Bottom Fishing at the Right Time: Exploring Targets and Strategies for Secondary Market Bottom-Fishing in a Bear Market
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Bottom Fishing at the Right Time: Exploring Targets and Strategies for Secondary Market Bottom-Fishing in a Bear Market
Although technology keeps iterating, each cycle doesn't seem to be driven by truly groundbreaking technological advancements.
Navigating Web3 tides with focused insightsHost: Alex, Research Partner at Mint Ventures
Guests: Jiang Xin, Founder of Old Fashion Research; Zheng Siwei, Head of Research at Top Fund; Lawrence, Researcher at Mint Ventures
Recording Date: 2023.11.03
Hello everyone, welcome to WEB3 Mint To Be, brought to you by Mint Ventures. Here, we continuously question and deeply reflect—clarifying facts, understanding realities, and seeking consensus in the world of Web3. I'm Alex, research partner at Mint Ventures. Today, we’re joined by three special guests to discuss the topic of buying the dip during bear markets.
Disclaimer: The views discussed in this podcast do not represent the opinions of our guests’ affiliated institutions, and any mentioned projects should not be taken as investment advice.
Alex: In today’s episode, we have three Web3 investors with extensive experience across both primary and secondary markets. First is Jiang Xin, who previously led investments at Distributed Capital and Binance Labs, and is now founder of Old Fashion Research. Next is Zheng Siwei, head of research at Top Fund. And finally, Lawrence, a researcher here at Mint Ventures. Let’s start with brief introductions from each of you—please say hello and share a bit about your focus areas.
Jiang Xin: Hi everyone. Old Fashion Research is a multi-strategy fund. We used to focus on M&A and were primarily active in the primary market. Recently, we’ve started allocating more into secondary market investments and portfolio management.
Zheng Siwei: Hello. Top Fund focuses on two main activities: publishing research reports for public projects, and participating in secondary market investments. I lead the research operations and also take part in some of our secondary market trades.
Lawrence: I conduct research at Mint Ventures, focusing mainly on DeFi, stablecoins, derivatives, and innovative on-chain projects.
Market Cycle Assessment
Alex: Our first question is about market cycles. Some believe we are still in a bear market or its late stage, possibly facing an extended downturn. Others argue we're already in the early stages of a bull market, and won’t see another prolonged, deep bear cycle. How do you each assess where we stand in the current cycle?
Jiang Xin: Let me start. Personally, I don't think we're fully in a bear market from a liquidity standpoint anymore—though we’re still far from the overflowing liquidity typical of a bull run. Still, we can see liquidity gradually returning. My view leans toward late bear/early bull territory. Yesterday was particularly telling—I recall SOL's trading volume hitting around $3–4 billion, while its market cap is only ~$16 billion. Ethereum and Bitcoin volumes are also rebounding. BTC traded around $34 billion yesterday, ETH around $13.9 billion—roughly 30%–40% higher than year-end 2022 levels (I’ll double-check the data later). So volume-wise, we’re clearly moving past liquidity drought.
Back in late 2022, extreme illiquidity caused abnormal price spikes and flash crashes. That seems to be fading. On sentiment, we’re starting to see thematic rotations—people paying attention to sector rotation. The signal isn’t strong yet, but emerging. Certain strong tokens show signs of accumulation. Even BTC has broken out of its long consolidation range. Overall, I sense a warming trend.
Zheng Siwei: Just to clarify—this is my personal opinion, not institutional. Let me state my conclusion upfront: I agree with Jiang that we’re not yet at the point where we should deploy all capital like it’s full bull market mode. Previously, I divided cycles simply into bull and bear phases. Now, I find it useful to add a third phase: one-way up (bull), one-way down (bear), and a transitional middle phase. Last cycle, March 2020 to November 2021 was clearly bullish. November 2021 to November 2022 was clearly bearish. But since then—from late 2022 onward—I see a nuanced third stage.
This phase is tricky because BTC and altcoins aren’t moving in sync—nor are alts aligned with each other. Using just two phases created contradictions in my own investment approach. Right now, I feel similar to how I felt around 2019. BTC likely bottomed last November, but many alts are still finding their lows—some showing early signs, others still descending. I haven’t deployed all capital; I don’t believe a full bull market has begun.
