Author: 0xTodd, Partner at Nothing Research
In the past week, many friends have called me to inquire about the market situation, and I feel it is necessary to publicly share my thoughts and views on the current market situation - [what has changed] [the future process].
Those who have been following me for a long time know that I am a long-term investor. So since 2019, I have had an annual strategy update, and 2024-2025 is probably this one, for sharing and discussing with my family.
I. DeepSeek Burst the Bubble
Whether DeepSeek really spent $5 million to train this AI or not, the narrative is that [algorithm improvement] has at least defeated [computing power improvement] in the short term.
You don't have to dwell on whether this thing is real - since the market unanimously recognizes the $5 million, you have to take it as true. By the end of 2024 in our Altcoin industry, apart from memes, I am reluctant to admit but objectively there is only one narrative left: the AI Agent, which is the hope of the whole village. However, no one expected that the AI Agent would be ruthlessly crushed by DeepSeek from the neighboring true AI track. The DeepSeek team is full of real IQ200, fresh graduates from Tsinghua and Peking University, and medal winners of the International Mathematical Olympiad.
In contrast, the ones we worship in this industry are second-tier programmers who are idle at home, AI engineers who have been fired from big companies or are running side businesses, so sometimes we are forced to have an IQ of 50. So...
On January 27th, I tearfully took profits on all my AI token positions, not selling at the highest point and having to take a big drawdown, which is painful to admit. But the more cruel fact is that this has turned our entire AI Agent track into a joke, and this is likely to be true. The reason why "narrative" is "narrated" before "event" is that this "event" has not yet materialized, and can only rely on "narration". Once the story can no longer be told, the decline of the track will be irreversible.
II. The Mob of Presidents and Presidents
I don't know how everyone felt during the Chinese New Year, but my physical experience is that many relatives and friends are asking how to register on BN or OKX, because they want to buy Trump Coins. The last time they were this crazy was during the National Day, when they wanted to open accounts and rush into the A-shares.
Shanghai Composite Index trend Source: Tencent Securities
If I'm not mistaken, those brave warriors who entered the A-shares on October 8th are still hanging on that mountain top. After taking profits on AI, to be honest, I'm getting more and more scared, and then I saw this post.
Roughly: The president seems to be in trouble, but for two possible reasons:
1. He does not make money through the ways you can see;
2. He is an idiot;
But I know the answer is definitely not 2. Yes! Meme has now become what the president is playing, and he can also make money through channels unknown to us. Honestly, can our meme players compete with Trump sitting at the same table? A hippopotamus from Thailand, a squirrel from the US, a longevity drug that extends the life of flies, can they really sit at the same table as Trump, who sits in the Oval Office?
It's Chinese New Year, the adults at one table, the kids at another. The adults drink fine wines, the kids can only drink Sprite. So on that day, I basically sold off all my meme positions. My meme position used to have huge unrealized gains, but because I actively lowered my IQ to 50, I didn't complete the great retreat, but kept joining the great revolution. It feels like a dream.
III. A Top Signal: A High School Boy Earns Millions
I believe that all the family members who play memes, and even those who don't play memes, have heard about this legendary story recently. A high school boy, by joining and sitting still for a month, suddenly hit Jelly, and made millions at a very low cost.
Of course, the story gets more and more exaggerated as it spreads, and there are more and more rumors, I don't have 100% confidence in the authenticity of this event, but I know the taste is right.
Looking back at the 1-3 days before the 69K historical top in 2021, I was reflecting:
· Interns, with returns easily outperforming fund managers;
· ENS grassroots community contributors, airdropped millions;
At that time, just as, at this moment.
I liked this post, where a TIME editor (or possibly a hacker) could immediately harvest countless SOL with a fake tweet. I ask you, what does this mean?
It's not that making money is wrong - masters can always make money, even at the bottom of a bear market. But if the subject becomes ordinary people: the intern boy made a lot of money, the ENS contributor boy made a lot of money, the high school boy made a lot of money, the editor boy made a lot of money.
It means: [At this moment, everyone's hands are particularly loose] Experienced card players all know that it is only when the floating profit is extremely high that the hands become loose.
This represents the greed index reaching a true peak. This is a super top signal.
So on the 30th, I cleared out almost all my Altcoins, only keeping BTC and a small portion of mainstream coins ETH/SOL/DOGE/exchange coins. Although there are still losses, at least I have left some victory fruits. I admire the brilliant operation of the high school boy, and I also revere the market law of this alternative investment.
IV. Doubts about BN and BN's Response
Ah, to be honest, I don't want to talk about this topic.
As a former CEX practitioner, I have seen this consultant-listing-dumping routine too many times, from the initial anger to the gradual numbness, it has become commonplace.
But in the past, this thing was kept under the table, belonging to "small greed and small corruption are the lubricants of development";
Belonging to "when the water is clear, there are no fish", the slight turbidity under the water surface is part of the game rules.
After all, we are not living in a utopia, not living in a vacuum homeland. But the thing that is most taboo is to take it from under the table and put it on the table. I have no intention of criticizing BN or the sister, because this exists in almost every CEX.
If this were in the traditional world, to exaggerate, it would be a huge scandal that could immediately lay off hundreds of people and dozens of people in jail. Maybe the sister would be better off not responding, learning from the celebrities' cold treatment, still leaving some hope for the retail investors. But our industry is already dominated by skeptics, and a huge scandal is a heavy blow, ruthlessly hitting the hearts of every holder.
