a situation of oversupply. This situation actually also exists in the AI field, except that AI has not issued coins, but its valuation in the private equity market of the first and a half is also a bubble. So this is a structural problem in the primary and secondary markets. I would also like to add a detail. Just like what Mr. Shui said before, if you hold the diamonds, you will get a reward. In fact, I have an impression that people rarely mention being a banker, including doing chip analysis. Because the liquidity of the last bull market was too abundant, basically those who wanted to be a banker and get chips, whether they were project owners or market makers, could not hold on to the chips in the end. He wanted to sell high and buy low, and once he sold it, the funds from nowhere directly pulled the banker away. So what I heard most in the last wave was that the banker sold it himself or the project owner sold it. In this wave, what I heard most was that the banker cut the leeks, or some market makers pulled it up and smashed it. I think the currency circle is still a long-tail market in finance, or a global market with relatively lower liquidity than the US stock market. So from a financial perspective, I think it still cannot escape the law of financial bubbles. But subjectively, I think the endogenous creativity of the currency circle is still weaker in this cycle. Although AI is a big bubble, of course there are also some, for example, ChatGPT will grow to hundreds of millions of users starting in 2023, and Cursor may have tens of millions of users now. So its actual value can offset this bubble. Of course, there is also a bubble in Nvidia, but Nvidias graphics cards are still in short supply. So I think there are fewer things that can offset the bubble endogenously. There may be more stablecoins, but stablecoins are still a bit far from Tokens. In the last wave, like DeFi and NFT, it is actually a state of de-bubble, of course, it also creates bubbles. Especially NFT, when NFT is sold outside the circle, the non-Web3 people who take over the outside are actually in a state of de-bubble, which is actually a kind of consumption. But in this cycle, we hardly see outsiders coming in to take over, except for Bitcoin, which is the only attraction.
Alex: Yes, so for the question of whether this round of investment is more difficult or easier, everyones answer is obviously more difficult. The first is the issue of liquidity. There is no obvious interest rate cut or water release at present. Another is what Mr. Jiang just said, our endogenous innovation and product attractiveness are very weak both inside and outside the circle, which is much worse than the previous round. The last round of DeFi attracted a lot of funds, such as NFT and games attracted many entrepreneurs and players outside the circle. I remember that a representative NFT project at that time was NBA Top Shots issued on FLOW, which used NFT to make digital star cards. At that time, many people outside the circle were trading this thing, and there were quite a lot of users, funds, developers, and industrial funds coming in to stir up the market. There is no such thing in this round, which also caused the fundamentals and business data to be bad, so the valuation has not been able to go up.
The most correct operation in this cycle
Alex: So in this difficult cycle, what do you think is the most correct investment operation or strategy you have made so far? Just mention one or two. What was the background of the formulation or operation of this strategy at that time?
Jiang Xin: This round is all about lessons. There is no correct operation. I can cite many wrong operations. How can I say the correct operation? To be honest, I think I have done well this year, because the market is indeed difficult this year. I have not lost much money this year, which is already very good. I did not do well last year. Last year, I was probably still in the process of reforming the play style of the previous bull market. Last year, I actually bought a lot of altcoins and lost a lot. The good thing this year is that I have disenchanted the altcoins. I think I can talk about two things. The first is that when Bitcoin plummeted twice in February and April this year, I still copied some. Of course, I didn’t copy all positions, nor did I copy with leverage. I copied some Bitcoins in cash and held them until now. I think this is better than before. Because I basically didn’t hold Bitcoin before, now maybe half of my positions are Bitcoin. I think this is a change, and basically the position I bought is not bad, not buying Bitcoin at a high position. I think it is more important to at least catch the beta. The second is that I still ran away from the altcoin bubble in a timely manner. I remember that the Deepseek wave was the high point. If I remember correctly, it was around January 30th when Deepseek came out and the US stock market plummeted. At that time, I basically cleared out all the altcoins, regardless of the retracement, and sold them at a loss. Later, in February, when the altcoins may have fallen by 80% or 90%, this wave basically preserved most of the gains. I think these two waves are okay.
Alex: You just mentioned a very important point, that is, you had less Bitcoin allocation before, but you half-invested in BTC during this round of bottom-fishing this year. What is the motivation or thinking behind this change of thinking or strategy?
