Author: terry
Compiled by: Deep Tide TechFlow
First, a disclaimer:
I'm not the top trader, but here are some key insights I gained while exploring the AI meta with some industry elites over the past two months.
The goal of this article is not only to distill the concepts I have learned but also to help you better understand and navigate this market through practical examples and advice.
Let's get started.
Attention vs. fundamentals
The rise in coin prices usually has two main reasons:
Attention (hype)
Fundamentals (real value, technology, application)
Attention-based coins:
The prices of these tokens soared mainly because everyone was discussing them (like the meme coins popular on X/TikTok). In such cases, the coin price can rise rapidly but may also fall quickly due to a lack of 'real intrinsic value', relying only on hype.
Fundamentals-based coins:
These coins have substantial value backing, such as interesting technology, strong development teams, partnerships, or useful products. Even if the price drops in the short term, it is usually just 'noise', as their long-term potential remains significant.
For example, a meme coin may see its price rise due to a lot of mentions on Twitter and TikTok, but once the attention fades, the price can quickly drop. In contrast, a mature project working on AI tools and collaborating with well-known projects or companies may see a gradual price increase as more people witness the actual effectiveness of its products, even if initial price fluctuations are slow.
When trading on hype, closely monitor price trends and exit promptly when momentum weakens. In fundamental investing, if you believe in the long-term potential of a project, short-term price fluctuations may be insignificant (this is my personal investment style). If you notice a weakening or change in a project's fundamentals, be decisive in cutting losses. Never become overly attached to a particular investment project.
Look for expansion space
A wiser strategy is to focus on projects that have the potential for multiple growth in value, rather than just pursuing small gains.
Instead of focusing on a small opportunity that could grow from a market value of $1 million to $5 million, look for projects you believe can grow from $5 million to $100 million or even $1 billion. Such deals, if executed well, could yield 'life-changing' returns, rather than just quick pocket money.
You should always look for opportunities with significant upside potential. This often means focusing on early projects with strong fundamentals or unique innovations, rather than those well-known coins that have already been 'hyped'.
Seize early opportunities
Profitable trades often come from getting involved before trends become mainstream. If you can spot a promising project or trend (like AI infrastructure or multi-agent architecture) before others, you can reap the maximum rewards.
In simple terms, if you start researching AI-related technologies or projects before AI becomes a buzzword, you might find a great coin when its market cap is very low. As the AI craze grows, more people will get involved, driving up the price. Early participation means you can capture most of the upside.
Take the time to understand emerging trends in AI (such as multimodal, decentralized reasoning, crowds, traffic engineering, agentfi, etc.) and get involved before they become headlines. This may require you to pay attention to developer announcements, read whitepapers, and check discussions on social media.
Establish a trading process
Having advantages, such as using custom scripts, analytical dashboards, or any efficient research methods, can help you find good opportunities faster than most people.
You can use crypto price alert bots or platforms like dexscreener to track the release of new tokens. When a new project appears and suddenly gains trading volume, you should investigate immediately. Check the project's official website, team information, X account, Telegram group, Discord, etc. If it looks promising, you can decide whether to invest immediately.
Speed is crucial. You can even utilize simple tools, such as a well-known 'AI quant' X list, Telegram groups, etc., to stay alert to new opportunities. Over time, you can acquire more advanced tools but start with free and simple ones. The key is—you must have a strategy, a process to help you win in the market.
Avoid the 'mid-curve' trap
Generally, it is easier to buy established leaders or find brand new low market cap projects. Mid-cap projects have higher risks if they lack a clear positioning, as new competitors can easily surpass them.
Assuming you have the following options:
Project A, market cap $1 billion, well-known, and continuously releasing new features
Project B, market cap $1 million, novel idea but still unknown
Project C, market cap $50 million, lacks innovation and is always overshadowed by other projects
A beginner might think C is 'safer than B but cheaper than A.' However, if C stagnates, lacking growth or innovation, it is less likely to yield big returns compared to finding a new, promising B or sticking with a reliable A.
The point is, if you choose mid-sized projects, make sure they have a plan to stand out. Otherwise, they may just waste your time and capital—ultimately, it's all about opportunity cost.
Focus on industry growth (this is also why I only focus on AI)
AI is a long-term trend. We see its impact not only limited to cryptocurrencies but across all industries.
When an entire industry (such as AI) shows enormous long-term potential, the entire market may expand significantly beyond current valuations. Early leaders in the industry could see substantial appreciation over time.
If the entire AI entity field is currently valued at about $10 billion, but you believe it will become one of the most dominant industries in a few years and could grow to $100 billion or more, then the leaders in this field (mature projects with strong communities and products) could see 10x or more growth as the industry expands.
Identifying leaders in growth stories and investing in them now can be a safer and more profitable choice as the entire industry matures.
Adaptation and continuous improvement
AI is developing rapidly, and cryptocurrency is developing even faster. You need to continually update your strategies, reflect on what works and what doesn't, and learn from mistakes.
A good practice is to write down your top 5 successful and unsuccessful trades at the end of each month's trading. Ask yourself: Why did I buy this coin? When did I sell, and why? Could I have spotted the trend earlier? By regularly reflecting on these questions, you can identify patterns in your decision-making and improve over time.
View trading as a skill that needs to be honed. Record trades, evaluate market sentiment, and discuss strategies with other cryptocurrency traders to help you become smarter and faster.
Manage liquidity, maintain flexibility
Set aside some cash so you can quickly invest when new opportunities arise. Don't get stuck in investments that do not allow for a quick exit.
Assuming you have $1,000 in investment capital. Instead of putting all your funds into one project and waiting for months, invest $600 in a promising project while keeping $400 in reserve. When you find a promising new project, you can invest quickly.
Liquidity means flexibility. When great opportunities arise, acting quickly is often more important than being 'fully invested' all the time.
Become a learner in cryptocurrency
Treat cryptocurrency as a long-term profession, continuously learning and growing. Don’t see it merely as a lottery ticket. You are here to accumulate knowledge, skills, and capital over the years, not just to chase a one-time big profit. If cryptocurrency truly is the future of finance (which I believe it is), we are just beginning this journey.
An amateur might say, 'I want to get rich quickly in a month.' Meanwhile, someone with a long-term perspective would say, 'I hope to gradually improve my understanding and become adept at spotting trends; in a year or two, I'll be better positioned to profit from market changes'—which can be achieved through trading, investing, or even creating projects myself.
Over time, good habits—such as focusing on research, actively reflecting, and practicing patience and discipline—will accumulate results. Ultimately, you will have the ability to profit effectively in a major bull market.
Stay patient and consistent. Over multiple market cycles, those who treat cryptocurrency as a profession and continually improve themselves will outperform those who rely solely on luck and hype.
Comprehensive summary
The key is—not to just chase popular projects. Build a system. Learn to identify trends early, conduct thorough research, focus on fundamentals, and see cryptocurrency as a skill that needs to be mastered over the long term. Keep some funds available to seize new opportunities, regularly review past decisions, and continue learning. Over time, this mindset will help you find major winners, identify key opportunities, and avoid becoming someone else's 'exit liquidity'.
terry
[Co-authored by gpt o1]