Market Rebound: How to Learn from a Pullback and Keep Navigating the Price Action?

Original Article Title: Conviction and Mental Capital in Crypto
Original Author: ElNachoCrypto, Crypto Researcher
Original Translation: ChatGPT

Editor's Note: The article explores the importance of conviction, mental capital, and a simplified strategy in cryptocurrency investment, emphasizing avoiding frequent trading and mistakes through self-reflection and a long-term perspective. The author provides 10 constructive suggestions, reminding readers to deepen their understanding through continuous research while maintaining emotional control and rational thinking to navigate market fluctuations.

The following is the original content (slightly reorganized for readability):

TL;DR

· Keep it simple; less is more. Having countless investments and activities filling your mind will lead to poor decisions.

· Why the rush to get rich? Bear in mind that money made quickly often disappears just as fast.

· Narrow your focus, guided by conviction and inner peace.

The Crypto World is Full of Distractions

Back in 2017, when I entered this space, I bought a batch of BTC at around $3500 cost basis. If I had fallen into a coma right after my last buy and woke up today, my financial situation would be quite nice.

I would have avoided countless round trips of trading, pain, and agony. But where's the fun in that? We must go through these to reach the other side, learning what we need to know to succeed. That's why we must accept and try to "enjoy" the hardship—seeing it as educational. Or as Ray Dalio put it: pain + reflection = progress.

The reflection part is crucial. That's why I write these things. Because I feel I must process the pain and articulate the lessons.

But what am I here to say? From 2017 to 2025, I was involved in nearly every activity offered (except scamming, my conscience wouldn't allow it). Trading, flipping NFTs, airdrop mining, yield farming, early-stage investments, and so on.

Despite all these endless efforts to quickly amass wealth, simply DCA-ing BTC since 2017 would have outperformed everything, and I would have expended less mental energy and time. This simple, boring, slow but consistent behavior would have brought unimaginable gains. The lesson lies therein.

I recently saw someone ask Cobie, given all the "moth-like" downfall around meme coins, what they should do. I think his answer was brilliant:

@cobie: Don't buy into that scammy stuff, save your money. Buy Bitcoin and other extremely scarce valuable things. Set longer-term goals for personal wealth. Ignore everything else as it's irrelevant.

I'm a huge fan of Cobie. I think he's a rational voice among a very noisy bunch of idiots.

It's not just about telling you to dollar-cost average into BTC, but to say:

· I think we're so obsessed with getting rich quick that we end up engaging in activities that repeatedly make us lose money.

· We need a longer, much longer wealth accumulation time frame.

· Learn from experience (mine and others')—money often follows the principle of "easy come, easy go." @Trader_Dante said it best:

@Trader_Dante: One of the reasons I don't suffer from FOMO is that in my 21 years of trading, I have found that almost everyone in this trading arena can't hold onto the money they make. A person's brief success doesn't excite me. I can usually correctly guess they'll end up with nothing.

· The crypto world is indeed an unregulated casino. If people really get what they want from the market (win or lose), they'll find their poison here.

· Many of us are indeed chasing 10 rabbits, so much so that we never learn what we're good at, cultivate consistency, ending up worse off than when we started.

Narrow Your Focus With Conviction

Believe in something, but be extremely cautious about what you choose to believe in. There are more scammers here than in the Wild West. Maintain a high level of suspicion towards everyone and everything, after all, this is the crypto world.

That's why I think some of Murad's tweets have caused people to lose a lot of money. He's promoting his point but borrowing someone else's conviction is almost worthless because when your resolve is inevitably tested, you won't have the fortitude to see it through.

On one hand, I admire Murad's conviction (I believe his argument is flawed, but that's another topic), but I also believe this will bring many painful lessons to those who choose to follow him. Perhaps this will ultimately lead to a lot of learning.

You must form your own arguments and beliefs through months or years of research. There is no other way. Doing so will give you peace of mind, knowing that you have done your homework, and the market will take care of the rest.

I have developed very few long-term high-conviction investments. I don't need to share them here, but what's important is that when the market gives me a gift (like a random airdrop), the funds flow back into my conviction.

I don't want to hold more than 10 different tokens or invest in over 10 projects. It is very draining mentally. Each project requires a certain level of attention, and combining them significantly increases the likelihood of neglect and mistakes. Research shows that we all have limited cognitive resources, and each new task requires its own cognitive processing, whether conscious or unconscious.

I'm not providing any financial advice here, just some things to think about:

1. Declutter your mind and portfolio. Sell low-conviction assets and buy high-conviction assets.

2. Deepen your conviction in these assets through ongoing research.

3. Nevertheless, the crypto world is an extremely fluid place, and you must be too. Be ready to abandon anything at any time. I'm not saying sell something impulsively at the first sign of bad news, just be prepared to objectively review your arguments at any time.

4. Pay attention to people who hold the opposite view of your arguments; they may show you things you haven't considered. I always pay attention to those who are skeptical of Hyperliquid. I really want to know what they have to say and what I can learn from it.

5. Objectively monitor your (and others') emotions/reactions to challenges to firm beliefs. Ask yourself, "Why am I/they so excited about this? What does this reveal about them/me?" If needed, imagine yourself standing behind yourself as a passive observer—how does your behavior look?

6. Always question your own ability to remain objective. We are not always rational or logical beings.

7. Always keep some spare funds for those once-a-year/cycle enticing opportunities. I dare say, once you have a fairly substantial amount of funds ready to deploy, you can do almost nothing for most of the year; just wait for those opportunities. Also, consider that some people here only use USDC for yield/airdrop farming and have a relatively small exposure to spot crypto assets. If you're going all in, you better have a very good reason.

8. Inner peace comes from knowing that if the casino bankrupts you today, you'll be okay tomorrow. If you are overexposed, you will make bad decisions. Do not invest more in your portfolio than you can truly afford to lose—revisit this number frequently.

9. Do nothing and govern. It is a beautiful thing when you can truly sit back and relax your position. Most money is made by doing nothing, whether it's holding cash for high-value opportunities or actively positioning due to a significant, high-timeframe mean-reversion event.

10. Part of the reason you are satisfied with your argument is profit-taking. When you know you have made a huge profit, several times your initial capital, holding longer becomes much easier. People really overlook this. It's not easy, it takes practice, but force yourself to adopt this habit. I pasted these two screenshots from @Tradermayne and @Pentosh1 into my investment portfolio sheet:

@Tradermayne: I agree, but you don't have to wait until the end of the bull market to take profits. You should gradually cash out during this process.

The likelihood of accurately judging when the bull market will end is very low. Lock in profits as your portfolio reaches a milestone; it feels much better than hoping to cash out all at once near the market top.

It is almost impossible to sell all assets at the "top," especially since some assets peak at different times. Besides, your portfolio's historical all-time high value may not perfectly align with the actual market top and there will be some volatility.

Moreover, if the market persists longer than expected, taking profits along the way allows you to have funds on hand to reinvest when necessary.

Of course, if you don't change your lifestyle, this money won't fundamentally change your life.

Relax, don't rush. The opportunity will come again.

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