Jiang Xin: I think that most people who speculate in altcoins in the cryptocurrency circle, especially those who entered the circle after 2019, don’t have much Bitcoin. Maybe the very old people who entered the circle before 2016 speculated in Bitcoin when they entered the circle, and they were Bitcoin-based. Later people may do more altcoins and Ethereum, because everyone also makes money from this. My last wave mainly relied on the income of Ethereum and some altcoins. Then everyone will path-depend to buy Ethereum and altcoins. But you will find that the negative income in 2024 is basically the decline of altcoins, so you will wonder if there is a problem with the strategy, and you will find that the new entrants now basically do not buy altcoins, they are all betting on dogs. The market structure is that many institutions buy Bitcoin, not altcoins, and even do not buy Ethereum. I used to work in a family office. The people in that family office are very traditional. They only understand Bitcoin. It is difficult for them to accept things like Ethereum and Solana that you think are already very solid. As for Bitcoin, everyone has been brainwashed quite thoroughly. Although they may not necessarily agree or have doubts in their hearts, the reality is that everyone is buying it. Then the new entrants only buy memes, and no one buys altcoins. Only the old leeks are left, or the old altcoin players are buying. But the supply of altcoins is endless, which means that the market structure is very poor. I used to work at the first level and met many project owners to talk to, and everyone felt that it was not profitable to do projects now. After the projects were distributed to exchanges, airdrops, agencies, and market making, it was found that it was better not to do the projects. So in this case, the altcoins have no motivation to grow. The project owners have no motivation to do it, and no one is willing to take over, so the ecosystem is very poor. So in the end, Bitcoin still has the most stable return, although it may not be the highest multiple. Then I also compared Bitcoin with some other major asset categories in the market. As for US stocks, except for these very weird stocks, such as Nvidia, Palantir, Rocket Lab, etc., they basically outperformed most US stocks. So at least I think it is a relatively high-quality asset category. After lowering expectations, I think Bitcoin is still a better choice.
Sleeping in the Rain: Let me talk about the AI Agent narrative. Last year, I wrote an article about the All In Agent narrative, and I did reap a lot of dividends from that wave. For example, I bought Virtual at around 0.35, and then I started selling it at four dollars, and I sold all the stocks above three dollars. The background at that time was that Goat came out, and I began to realize that the market was very interested in this kind of ticker track. In addition, considering that OpenAI seemed to have an Agent module to be developed at the end of the year, there was also an expectation, and the Fed’s interest rate cut would lead to sufficient market confidence, so I did the ticker of the relevant track. This is what I think is a relatively correct investment operation. But this is actually because I was optimistic about the Agent narrative before, bought a lot of OLAS, and then lost money. At that time, there was no environment to brew such a large-scale narrative outbreak. It is equivalent to saying that I learned a lesson from the past, and when it showed a sign, I went straight in.
Alex: I see. That is to say, the most successful operation in this cycle or the one that brought you the greatest return was that you noticed the AI Agent track or the early outbreak of this narrative at an early stage in the narrative. The target you chose at that time was Virtual, right?
Sleeping in the Rain: Yes, there were some on Solana, and I made more than 100,000 dollars at that time, but I was very narrow-minded and ended up losing money.
Errors and experiences in this cycle
Alex: OK. Professor Jiang just said that this round of cycle is difficult for us, and we may be able to summarize more experiences than some good points. So our next question is, in this round of cycle, we reflect on ourselves, what mistakes should we not make in investment, and what lessons may come from these mistakes?