Lawrence: My view aligns closely with theirs. If we’re not in late bear, we’re at least mid-to-late bear. There may still be downside, but buying now—even if not perfectly timed—feels like losing time rather than money. Regardless of which metrics you look at—on-chain data, stablecoin supply—it still looks like mid-to-late bear market consolidation.
Alex: We've been discussing cycles with others and noticed something interesting: there’s surprising consensus on when the bull-bear transition might happen—especially around H2 2024 to 2025. Could this consensus create reflexivity? If everyone expects a bull run, could it fail to materialize? Is this alignment real, or just within our bubble?
Zheng Siwei: The sample I’ve gathered is small. Yes, some people think late 2024 or end of 2025 marks the start. But others are more optimistic—some believed the “iron bottom” had already formed and that the bull market was already underway. The shift from bear to bull isn’t always clear-cut. Some feel we’re already in transition.
Others cite catalysts like ETF approvals and next April’s halving potentially igniting the market. So within my limited circle, views aren’t unanimous. But if most voices truly converged on late 2024–2025, then yes—reflexivity would kick in. Expectations of a bull run would prompt early accumulation, distorting the timeline.
Alex: Jiang, you’re based overseas and interact widely with founders, funds, and investors. What’s your take?
Jiang Xin: Great point—known expectations do matter. This happens in traditional markets too. For example, rate hike forecasts impact equity markets preemptively. Crypto exhibits less reflexivity than equities, though. Earlier this year, crypto and equities were tightly correlated, but recently they’ve decoupled somewhat—while stocks pull back, crypto continues rallying. So crypto does have its own rhythm.
Macro cycles influence expectations—e.g., when rate cuts begin, a bull run might follow. But crypto also has unique industry traits due to smaller market size. One factor is ETF speculation—timing matters. Second, the U.S. regulatory environment remains largely negative. Last cycle saw excessive optimism around regulation. When will that heal? After SBF’s case concludes, will mainstream perception shift positively? These industry-specific shifts affect timing—and purely macro analysis may miss them.
Alex: Have you encountered anyone who believes a bull market won’t come until 2025—or ever—and whose reasoning made sense?
Jiang Xin: Good question. I’ve heard arguments that the next bull market may not reach highs like $69K. Let me summarize the rationale—not that I fully agree. One argument: over-optimism on U.S. regulatory tailwinds last cycle. Back then, nearly every major institution entered—retail via Silvergate, PayPal, Robinhood. Access was smooth. FTX offered seamless deposits/withdrawals. Leveraged plays through SBF, Three Arrows, etc., inflated prices artificially.
Such conditions are unlikely to repeat under tighter regulation. Having experienced one frenzy, people may hesitate to relive it. Also, overall market cap is much higher now. BTC sits at ~$600B. Doubling or tripling would require $1.2–1.5T. Many doubt BTC’s utility justifies such valuation. I’m more optimistic personally.
Bear Market Buying Strategies
Alex: So overall, we seem to agree we’re in late bear/early bull. There’s a famous saying: “Bull markets are born in hesitation.” When views are mixed and murky, that’s often when a new bull begins. Let’s get specific. Whether or not fully invested, you’re likely executing some buy-the-dip strategy. How are you approaching it—what’s your framework? We’ll save specific picks for later. Lawrence, please go first.
Lawrence: I’m currently near full position, though planning to trim soon. I started DCA’ing post-FTX collapse last November, feeling things were extremely pessimistic—uncertain if it was the bottom, but began accumulating anyway. Didn’t expect the rally this year to be so fast. Was a bit confused—how did prices jump so quickly? But over the past year, consistent DCA worked well.
Alex: Let me share our firm’s approach. We bought heavily during two key events last year: Luna’s collapse and FTX’s implosion—essentially during unexpected, extreme market shocks. I added significant personal exposure then too. Currently, I’m fully invested with slight leverage—using spot holdings as collateral to borrow a small amount for additional allocations. However, after recent sharp rebounds, I trimmed some positions. So now I’m slightly leveraged, but conservatively.
