Trader Rocky's Investment Philosophy

1. About Trader Rocky

Rocky is a co-founder of Blue Ocean Capital, focusing on investments in the Web3 secondary market. He fully committed to the cryptocurrency field at the end of 2016, with his first pot of gold coming from the ICO boom of 2016-2017. From 2018 to 2021, Rocky was involved in blockchain vertical media and investment incubation-related businesses. In 2022, he established the Blue Ocean Capital fund, which currently has a net value of approximately 4.5 times.

Rocky's trading strategy is mainly influenced by two experiences:

1. High returns for newcomers to the market

In 2016, Rocky invested in cryptocurrencies through a friend and achieved a fourfold return in two months, which sparked his immense interest in this market. He then began to delve deeper into related knowledge and earned nearly 20 million yuan during the ICO era, marking his first pot of gold.

2. The painful lessons of the "3·12" incident

On March 12, 2020, Rocky lost more than 100 bitcoins due to leveraged trading. This experience made him realize the risks of the crypto market, leading to a new understanding of leveraged trading, and he established the "Three No Principles": no leverage, no contracts, no borrowing money to trade.

These two experiences have transformed Rocky from a technical trader to a value investor, leading him to establish his own investment risk control system and build a team.

2. Rocky's Trading Strategy

Rocky's trading strategy mainly includes the following aspects:

1. Fund Scale Management

• The funds invested in cryptocurrency should be money that, even if completely lost, will not affect your life.
• Match the number of investment targets based on the scale of funds: 0-200,000 USD: about 5 pieces $200,000-$1,000,000: about 10 $1,000,000 - $5,000,000: about 15 $5 million to $20 million: about 20 Over 20 million USD: No more than 30

2. Expected Returns

• Expected returns are mainly related to the US dollar cycle.
• The dollar cycle usually lasts 4.5 years, including 2 years of interest rate hikes and 2.5 years of interest rate cuts.
• Currently in the phase where the interest rate hike cycle is ending and the rate cut cycle is about to begin.

3. Risk Control

• Position Risk Control: Adjust positions based on macroeconomic data such as the US Dollar Index, 10-year Treasury yield, M2, etc.
• Portfolio Risk Control: Establish a project Dashboard to track project data ( such as user growth, daily active users, TVL, revenue, etc. )
• Basic Line Risk Control: Adopting the "Three Four Zero" principle, which means 30% risk warning and 40% liquidation line.

4. Investment Framework

• Top-down analysis framework: Macroeconomic analysis → Industry/track analysis → Project analysis
• Pay attention to the trends in the primary market and focus on the investment directions of leading VCs.
• Focus on the project's fundamentals, such as the background of the founders, team strength, business model, etc.

5. Trading Principles

• Do not engage in high-frequency trading, and instead allocate more time and energy to research.
• Do not invest in projects that you are not familiar with or do not understand.
• Do not pursue short-term profits, focus on long-term value.

3. The Tracks that Rocky is Optimistic About

Rocky believes that the second half of the bull market (, after the interest rate reduction cycle begins ), has 5 tracks worth paying attention to:

1. AI: The investment enthusiasm in the primary market remains high.

2. RWA( Real World Assets ): Similar to the DeFi track in 2020, regarded as DeFi 3.0

3. DePIN( Decentralized Physical Infrastructure Network): The easiest scenario to bring Web2 users into Web3.

4. Bitcoin Ecosystem: With the emergence of derivatives such as ETFs, a large amount of dormant assets will be released.

5. GameFi: Analogous to the early development of the internet, the gaming market still has enormous potential.

4. Rocky's Investment Advice

1. Adhere to the "Three No Principles": do not use leverage, do not engage in contracts, do not borrow money to trade cryptocurrencies.

2. Avoid high-frequency trading and spend time researching macros, tracks, and projects.

3. Broaden your horizons, communicate more with industry professionals, and participate in conferences and events.

4. Only invest in projects that you understand and are familiar with.

5. Do not pursue shortcuts or blindly follow trends; focus on projects that can bring value to Web3.

V. Recommended Learning Resources by Rocky

1. Books related to macroeconomics and cycle theory:

   • Zhou Jintao's "Wave Motion Cycle Theory"
   • Hong Hao "Cycles"
   • Kindleberger "Manias, Panics, and Crashes: A History of Financial Crises"
   • Ross's "The Great Depression Diary"
   • Shiller's "Irrational Exuberance"
   • Mankiw's "Theoretical Evidence Analysis of Economic Cycles"

2. Recommended Twitter accounts to follow:

   • Macroeconomic analysis: @biancoresearch, @matt_levine, @elerianm, @ritholtz
   • Institutions: Sequoia Capital, Multicoin, a16z, etc.

3. Project Research Tools:

   • Messari Report
   • Nansen's Smart Money data
   • LunarCrush( Market Sentiment Observation)
   • TrendX( AI-driven Web3 market sentiment tracking )
   • Alphascan( Early Alpha project capture )