Jiang Xin: I think the most important thing is to do simple things, dont always want to do alpha, and achieve tenfold or hundredfold growth. Everyone knows that the overall financial environment is relatively tight, but no one wants to admit that they can only earn beta and can only buy Bitcoin. Everyone thinks that they will stare at the top 0X SUN, and stare at these people at the top, and feel anxious about printing money every day and tenfold or twentyfold. So everyone thinks that I can do it too, and I also want to print money. But this is actually a bit of missing the point. It is of course good to be the leader, but most people cant actually make this money. Instead, they consume a lot of energy to be the leader, and even open high-multiple contracts, or take large positions to do copycats or buy memes. I think many people lose money mainly because they are too anxious. Including myself, I have done some relatively stupid operations, buying copycats with high positions and large positions, and some high-multiple contracts have also been liquidated. But fortunately, I didnt hurt my bones, and I am still relatively rational. Most of my positions are still in Bitcoin and U, cash and large currencies. So I think you should not be in a hurry. In such a general market environment, you can try and make mistakes with a small position. If you can catch this kind of 100x meme, it is very good. If you cant catch it, I think you should be calm and admit that you are actually an average person. I think most people make money in the market, which is enough. I dont think everyone needs to make 100x or 1000x, because you have to think about it. First, there are very, very few people who can make 100x or 1000x. There may be only ten to twenty people in the whole market. Second, the effort you put in for 100x or 1000x is not proportional. You may have to sit for days and nights, but the return you get may not be as good as if you hold Bitcoin. I read a passage said by Wang Yishi the other day. He entered the circle very early, in 2011 and 2012. He did a lot of things, including investment and project entrepreneurship. In the end, Bitcoin was only one-tenth of what he had that year. I think we should still do the simplest thing. But this is indeed difficult to do. I also tell myself every day to insist on doing the right and simple things, long-term things. Everyone knows that Bitcoin will rise, and everyone knows that the US stock market will rise with a high probability, but why cant everyone hold on? I think every day I have to think about why I cant be more long-term and consider the problem from this perspective. This is the most important lesson I learned in this cycle.
Sleeping in the Rain: I have three main ideas. The first is not to predict the market, you should follow the market. The second is that when you are more confident, you should be alert. When your ego becomes stronger and stronger, you should be alert to whether you have made money because of the changes in the market or investment operations, which has led to some wrong expectations. The third is to write more reviews. I think writing trading reviews is a very important thing in trading. It will help you record some previous operations, including correct behaviors and wrong behaviors. If you look back more often, it will have a great promoting effect on your trading level. What impressed me most was that I was very optimistic about the impact of Trumps coming to power, and I was too optimistic about the performance of asset prices at the beginning of this year. In fact, I made some of the mistakes I mentioned just now. I thought that Trumps coming to power might bring political certainty, and everyone said so, but what he actually brought was political uncertainty. I think what Mr. Jiang said is very right. You have to accept a state of getting rich slowly, rather than rushing for success, making a lot of money all at once, which is actually a low-probability event. Do simple and correct things.
Alex: OK, you just mentioned a point, I want to ask a follow-up question. You just said that the second point to pay attention to is that when the personal ego becomes more and more inflated, it may be a dangerous time. For you personally, what manifestations may allow you to detect the expansion of personal ego?
Sleeping in the Rain: It’s very simple. You don’t listen to what others say to you. You think everyone is a fool and my prediction is correct. Then it goes back to the first point, that is, you should not predict the market, you should follow the market and see how the market goes. Whether it is small or big, for example, see how BTC goes, I feel that if you predict according to the previous cycle theory, you will definitely suffer a lot in this round, including the saying that the rise of BTC will bring about the cottage season. I think we should still be vigilant about this.
Alex: You just mentioned writing trading reviews. Do you have a regular cycle, for example, once a day or a week, or something like that?
Sleeping in the Rain: One transaction is one. Write down the core points of your profit and loss. You don’t have to mention why you bought the coin. Just write down the core points that led to your profit or loss. Take a look at it from time to time. You can also make classifications, such as how to do BTC, how to do small-cap altcoins, large-cap altcoins, and stocks, and classify them into different categories. It is very convenient to use Notion to do this.
