Author: Tulip King, Chief Technology Officer of Messari

Translated by: Luffy, Foresight News

Alpha Priority:

• Let the market tell you which cryptocurrencies are good and which are bad. Buy strong tokens and sell weak ones. You don’t have to be first, just don’t be last.
• Put in the effort. Identify cryptocurrencies whose trends contradict your views and try to understand the reasons behind them.
• Be unconventional. If you rely on copy trading, the results won’t be good.

The Market is Right, You are Wrong

Indeed, when you invest and trade against the market, you can potentially make the most money. In an ideal world, we could all buy at the bottom and sell at the top. However, this is unrealistic. If people could more calmly follow market trends—entering when cryptocurrencies rise 40% in a day and selling when they fall more than 10% for several consecutive days—they could avoid many troubles.

• The market is never wrong: The market never makes mistakes; only human opinions can be wrong. This means that regardless of what you think should happen, the market's trend is the ultimate reality.
• Profit validates correctness: Being right or wrong is not about predicting market trends but about whether you can make a profit. Traders may theoretically judge the market direction correctly but still incur losses due to poor execution or timing. The true measure of "correctness" is profitable trades, not accurate predictions.

You will find that Saylor not only buys at high prices but also in large amounts.

Instead of trying to predict reversals, successful traders learn to identify and follow strong areas in the market. This means being willing to buy assets that have already risen significantly, quickly cutting losses when market sentiment shifts, and avoiding the temptation to average down on losing positions.

The most successful traders focus not on being right but on effectively managing risk. Take profits when you have them, don’t stubbornly hold during significant drawdowns, and be willing to re-enter after exiting.

Price trends are the only truth in the market. When your positions are moving against you, the market is sending a signal that your viewpoint may be wrong. The prudent approach is to accept small losses rather than letting them turn into large ones.

When your positions experience a significant pullback, you need to temporarily step back and ask yourself why. Is this the trend of the entire market? Has the narrative shifted to other cryptocurrencies? What have I missed? Most importantly, you should ask yourself: Do I need to endure this downturn? When the market disagrees with your viewpoint, question your perspective. Stay humble and adapt to the changing situation.

Market Signals: Aiccelerate Case Study

The current market reaction to AICC has taught us a lesson in market psychology. The key takeaways are as follows: If you disagree with the market's interpretation of AICC, you face two possibilities, both of which require immediate attention:

• The market is right, and you are wrong.
• The market sell-off is due to other reasons you have yet to discover.

In either case, going against the trend is dangerous. If you cannot explain why the price is falling, you are unlikely to determine when it will stop falling. This is what Buffett meant by "You only find out who is swimming naked when the tide goes out." If you do not understand the market's movements, you will face unseen risks.

Less Obsession

In the ever-changing cryptocurrency space, the only asset that can truly be "bought and held long-term without concern" is Bitcoin. This is not an extremist position but a recognition of Bitcoin's unique status as digital gold, supported by unparalleled network effects, true decentralization, and institutional adoption. For all other assets in our digital asset world, active management is not just recommended; it is essential for survival.

Although ai16z has attracted a lot of attention, the market hinted weeks ago that you should turn to the DeFAI space.

The cryptocurrency market requires a unique mindset: you must be both well-informed and adaptable. Successful traders maintain what Andy Grove called "professional paranoia," a state of constant vigilance, questioning every position and challenging every viewpoint, treating every profit as potentially temporary. This is not pessimism but a realistic attitude in a market where narratives change as quickly as messages on Discord.

The most dangerous trap in the cryptocurrency space is not leverage or poor entry timing but emotional attachment to positions. We have all seen situations where traders become HODLers after incurring losses, investors double down on a viewpoint because they have built their identity around it, and community members become extremists who refuse to acknowledge market changes. This bias towards positions destroys more capital than any smart contract vulnerability.

Achieving success in this market requires being constantly online, processing information from multiple channels. But more importantly, it requires emotional intelligence to objectively handle this information without being influenced by existing biases. Your beliefs should be strong enough to establish positions but flexible enough to abandon them when circumstances change. Imagine yourself as a surfer who understands the waves rather than a captain trying to control the ocean.

The best traders seek guidance from the market and readily acknowledge when they need to update their trading framework.

The most successful cryptocurrency traders I have observed possess this trait: they hold firm opinions but are ready to discard them like loose clothing when the market presents different situations. They understand that in the cryptocurrency space, being correct is not about holding unwavering beliefs but about maintaining consistent focus and adaptability.

Remember, every position other than Bitcoin requires active management, continuous validation, and a humble attitude to acknowledge when circumstances change. In such a dynamic market, beliefs should be viewed as hypotheses to be tested, not as fortresses to be defended.

The Power of Independence

In the echo chamber of cryptocurrency Twitter, every price movement spawns thousands of contradictory statements, making independent thinking a scarce and valuable skill. It is easy to mistakenly equate information gathering with analysis and to confuse following opinion leaders with forming one's own insights. But at the end of each trading day, the PnL statement bears your name.

The market does not care which influential accounts you follow or which so-called alpha groups you join. It only reacts to the collective behavior of participants based on supply and demand, fear and greed, and actions taken according to their beliefs. This is why copy trading without understanding the underlying logic is so dangerous: you never know when to exit, when to add to your position, or, most importantly, when your initial viewpoint has become invalid.

Writing is the most powerful tool for cultivating true market insight. The act of writing promotes clear thinking. When you try to articulate your market views in writing, logical gaps become apparent. Those vague concepts that seem persuasive in your mind must withstand rigorous scrutiny when you have to express them clearly. This is why the most successful traders and investors, from George Soros to Howard Marks, are often prolific writers.

Consider how Messari has become an incubator for some of the sharpest minds in the cryptocurrency space. The habit of regular research and writing not only records thoughts but also refines them. Every article, every topic post, and every market analysis forces the author to stress-test their ideas, pushing them beyond the surface to explore the underlying mechanisms of market trends.

The path to market success is not about finding the right people to follow but about forming your own viewpoints. Start writing, even if just for yourself. Record your trades, articulate your views, analyze your mistakes, publicly question your assumptions, and engage in discussions. When new information arises, be willing to change your mind. The goal is not to be right all the time but to think clearly and independently.

"Don’t just follow the crowd; value your own perspective. Cultivate it, cherish it." — Rick Rubin

Remember, in a narrative-driven market, those who can independently construct and analyze narratives have a significant advantage. Your writing does not need to be polished or widely popular; it needs to be honest and analytical. This is how partially formed market intuition evolves into actionable trading viewpoints and how market participants grow into market leaders.

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