This content summarizes an AMA hosted by E2M Research on Twitter Spaces, featuring Shen Yu (Twitter @bitfish1), Odyssey (Twitter @OdysseyETH), Zhen Dong (Twitter @zhendong2020), and Peicai Li (Twitter @pcfli). The discussion delved into two key topics in the Web3 and crypto space: strategies for long-term asset holding and mindset adjustments after selling too early, with subsequent reinvestment.

The guests shared actionable strategies based on their experiences, such as using the “Four Wallets” rule to allocate assets and avoid emotional decision-making. They advocated investing in core assets like Bitcoin and Ethereum through staged purchases and cold wallet storage for long-term holding. For experimental assets like NFTs, they recommended a small-scale observational approach to explore market potential. Psychological resilience was another highlight, with methods to limit impulsive actions and adapt strategies during market corrections. These insights offer a rational framework and long-term strategy for navigating crypto market volatility.

Disclaimer: The guests’ views do not represent those of WuBlockchain, which does not endorse any products or tokens. Readers should adhere strictly to the laws and regulations of their jurisdictions.

This audio was transcribed using GPT, and minor errors may exist. Listen to the full podcast:

YouTube:

Spotify: https://creators.spotify.com/pod/show/7qfkmlvhrl8/episodes/ep-e2r86gn

The Definition of Good Assets, Emotional Management, and the “Four Wallets” Rule

E2M: Welcome to E2M Research’s Friday AMA! Today’s topic is about holding quality assets long-term and how to reinvest after selling too early. Before we begin, let’s emphasize risk management. With the recent market rally, it’s critical to stay calm and avoid FOMO. The discussion is for informational purposes only and not investment advice.

We’re excited to have Shen Yu as today’s special guest to explore these topics. Whether it’s about long-term holding strategies or reinvesting after a misstep, both Peicai and Shen Yu will share valuable insights from their industry experience.

Shen Yu recently posted about Bitcoin’s 100x growth from 2021 to 2024. To start, Shen Yu, could you share your perspective on defining “good assets” and the strategies for holding them long-term?

Shen Yu: Sure, this question can be divided into two parts: defining “good assets” and strategies for holding them long-term.

1. Defining Good Assets: Identifying a good asset involves making a forward-looking judgment based on current knowledge. If an asset shows a clear growth trajectory or pivotal trends already visible today, it could qualify as a “good asset.” Ultimately, this evaluation is subjective and may vary among individuals.

2. Strategies for Holding Assets Long-Term: The key issue isn’t just rational decision-making but psychological resilience. Since human behavior often leans toward irrationality, it’s essential to set rules and mechanisms during calm moments to mitigate the impact of emotional decisions. Even after making an impulsive choice, these safeguards can help minimize overall losses.

To address this, I’ve developed a system called the “Four Wallets Rule,” dividing assets into four categories:

● Cold Wallet: This is for core assets, with barriers to accessing them. It discourages impulsive actions during FOMO. Typically, this wallet holds over 60% of my assets.

● Warm Wallet: Used for stable cash flow to maintain composure during bear markets, it holds 20–30% of assets.

● Hot Wallet: Dedicated to speculative or high-risk activities like NFTs. The allocation is small, and profits are periodically transferred to cold or warm wallets.

● Fiat Wallet: Operates on a “withdraw-only” policy and covers annual living expenses through a 4% withdrawal rule. This ensures financial independence even if other wallets incur losses.

This system helps me maintain stability during emotional highs and lows. Losses in speculative assets are manageable, as they’re pre-assessed under rational conditions.

Learning from Mistakes to Build Long-Term Strategies

Odyssey: Shen Yu, you mentioned learning about portfolio management from senior investors early on. Was there a specific turning point or major lesson that led to your current system?

Shen Yu: I’ve learned from observing others’ mistakes. For instance:

1. A Case of Selling Too Early: In 2012, a traditional finance veteran raised ¥3 million to buy Bitcoin at ¥30–¥50. He liquidated his position when Bitcoin reached $50, missing its rise to $1,000. He became a vocal Bitcoin critic afterward — a classic example of failing to recover after selling too early.

2. A Panic Sell: In 2013, a market crash caused a friend to panic-sell Bitcoin at ¥2,000. The psychological trauma left him unable to re-enter the market.

These stories, coupled with my experiences of prematurely selling Litecoin and Dogecoin, underscored the irrationality of human behavior. I started keeping decision logs, documenting emotional states, reasoning, and predictions for review. This practice revealed patterns and areas for improvement.

Errors are valuable feedback, and reflecting on them can foster growth. I’ve noticed that long-term survivors in crypto share traits of openness and adaptability. These qualities helped me develop a portfolio system that balances risk and reward, tailored to my goals.

Avoiding Investment Traps Through Layered Management

Odyssey: How do you ensure reflective practices lead to productive adjustments instead of new pitfalls?

Shen Yu: My portfolio is structured to manage asset tiers based on market value and long-term viability.

Not all assets qualify for core holdings. Many remain in “entertainment” allocations, only advancing after surviving multiple market cycles. This layered approach mitigates risks from irrational responses to asset performance.

Buying Back After Selling Too Early

Odyssey: Have you ever repurchased assets after selling them too early?

Shen Yu: Yes, Ethereum is a prime example. I initially bought Ethereum at ¥2 and sold much of it at ¥20. Later, I cleared most of my holdings around ¥140 following its hard fork rollback, which challenged my confidence in its PoW model.

However, the rise of DeFi revealed Ethereum’s unique ecosystem potential. Recognizing its monopoly-like position after further growth, I rebuilt my holdings. Identifying turning points is crucial for this kind of decision-making.

I believe this turning point was pivotal. It marked Ethereum’s gradual development into a monopolistic asset, even if I didn’t fully grasp the significance at the time. As a close observer, I relied on continuous knowledge accumulation to determine that Ethereum had become a core asset worth a heavy allocation. This serves as a textbook case of repurchasing after selling too early.

How to Identify and Abandon Assets Unsuitable for Long-Term Holding?

Odyssey: Some might think your ability to repurchase assets with ease comes from having enough buffer to not worry about those assets going to zero. On the flip side, while you are quick to allocate heavily to a promising asset, how do you decide when to abandon one? For instance, regarding BAYC NFTs we discussed about a year ago, do you plan to hold them until they lose all value, or do you have another approach?

Shen Yu: Regarding BAYC and similar NFTs, I never allocated heavily to them. They were placed in an observational portfolio. These NFTs were primarily bought with a consumer mindset — they seemed to have potential but were uncertain. In my overall portfolio allocation, NFTs were kept below a critical threshold, residing mainly in hot wallets or consumption wallets. Only a few NFTs with rare value or sentimental significance were moved to my cold wallet.

My core approach is that an asset must undergo long-term observation and rigorous evaluation before I allocate heavily to it. It needs to meet numerous criteria and pass a key turning point I deem significant before being classified as a core asset. Until then, these assets serve more as tools for building understanding and are funded with small, discretionary amounts meant for exploration or speculative purposes. For assets that fail to meet the criteria for heavy allocation, I remain flexible rather than holding them blindly to the point of total loss.

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