Alex: Let me talk about my personal thoughts on the above two questions this round. The first one is the most wrong decision. The one that I lost the most money in this round was a project I wrote before called Covalent, which provides data services, a bit like The Graph, which is GRT. The main reason for losing money at that time was that I took a relatively large position in this altcoin project. Although it was not a large absolute position ratio, it should be a project with a relatively high proportion among all altcoins. At that time, I took a relatively heavy position because I thought the fundamentals of this project were good, and it was in the very hot Solana ecosystem at that time, and it was one of the core infrastructures. But in fact, the fundamentals of this project were not good enough to take so many positions. The reason for taking so many positions is that, as Professor Jiang mentioned just now, I had a wrong prediction about this cycle, that is, I thought the altcoin season would still come. I think based on the past altcoin seasons in 21 years, as long as the fundamentals are good, and the project was in a low point of attention at that time, basically no one would go to see it. If a good project suddenly attracts a lot of attention and a huge marginal improvement, based on the experience of the last round, it will usher in a tenfold or even dozens of times surge. But in fact, we also know that the altcoin season did not come later. Whether it is the attention of the entire altcoin or its capital, the injection did not have a big marginal growth, resulting in the fact that although the fundamentals of this altcoin project are good, it is not as good as AAVE or Hyperliquid, so its market value has always been bad. This project is a big mistake I made in this round of cycles. A relatively correct operation is that I still insist on investing based on fundamentals in this round. Based on this principle, I discovered Ethereums business data early last year, especially after Cancun, its business data, including gas fees, active addresses and other key indicators, all showed obvious deterioration. So early last year, I switched these Ethereum positions to Bitcoin. And because of this concept, most altcoins with bad fundamentals were basically not bought. So I avoided the decline in the exchange rate of Ethereum to Bitcoin in this round, and did not lose a lot of money because of altcoins. This may be a point that is done well and can be reused in the next cycle.
Judgment on the Shanzhai Season
Alex: Lets go back to the issue of altcoins, because this issue is still relevant to most retail investors. Everyone still hopes to achieve wealth growth in the cryptocurrency circle at a higher rate. Do you think there will be another altcoin season? Because altcoins are currently significantly underperforming Bitcoin in this round. Will there be a big rebound in the exchange rate of altcoins against Bitcoin at some point in time? Do you think this possibility still exists, and what might be the reason?
Sleeping in the Rain: I think there will still be some altcoin seasons, and there won’t be a general rise in prices. First of all, there is a lack of market attention. In this era of increasingly convenient asset issuance, the number of altcoins will increase, and it will become increasingly difficult to trade. If you want to be long-term, you can only follow the narrative and fundamentals to buy some high-quality assets, such as AAVE and HyperLiquid mentioned earlier. Then I think the interaction between liquidity and market confidence has made the altcoin season out of reach. If there is a macro external environment, similar to the shock that OpenAI brought to us when it launched ChatGPT, or the Federal Reserve started to cut interest rates again, because it expects twice this year, as long as these things happen, it will be able to bring confidence to the market and make the market willing to spend money to buy some altcoins that it is optimistic about. Then the market also has enough money to hype the narrative of local sector assets, but the market is very pessimistic now, and no one is willing to bet. For example, the AI Agent mentioned earlier, I think a big reason is that it depends on the interest rate cut in November last year, which led to a higher market expectation for the future overall, so they will increase their preference and enthusiasm for risky assets. I think we are still lacking some relative events to boost the markets confidence in altcoins, whether it is liquidity expectations or expectations of technological iterations, we are still lacking such an event. This is my general idea, there may still be a local altcoin season, the market is mainly lacking confidence.
Jiang Xin: If it is a partial altcoin season, I agree. But if it is a full-scale altcoin season, I think it is unlikely. In fact, the current altcoin market is the same as the A-share market. The first is that the fundamentals are very poor. Most A-share listed companies also go public for the purpose of cashing out, which is also the purpose of most projects issuing coins. The second is that liquidity is very scattered. You can see that the A-share market has more than 400 million leeks and the liquidity is too scattered. Most institutions are holding a few stocks. I think it is very difficult to speculate in altcoins because there are too many. In fact, if you do it in A-shares, you will have a deeper understanding of the altcoin market. Funds are all holding together to rush some theme stocks, such as AI Agent last year, which has not been seen this year. There was a relatively small wave of RWA and PayFi before, but it is not considered an altcoin season. Later, it may be similar to institutions holding together to rush some themes. The second is insider trading and then making a bank. Like A-shares, it is hot money hitting the board. In the currency circle, you can see that some coins are pulled up and smashed through contracts. I think the method is the same, and even many people are from the same group of people in A-shares. So I think there may not be a full-scale altcoin season in the future, that is, there will never be one. I was relatively less pessimistic before, and I thought that it might be better after the liquidity of altcoins was cleared. But I think that time may not come again. Because the number of practitioners in the currency circle, the number of project parties, and the overall size are much larger than before. For these project parties who want to launch new projects, the motivation and return on investment are much greater than building an old project by themselves. If I build an old project, it may be a very difficult process to increase the market value from 50 million to 500 million US dollars. But it is much easier for me to launch a new project and get a market value of 500 million than to pull up the old project. So I think the supply of new projects will continue to increase, and then the old projects are sucking blood and eroding the remaining liquidity. So I think the altcoin market is unlikely to have a full bull market, which is the benchmark for A-shares.
