The fact is that bears last longer than bulls; the lower the buying price during a bear market, the more shares you accumulate. Your future profits essentially come almost entirely from the long bear markets you have experienced!
If we talk about the most applicable investment strategy for cryptocurrency novices, it must be 'systematic investment'. The systematic investment method seems simple, yet it solves various problems that novices can't avoid, such as 'limited capital', 'not knowing when to enter', 'how much to buy', etc., while significantly reducing volatility risks and avoiding chasing highs and selling lows, making it a powerful tool for personal cryptocurrency novices.
Everyone must remember: the bear market is always longer than the bull market, which means systematic investment can pick up more bargains.
After comparing these two bull markets and contemplating Bitcoin, I have changed my perspective on Satoshi Nakamoto and may owe him an apology:
1. He is indeed very brilliant; he invented Bitcoin, and the underlying blockchain technology has also pioneered technological innovations across many industries; it initiated the largest social experiment regarding the nature of currency in human history to date; and it also started what may be the largest Ponzi scheme in human history (who knows, humans are just so forgetful, there may be larger ones in the future); it revealed the essence of centralization and decentralization (this point I am not too sure about, I will learn more later, this conclusion is derived from my deduction): decentralized systems will eventually evolve into centralized systems.
2. Of course, he also initiated the largest resource waste event since the 21st century. If you consider this as the cost of the social experiment, that’s fine; after all, in the long history of humanity, waste events are numerous, such as gold rushes, wars, etc... Compared to that, his relatively mild cost is acceptable and perhaps he is just trying to prove: although these things keep happening, humans are simply forgetful, and he revealed the inherent inefficacy that any organization or country cannot overcome;
3. Then, regarding the design of Bitcoin, I may also owe him an apology:
△ The four-year halving design, whether intentional or unintentional, is quite brilliant: if it's too short, Bitcoin might reveal its essence too early and could not carry out this experiment; if it's too long, the resources wasted would be too much and would deceive more people.
△ The original social mechanism of mining is essentially a cyberpunk imagination of the future world; its simplicity is unassailable (although there were several hard forks due to computing power hegemony); whether it’s computing power hegemony or even with so many other innovative coins, it still firmly holds the top position because it aims to reveal its essence: an unassailable consensus that is unrelated to technological innovation or any other factors;
△ Because of this pure design (perfectly deflationary currency), speculators find it hard to find more consensus points (for example: gold has multiple consensus points), which can deceive fewer people. It is precisely this setup of perfectly deflationary currency that makes people realize early on that it cannot be used or recognized as currency; the less perfect it is, the less quickly people realize it (for example: gold, which took thousands of years and multiple deflation events to be discovered).
Regarding him, I temporarily consider him a positive 'anti-government' figure; this whole event is his performance art: a genius 'anti-socialist' inventing a technically unprecedented but fundamentally childishly naive tool to weakly resist the inevitable inefficacy of government monetary policy. As for whether he is a 'positively anti-government' figure or anti-social, you can see whether he will cash in his 1 million Bitcoins.
Before he cashes in his 1 million Bitcoins, we feel the story can continue, so the simplest way for us as newcomers is [systematic investment].
The content summary is as follows:
1. Why invest?
2. The only investment method for ordinary people?
3. What to buy to invest in Bitcoin?
4. What money to invest? Eggshell investment method
5. Stages of systematic investment strategy and execution: Practicing the smile curve
Why do people invest? Core viewpoint:
1. Money has two uses. One is for investment, the other is for consumption.
2. The spending concepts of the rich and the poor are different; the rich use money to make money, while the poor use money for consumption.
3. Not being able to invest means you have to spend your entire life desperately selling your time. After retirement, there is no income, and meager pensions only make you more anxious.
4. Franklin had a famous viewpoint: “The three conditions that determine a person's wealth are: first, background; second, luck; third, effort; among these, effort is the least significant.”
5. Considering the average lifespan of Chinese people is 78 years, working 8 hours a week, while the rest of the time is spent sleeping or consuming, the total work time available for sale in a lifetime is only 10.5 hours. Simply working hard cannot achieve financial freedom before the age of 40, or even before retiring at 65!
6. However, using money to make money is more efficient. Money works every day of the year, 24 hours a day, without rest. Under the premise of correct investment, it works for you even while you sleep...
The only investment method for ordinary people?
