Why can't you make money even if you know the market rules? Analysis of the core ability of investing in

Author: Puffy

Compilation: Deep Tide TechFlow

Question: If the past events were to be exactly replayed, wouldn't it be too easy? How can everyone get rich so easily?

Answer: Even if the past events (are repeated) exactly the same, they will not get rich so easily. It's much harder than it looks.

Independent thinking

Only less than 5% of people can truly think independently, and this ability often requires the following steps:

Establish a solid epistemological foundation

Collect raw data

Apply meta-rules to narrow down the scope of the strategy

Clarify the relationship between things

These steps are very difficult for most people. They have never tried, don't know where to start, have no relevant experience, and have no confidence to make their views stand out from the outside noise.

If you don't have this kind of trait, you basically don't know where to start in the cryptocurrency field. Even the simplest and most logical dataset, such as the LTC chart - the first altcoin, and the 'code' followed by all subsequent currencies, may seem as complex as an unsolved mystery to you.

IQ and relationship processing ability

Intelligence is, in a sense, a kind of empathy. You need to fathom the intention of the questioner and understand the relationships they are trying to convey.

In the cryptocurrency market, the issuer is the participant of the entire market. People with high IQs can quickly discover relationships that others may never be able to perceive.

For example, it is meaningless to try to explain the equation 3x = 6 to a dog, because it cannot understand abstract concepts like 'dividing both sides by 3'.

By the same token, can you 'see' the distribution of emotions, P&L, and the overall trend behind a chart through observation? If so, you can speculate the future market trend from it.

Powerful Strategic Thinking (Meta game)

Many intelligent people, although capable of independent thinking and discovering connections, have very weak overall strategic thinking.

Here are some typical cases of failure:

Developers: They believe that their technical skills can bring them a competitive advantage in the market.

Thought Leaders: Despite their lofty status, their past investment records are abysmal.

Successful people: Can someone like Paul Graham really find the right investment answer?

The crowd that has been eliminated: This happens to almost everyone, just like professional athletes eventually lose their peak state.

Human nature is inherently flawed, unable to fully understand and accurately model complex market systems. To avoid these pitfalls, you need strong strategic thinking to help you filter information and allocate its importance.

Risk in execution

Success execution requires the following basic abilities:

Most people with startup capital are relatively stable in life and cannot easily invest their funds in high-risk cryptocurrency trading.

If you have a happy family life and a respected profession, the potential returns from participating in cryptocurrency trading may be far lower than the potential risks.

There are many classic pitfalls in trading, even experienced individuals may fall into them, for example:

Treating profits as 'casino money': A truly calm person would consider buying SHIB for $300 and seeing it rise to $30 million to be the same as buying the same stack of SHIB for $30 million of family wealth.

Take action at critical moments: There are always similar patterns repeating in the market. Many people know that they are in a bad trade or position, but they hesitate to take action. "Oh, it's down 40%... Oh, it's down 70%... Oh, it's down 65% from its historical high... Oh, it's down 85%... What should I do?"

How to avoid bankruptcy caused by external factors

Look at the list of major Bitcoin holders, how many people do you think still hold their Bitcoins?

Bitcoin's top 500 holders: the top 50

980,000 coins*. Satoshi Nakamoto

400,000 coins*. HD Moore (AHA)

400,000 coins*. Dustin D. Trammell (AHA)

400,000 pieces*. Tod Beardsley (AHA)

350,000 coins*. The alias of “Dread Pirate Roberts” is also known as “DPR”

300,000 coins. Roger Ver

300,000 coins*. “knightmb”

200,000 coins. Mark Karpeles

8.5 182,592 coins. “Loaded”

174,000 coins*. FBI (Federal Bureau of Investigation)

119,000 coins. The management team of AsicMiner consists of 3 people (specific names unknown)

Common causes of bankruptcy include:

Being hacked

Exchanges misappropriating user assets (countless similar cases)

Legal disputes

Tax issues

Why do almost every key figure in the cryptocurrency field end up either receiving legal subpoenas, disappearing under suspicious circumstances, encountering scams or being arrested?

In fact, preserving wealth is not an easy task. If you want to keep your Bitcoin forever, it seems that 'dying early' is the safest way (this is ironic).

So how do people get rich through cryptocurrency?

Most of the people who get rich through cryptocurrency actually have a great misunderstanding of the market, but they happen to seize the opportunity at a critical moment.

Many people invest in Bitcoin because they say, 'You can use it to buy coffee' or 'to fight inflation,' or other trendy statements that come up every cycle, but these reasons have not actually been fulfilled.

If you thought in 2010 or 2012 that Bitcoin was a novel concept validation technology that accumulated real demand through dark web markets, proving its feasibility, and gradually triggered a series of speculative bubbles, then your judgment was correct.

However, there were not many people holding this view at that time.

Some people invested in ETH very early, just because their high school poker friends told them that it could be used to support decentralized games or other application scenarios. Others believed that ETH would become an unstoppable smart contract platform (until the ETC fork event occurred).

However, almost none of these ideas have been truly realized. The vast majority of early 'whales' either sold their assets at low prices or experienced asset shrinkage of up to 95%. This indicates a lack of deep understanding of market operations and a lack of clear investment strategy.