It has shattered the faith of many people. Our industry really needs "gods", because it is sustained by consensus.
But when everyone finds out that the "servants" under the "gods" also want to make some quick money, the faith suddenly vanishes, and it is quickly projected onto the "gods" - all the Altcoins on BN are now facing a huge skepticism and scrutiny from retail investors. If AI and HOOK are like this, will the other coins really be any better?
V. The Future Script
If we take the view of clinging to the sword in the river, this drop is very similar to 5.19, and I suggest everyone to review the trend after 5.19 themselves.
Trend after 5.19 in 2021, source: Bitfinex
If the script of 5.19 is followed, the next step will be a repeated and sustained two-month volatility plot, until even the most loyal people are washed out, then a new $Bitcoin ATH will arrive.
Of course, some people suspect this is the plot of 12.4, AKA the beginning of the bear market.
From my personal inclination, I hope this is 5.19. After all, the matter of Bitcoin becoming a US national strategic reserve is moving towards clarity, and one should never underestimate the huge impact of this. Even if Bitcoin reaches 85K-88K, I would still be willing to add some more positions.
VI. My Position Distribution
My current positions:
40% BTC; 20% mainstream coins (ETH, SOL, DOGE, BNB/MNT); 40% stablecoin financing;
Bitcoin is my eternal faith, and I think I will never sell BTC again, nor will I do any more short-term trading. The reason for keeping ETH: to be honest, my faith in ETH is weakening.
However, objectively speaking, the President's DeFi project is buying ETH.
I don't know how many of you are trading US stocks, but many people regret not following [Nancy Pelosi, the Goddess of Congress].
Pelosi's heyday was as Speaker of the House, which is only the third-ranking position in American politics.
And now Trump, the authentic President, this crypto President, is holding a large position in ETH (although he has already deposited it into an untraceable Coinbase custody), which is not to be underestimated.
Secondly, ETH has fallen to its current level, and I feel it has reached the extreme of FUD, and there may be a rebound. I can't buy when no one cares, but at least don't sell when no one cares.
The reason for keeping SOL: there is a small probability of an ETF; but the cooling of the AI narrative and the short-term decline of MEME are two small clouds.
The reason for keeping DOGE: Grayscale has launched a Dogecoin trust, and Doge also has a small probability of an ETF;
In addition, Musk is working hard in the D.O.G.E department; and being on the same car as the world's richest man and "US Reform Commission Chairman", I think I can sleep well.
VII. Cruel View: The Good Days of the Old Timers Are Over
Except for the above, I will most likely not hold any Altcoins in large positions in the short term - the reason is also very simple, inflation is too fast.
The speed of new users and new capital entering the market is simply no match for the speed at which these coin minting maniacs are printing.
A few days ago, there was a statistic that the top account on Pump fun had issued 17,000 coins in 3 months. Not 170, not 1700, but 17,000! His contribution alone may exceed the total issuance of tokens in the entire 2017 bull market.
There are too many choices! Too many angles!
Even the same angle has N CAs, how can the old timers' Altcoins compete?
The old timers' favorite strategy: buy a mid-cap Altcoin at $100M or $200M. Hold it for 2-3 months, betting it will outperform Bitcoin. However, now it probably can't even keep up with ETH.
While General P's favorite strategy: buy a 10K valuation project on the internal market. Run away 30 minutes later. Real men never look back at the explosion. Obviously, in the face of the current token hyperinflation, General P is far superior to the old timers. I'm not advocating that everyone become a P-soldier, I just hope that at least everyone won't be an old timer.
VIII. Best Position: 50% BTC + 50% Stablecoin Financing
I also sincerely advise everyone to hold a certain amount of USDC to get through the coming period. You have to accept the fact that no one can really sell at the super top.
The top comes every 4 years, and in the 1,000-plus days, for you to find a day to sell, the probability is 1/1000, and very few can do it, they are all super lucky.
At this stage, a 50% position is the best choice. 50% of your principal invested in financing, we don't talk about mining or doing any arbitrage. We just do the simplest Ethena USDE, now Pendle can still offer an 18% interest rate. If you're too lazy to mess with Pendle, just throw it into AAVE or the mainstream CEX financing, there's still 10%. The other 50% is mainly in Bitcoin, quietly waiting for the day when the US Bitcoin strategic reserve arrives.
With both interest cash flow and dreams and beliefs, you must be comfortable and packed.
Of course, you can also carve out 5% to allocate to the Altcoin you truly believe in, whether it's ETH, SOL, DOGE or any other faith coin. And carve out 5% of the funds to go PVP a couple of times, win and be cool, lose and treat it as consumption, keep your hand in, isn't that great?
Finally, form this Yin-Yang distribution.
IX. Finally
I'm quite satisfied with my current positions, after all, this is my 8th year in the crypto industry, with so much experience accumulated. The only thing I regret a little is that I was playing in Osaka over the New Year holidays and was lazy, not organizing these thoughts and releasing them in a timely manner.
The same strategy, if I had said it a few days ago, perhaps it could have helped many people, but a few days later it becomes an after-the-fact review. But it's not too late to make up for the lost sheep.
I hope that each and every one of you can achieve your own big results in the crypto market. Of course, if you can't get the big results, then keeping some small results, earning more spiritual wealth and social wealth, is also not in vain. Finally, I wish all my family members - a prosperous Year of the Snake, with the golden snake dancing wildly.
Todd
February 5, 2025