Core viewpoint:
1. The Bitcoin market is a non-zero-sum game market; your long-term profits come from economic growth.
Instead of others' short-term losses.
2. We don’t have much money, but we can invest. The systematic investment strategy doesn’t just involve a little bit of money now; more importantly, we are also investing time.
3. Systematic investment strategy plan:
— Regularly invest a certain amount of money in a certain investment target (BTC) over a long period of time.
Target: Investment object.
Long time: At least two major cycles (5-10 years).
Regularly: Same day and time daily/weekly/monthly/quarterly.
Certain amount: Fixed amount.
4. Almost all ordinary people have the ability to systematically invest. In China, the vast majority of families are working tirelessly to invest systematically. The targets they systematically invest in are real estate.
5. Investment is the only way I can find for ordinary people to cross over classes. And systematic investment is the only investment method that all ordinary people have a chance to do and have the ability to do well.
6. By adopting a systematic investment strategy, even if we start with a small amount of money, even if we only invest 2000 or 3000 RMB per month, as long as we have the ability to earn money continuously, we can make our initial capital generate amazing effects over time.
7. Looking at all targets’ long-term return rates from the current time (within my awareness), BTC > stock market > real estate market > bond market > bank deposits...
8. Systematic investors can always profit even when entering at the worst times. The fact that bears last longer than bulls means that the lower the buying price during a bear market, the more shares you accumulate. Your future profits essentially come almost entirely from the long bear markets you endure!
9. The target of systematic investment is the most important thing! Once you start buying, almost all future profits are already determined.
10. Life is full of systematic investment. It can be fitness, running, reading, writing, learning English, working...
[Systematic Investment] As the name suggests: Regularly take out a fixed amount of money to buy a fixed cryptocurrency.
Systematic investment solves three difficulties:
What to buy and sell: Fixed cryptocurrency
When to buy and sell: Fixed cycles
How much to buy and sell: Fixed funds
Of course, systematic investment can also be irregular amounts at regular intervals, and we will later introduce when to adopt this strategy.
What to buy to invest in Bitcoin?
1. The essence of the magic of the trading market — here, you can utilize the wisdom of others. Even more magically, some good investment targets have already been selected by the smartest people in the market for ordinary people; you just need to buy according to their choices.
2. After purchasing, you don’t need to research, analyze, monitor the market, or even discuss with others; in fact, you can do nothing at all, because the smartest people in the market have already done it for you, and for free!
3. But such a simple, crude, yet effective method is actually not adopted by 99% of ordinary people.
4. Why invest in BTC? I joined the circle in 2017, and I’ll show you why with data:
Starting from July 2017, until July 2024, systematically invest 3000 RMB on the first day of each month to purchase Bitcoin equivalent at that time. Let’s see what the profit situation is like over 7 years.
The conclusion is that the total investment is 267,000 RMB, now worth 2.2786 million RMB.
What money to invest? Eggshell investment method
Main points:
1. The money for investment must have no cost and no time limit.
2. You can imagine money as the structure of a cooked egg: we can only use the eggshell for investment.
3. Eggshell investment method
The yolk part represents your daily essential expenses (for example: if you don't work for a year, family expenses are expected to be 200,000).
The egg white part represents the savings you prepare to guard against risks (for example: 1 million commercial insurance + risk savings).
The eggshell part is the money you can use for investment, also called 'spare money'; it can absolutely stay in the market for the next two major cycles...(for example: monthly systematic investment income of 10% or 2000 RMB)
4. A large portion of people's investment failures are not due to issues like IQ, confidence, or perseverance, but because they completely underestimated the costs of the major accidents that may be encountered in life early on. - Did not expect that the egg white part could be so thick.
5. The money for systematic investment must be able to accompany you through at least two bull and bear markets (across two major cycles)…
Stages of systematic investment strategy and execution: Practicing the smile curve
1. A systematic investor must go through at least two major cycles. That is, at least experience two bull and bear markets in the cryptocurrency world... A major cycle consists of the previous declining B phase and the next rising A phase.
2. It’s not a curse that it drops as soon as I buy it, nor is it bad luck encountered by a specific individual, but a universal and inevitable phenomenon that almost everyone will experience.
3. During long-term bear market phases, there is only one way to resist the meaningless struggles from all sides: to sharpen your long-term perspective.