Alex: In fact, our internal judgment on altcoins is that every time it improves, it is a rebound. Dont bet on it to reach new highs or bloom across the board. Because this round is still like what I just said, there is no so-called intrinsic value, and it has basically become a consensus that the price of the currency cannot rise due to the lack of intrinsic value. So I think this round of the crypto market is obviously more mature than the previous two rounds. But I am still paying close attention to some information in the industry, hoping to wait until a certain moment like 2021 when we see DeFi, NFT, and even GameFi, and feel some excitement and improvement points when they are combined with this traditional business model in the early stage. It may appear at some point in the future, but I dont know when it will appear. I can only keep observing the industry at the forefront of the market to ensure that when the opportunity arises, I can be in a relatively forward position.
Advantages, Disadvantages and Experience of Cross-Circle Investment
Alex: The last topic we want to talk about is that Mr. Jiang has just mentioned that he is now looking at some US stocks and other opportunities besides cryptocurrencies. Now everyone has a general feeling that there were many opportunities to make money in the last round, such as playing games, doing contracts, PVP, etc., but this round, the opportunities are obviously becoming fewer. Many people are looking for opportunities in other fields, such as starting an AI business or speculating in US stocks. What is your current work status, or your idea of exploring other opportunities? Share with us.
Jiang Xin: I think the U.S. stock market is still a relatively certain opportunity similar to Bitcoin. I think that in the future, most investors in U.S. stocks and cryptocurrency investors may have something in common. Coins with liquidity and fundamentals in the cryptocurrency circle will go to the U.S. stock market. For example, HyperLiquid and some altcoins, including Tron and ETH, may not necessarily go through ETFs, but can also go to the U.S. stock market through backdoor listings to enter this larger pool. Investors in U.S. stocks can now buy Bitcoin and Ethereum directly with ETFs, and Solana may have these mainstream coins listed on ETFs in the future. Then altcoins without ETFs and U.S. stocks are like a pink sheet market or an over-the-counter market, or a market with low liquidity, a bit like Meme gambling. So this differentiation is very obvious. I think the simple way is to speculate in U.S. stocks and these mainstream coins, enjoy the stable growth of the Federal Reserve, and small funds go to the chain to fight for some high multiples with altcoins. I think this fund allocation needs to be adjusted for me. To do U.S. stocks, you need to learn the motivations of market fluctuations and changes. I think it is some changes in the market structure.
Alex: Given your current situation, what is the allocation of investment funds between US stocks and cryptocurrencies?
Jiang Xin: I hope to do it half and half now. Because the volatility of the funds in the cryptocurrency circle is too great, I still pursue certainty. The advantage of U.S. stocks is that you can invest in more asset categories, such as gold, crude oil, and some other commodities. If the macro situation changes, for example, you want to do some options and treasury bonds, its types will be more complete. So I am also configuring some other types of assets. The advantage of the cryptocurrency circle is that for small-scale players, its multiples are relatively high. I think it is more suitable for newcomers, that is, they have a lot of time and a relatively small amount of funds, which is very suitable for meme or wool on the chain. This may not be very friendly to us players, which may be another reason why I switched to U.S. stocks.
Alex: Actually, our team has also been evaluating opportunities in the US stock market recently, because there are basically no good tracks in this round of cryptocurrencies. We all know that there is an old saying in investment, which is fishing where there are many fish. Now the fish pond in the crypto market is basically dry in the short term. Anyway, Bitcoin has been allocated, so we are considering looking at opportunities in the US stock market. We have a problem here. We have been investing in the crypto market for so many years. At that time, we thought that we should focus on this area. First, we are optimistic about the crypto market and the high growth potential of the Web3 business model in the future; the other is that compared with traditional external investors who used to speculate in stocks and do traditional finance, we have been in the crypto industry for a longer time and have a more thorough understanding of the rules of this industry, so we have certain cognitive advantages and stronger action. Now if we want to jump to the US stock market, based on your personal experience, Mr. Jiang, do you think that the experience of cryptocurrencies can be transferred to investing in US stocks, and its advantages can also be transferred? What are our advantages and disadvantages that need to be paid attention to?
