Are you buying "VC harvesting coins" or "high-quality altcoins"?

How to identify what is a "high-quality altcoin"? Today I will share my criteria for selecting "high-quality altcoins". Use this criteria to select 5, and then allocate them in a diversified manner at the current price. It is impossible to lose money if you hoard them for half a year to a year.

The altcoins mentioned here only include secondary coins listed on Binance, and only refer to the long-term strategy of hoarding coins. Next time you decide to hoard an altcoin, check whether the altcoin you want to buy meets these screening criteria.

1. In 99% of cases, it is right to choose old coins that have gone through at least one round of wash-out. This is the most contrary to common sense for most people. Everyone says that you have to speculate on new narratives when speculating in coins, but this round is different. The successful case of the last round of ICP opening with high FDV and cashing out more than one billion US dollars has taught all project parties the "best cash-out plan". Previously, new coins opened low, so they had to pull the market to cash out at a high level. This round of new projects, take a look at which one opened with a low FDV? The first positive line of the market maker directly completed the one-year pull-up in the last bull market, and it can immediately turn to the second stage of cashing out by smashing the market. You ask me how to cash out without unlocking the coin? There is something called a contract. Relying on the high-altitude contract + borrowing coins to smash the market, the risk-return ratio is much better than the last round of bitter hoarding and pulling the coin.

If you want to speculate on new narratives this time, go to the primary market, not the secondary exchanges. If you want to find alpha in secondary new coins, your chances of winning are worse than just picking a random coin in the primary market and filling it up with one shot.

2. Choose a coin with income, whether it is protocol income or service income. Being able to support the team with its own cash flow means that it does not need to dump the market from time to time to cash out. It is best if its income can be linked to the coin price, whether it is a buyback or dividend (this is why Aave is awesome)

3. Reject air coins, and choose coins that have business and natural growth in "business". The secondary institutions with subjective strategies that can survive this round actually have a consensus, and everyone is disgusted with air coins that only tell stories. So if you want to buy L2 or a public chain, first go to the chain to see if anyone has played it in the past six months, and whether the number of people playing is increasing? Or did it become a dead chain directly after the airdrop (for example, look at Starknet and Zksync, is anyone playing? And why is Sui rising well? Just search the growth data on the chain online and you can see it)

If you want to buy Defi, then check whether its Defi business and revenue have grown. For example, why can Banana Gun be listed on Binance directly from the first level? Why do Aave and Ray have a good growth? But GMX, DYDX, and AEVO have been hitting new lows? These can actually be reflected in the business. When a coin has no business to generate income, and the price is still high at billions, then if you buy it, you will help it pay the team's salary. If you want to speculate on air and concepts, why don't you go to the first level? Do you have to take over at a high position in the second level?

4. If a meme coin is not from the first level, don’t touch it lightly, including all the memes of the TON chain on Binance. (These artificial meme coins have a purpose. Ton created these meme plates to attract people to create a false prosperity on the chain and make the price of Ton coins soar. These meme coins on Binance are to transport users from the Ton ecosystem to the exchange, and then the launchpad can also airdrop benefits to BNB users. If you want to enjoy this wave of dividends, you can either buy Ton or go to Ton to make money, or buy BNB to enjoy the airdrop dividends of the exchange. The second-level takeover of these meme coins as the exit liquidity of the project party and the money-grabbers can only be said to be doing charity)

5. Don’t touch the VC chips of new coins that are many times more expensive than retail investors’ chips. At least wait until the price drops to that level. Especially for this round of VCs, in fact, everyone in this round of new coins has the mentality of “getting back the money is good enough”. So before buying coins, take a good look at the FDV. No matter how good the project is, it will be smashed to pieces at an outrageous price.

If you want to buy layer 2, first check how much more expensive the current price is than the last private placement round? How does it compare to the current valuation of other layer 2s? (For example, if Stark is more expensive than ARB, it is obviously unreasonable. It is also unreasonable that Jup is so much more expensive than Ray. The valuation will be fixed in the end.) Then compare the ceiling valuation of this track in the last round.

For example, if you want to buy arb now, the valuation of polygon in the last round was less than 20 billion, which was the ceiling. At that time, the FDV of arb was 10 billion. If you buy Arb at this time, you are equivalent to accepting that you are willing to only make 1 times in the bull market and bear 80% of the risk of retracement. So why not buy BTC.

In fact, the valuation of altcoins is already very generous compared to the previous round, because the target volume and capital diversion in this round are ten times that of the previous round, with more and more coins and less and less money.

Before buying a coin, use the product more often and ask yourself whether you will continue to use it, check the number of users and actual business, check the FDV and compare it with the valuation of the previous cycle to decide whether the current price is expensive, instead of looking at the price chart and judging by your feelings when it has fallen by 80%. Control your hands and only buy things that you understand and believe in. In fact, if you can do all these points, you can outperform at least 90% of people.