4. The father of value investing, Benjamin Graham, who was also Buffett's teacher, succinctly summarized the stock market with one sentence: “In the short term, the market is a voting machine, but in the long term, it is a weighing machine.”
5. During a brief bull market phase, do not suddenly spend a large amount of money, do not increase the investment amount. The mindset of getting rich overnight, with money earned by luck, will be lost entirely by skill.
6. As a systematic investor, very few can make it to the end, possibly less than 1% of the original number of systematic investors.
7. After reaching the smile curve and experiencing two major cycles, your wealth has multiplied several times, you have basically achieved financial freedom…
8. Finding something worth doing for a lifetime is a person's best talisman.
Below is a summary of the 6 major indicators for BTC systematic investment:
1. Bitcoin 200-day moving average
Indicator characteristics: An important indicator in traditional trading markets used to distinguish between short-term and long-term holders; the 200-day moving average is a critical point, suitable as a reference indicator for mid-term holders in the four-year cycle market of cryptocurrencies.
Systematic investment operation: Start systematic investment when the price of Bitcoin is below the 200-day moving average during the spring and summer of the four-year cycle; begin to sell when the price is above the 200-day moving average in autumn, which can yield relatively high certainty returns.
2. Bitcoin rainbow chart
Indicator characteristics: Places Bitcoin prices in a chart with nine colors similar to a rainbow, with simple and clear buy and sell point prompts; different color bands correspond to different buy and sell actions.
Systematic investment operation: Buy in the inner blue part, sell in the outermost red part, hold in the middle yellow part. You can adjust the systematic investment position based on the Bitcoin price in different positions on the rainbow chart; for instance, execute the normal systematic investment plan in the light blue area, and increase or decrease the systematic investment position when the price moves to specific areas.
3. Nine God indicator
Indicator characteristics: Created by Weibo influencer Nine God, it is favored by those who hoard cryptocurrencies; the indicator is simple and mainly used to judge whether it is suitable to buy the dip, systematic investment, etc., with no sell prompts (as it is specially designed for hoarding).
Systematic investment operation: Less than 0.45 is suitable for buying the dip; between 0.45 - 1.2 is suitable for systematic investment; more than 1.2 indicates the price is high and is not suitable for operation.
4. Bitcoin UTXO age distribution chart
Indicator characteristics: Statistics of the ages of all Bitcoin UTXOs, proportionally made into a chart resembling underground rock layers, with different colors representing the proportion of different ages of Bitcoin UTXOs.
Systematic investment operation: When the proportion of older Bitcoin UTXOs increases and the proportion of younger ones decreases, the market enters a bear market and can buy the dip; when younger UTXOs begin to become active, the market is in a bull market and cash out can be considered. Currently, Bitcoin is in a bear market, suitable for systematic investment and buying the dip.
5. NVT ratio
Indicator characteristics: Similar to the concept of price-to-earnings ratio in traditional stock markets, used to determine whether Bitcoin's price is in a bubble or undervalued.
Systematic investment operation: There are red and blue dashed lines on the chart; if the NVT ratio is below the blue dashed line, buy; if it is above the red dashed line, sell. Currently, the NVT is in a sell position, which is different from other indicators.
6. Gu Bi moving average
Indicator characteristics: Comprised of two groups of moving averages; the long-term moving average group represents long-term investors, while the short-term moving average group represents short-term investors, used to judge market trends based on the relationship between the two groups of moving averages.
Systematic investment operation: In the spring and summer of Bitcoin's four-year cycle, buy when the short-term moving average group is below the long-term moving average group; in autumn, look for selling opportunities when the short-term moving average group is above the long-term moving average group. If the long-term moving average group shrinks and the short-term moving average group breaks below the long-term moving average group, it means the long-term upward trend has changed, and you can choose to liquidate. Currently, the short-term moving average group has pulled back to near the long-term moving average group, which is a signal to remain on the sidelines.
Lastly, I want to say to everyone, the principle is simple. Any advanced technical operation cannot compare to just holding. Just think, who are the ones making the most money in the cryptocurrency world now? They are the ones who bought Bitcoin ten years ago and have held it until now. They can defeat 99% of people in the cryptocurrency world just by holding firmly. The most powerful techniques in this world are actually the simplest. For ordinary people, there is no need to study candlestick charts, no need to analyze alpha projects; you just need to buy and hold Bitcoin foolishly, and ten years later, your returns will definitely outperform the vast majority of people in the cryptocurrency world!