Jiang Xin: I think from my experience, there are definitely more disadvantages at the beginning. Because you are not familiar with this market, and even your experience is a negative asset for you. For example, Circle. As far as I know, few people in the cryptocurrency circle buy Circle. Everyone thinks Circle is very expensive, or that stablecoins are just a cliché. But many people outside the circle hear about stablecoins for the first time, and they will be very curious about this thing, and they are very FOMO. Everyone will give a very high valuation to things they don’t understand. People are like this. The less you know about it, the more awesome you think it is, and the more you know about it, the more you think it is just so-so. Rockets are just some chemical fuels and a few thrusters, right? So the experience in the cryptocurrency circle will actually have a negative impact on your stock trading at the beginning. But I think the advantages are that, first, the trend of currency-stock integration is increasing, so when you speculate in these currency stocks, your cognition will definitely be correct in the long run. For Circle, Coinbase, etc., you will definitely be easier to get started than others. The first thing is to be familiar with the mentality and logic of speculation, including some shell stocks recently, I think it is basically people outside the circle who are speculating. I think you need to be familiar with the way the U.S. stock market works, what people will buy and what people will not buy. The ideas of the U.S. stock market dealers may be completely different from those of the cryptocurrency dealers, and you may even have to throw away some of the previous concepts of the cryptocurrency circle. But the advantage is that there are still many similarities in investment. In particular, the cryptocurrency circle is more of an emotional transaction, and it does not have so many fundamentals. But sometimes it can help you remove a lot of noise. Sometimes the fundamentals are noise. Everyone knows that Nvidia, Microsoft, and Apple are bullish, why do stock prices sometimes fall and sometimes rise? Many times it is an emotional game. So if you are used to speculating in cryptocurrencies, you may be better at these emotional games, and you may dare to increase your position in large amounts when others are panicking. This is also some of my thoughts when I bought the bottom of Nvidia and Tesla in early April. It mainly depends on emotions. So this may be helpful to be used to speculating in cryptocurrencies.
Alex: Yes, maybe like Circle, and many cryptocurrency stocks now, in our view, it may be a crypto asset packaged, and the premium is so high, we think who would buy it! But for stock traders, it may be a very new thing like Circle, so they are willing to trade such things.
Sleeping in the Rain: I was deeply touched by what the two teachers talked about. When doing cross-border business, it is actually a time when the disadvantages are very large. Including my previous investment in script-killing, I basically lost all my money and didn’t see any money coming back. In the case of a new entry, it is difficult to define whether my investment is correct. Including in the US stock market, everyone may know to buy Tesla, Nvidia, etc. For example, if Tesla falls, everyone will go to buy at the bottom. As Professor Jiang said, everyone is actually doing more games on events and emotions. If conditions permit, I will do some cash flow industries and consider entities more. In terms of US stocks, I may only choose SPX (SP 500 Index) and do simple and correct things. This is probably the idea. But there is really no cash flow business in the physical industry now. Even if you do research, there is no good opportunity to do it. Because I think cash flow is something that can bring people a sense of security, so I will now tilt my various energies or funds to do some things related to the income of the chain. For example, there are many income opportunities in USD1 now, or some LPs, Pendle, Pendle PT and the like. This is a relatively safe opportunity for me. About 30% to 40% of my positions are doing this. This includes backpacking and Lighter. I prefer to put my funds in areas that I am more familiar with. If I just go straight into the physical world, I feel like I will lose everything.
Alex: Yes, I personally feel that when we invest, the first thing is that we may not step out of our circle of competence too much. If you step out of your circle of competence too much, it will be difficult for you to make money in the long run. However, if the opportunities in the industry covered by your circle of competence are gradually decreasing in the long run, and you are very stubborn and do not expand your circle of competence, this may not work. So there is still a contradiction, and we still have to gradually adjust this state. OK, we talked for almost an hour today. Thank you to the two teachers for participating in our program and sharing a lot of insights, experiences and lessons on investment. Lets stop here for todays program. Thank you everyone.