My general philosophy: I don’t DCA. I prefer large buys during extreme events. If another shock occurs, I’ll increase leverage. Otherwise, I’ll hold. If prices rise too fast, I may reduce exposure—betting on future volatility or black swans. If none occur, my bull market returns may be modest. That’s my personal strategy. Zheng, how about you—what’s your or Top Fund’s reference approach to buying the dip?
Zheng Siwei: Let me speak personally first. Specific strategies vary by investor style. Mine leans three ways: focused on alts, rarely touch BTC/ETH; long-term oriented, avoid short-term trades; mostly left-side investing, rarely right-side. Given that, my positioning differs. Overall, I’m relatively light. As for timing: Alex mentioned bull markets emerge amid uncertainty. From late bear to early bull, I start by allocating to BTC/ETH—to avoid missing out, and because I’m unsure if it’s truly the start. Holding BTC/ETH ensures I won’t completely miss gains, and drawdowns would be manageable later.
Last cycle, late 2019 was already solid. March 2020 was a once-in-a-decade crisis—but I won’t base this cycle’s assumptions on such low-probability events, though black swans remain possible. When I sense a clearer shift toward bull, I’ll start adding alts. Alt buying is staggered. As noted earlier, alts move independently. Suppose I watch ten promising alts—over two months, maybe three are fully loaded, six partially, one untouched. That’s the challenge: judging different assets’ bottoming timelines and price points.
So I time entries based on individual alt ranges. I keep flexible capital aside. Last cycle, I was confident my picks would outperform. But reality showed even obscure tokens exploded. So I now include a small right-side component—experimenting with trends. Left-side remains core; right-side is supplementary.
Alex: You mentioned alts—when buying alts in bear markets, what criteria guide your selection? Any framework?
Zheng Siwei: Framework is simple: good project + good price. Simple in theory, hard in practice. A “good asset” either means excellent fundamentals—even if price isn’t compelling—or mediocre fundamentals but extremely attractive pricing. Take Uniswap: widely seen as fundamentally strong. But is the price attractive enough? Will it deliver outsized gains next bull run? With high certainty? Using expected value math, even top-tier projects may not offer great risk-reward.
Conversely, some projects lack blue-chip quality, face uncertainties, could succeed or fail. I usually skip these—unless FDV drops below $100M. At that point, I apply looser standards. Below $10–20M? I’ll risk a small allocation. If it fails, so be it. But if it succeeds, returns could dwarf those of blue chips like UNI. So I balance fundamentals and price—often 50/50, sometimes 60/40 favoring price. In this space, price volatility is extreme.
Alex: That’s your personal view—does your fund operate differently?
Zheng Siwei: Yes, due to scale and operational style. The fund has multiple PMs—I manage one portion, following my personal style per our CEO’s directive. Mixing styles poorly executed leads to worse outcomes. Two key differences:
First, larger capital prevents aggressive moves I might make personally. I may occasionally chase right-side opportunities, but large funds act only with high conviction.
Second, diverse PMs mean varied strategies. Some align with mine, others differ. Our CEO adjusts allocations per PM—giving more weight to those whose style fits the expected market rhythm.
Jiang Xin: Similar to Zheng. I’m not fully invested. Pre-September, I was nearly flat. Bought a little in September, sold some during October’s surge. Now roughly half-positioned. I rarely allocate to BTC—seek higher risk/reward. I’d fill ETH first. For alts, same as Zheng—I track a list of 15–20 names, can’t load all due to diversification limits. Also watch theme rotation.
That’s why I’m not fully in—still uncertain on the macro thesis. I have a rough idea, but nothing as clear as 2019–2020. Back then, valuations were cheaper. Now, even with a solid narrative, top projects feel expensive. I’m waiting—for a dip, a mispricing opportunity. Or if no pullback comes, I may buy in anyway. Still watching for volatility.
Alex: When selecting assets, I see two approaches—neither inherently better. One emphasizes business quality: strong model, moat, evaluated via fundamentals. The other focuses on narrative, market trends, emotions—guessing which themes will ignite next. Both have delivered wins and losses. Jiang, when picking alts, which dominates your portfolio—and why?
Jiang Xin: I lean toward stronger fundamentals. With deep primary market experience, I trust fundamental analysis. It helps judge whether prices are cheap or reasonable, and whether assets are undervalued. That said, I incorporate sentiment. Like Solana last September—negative narratives despite solid operations—that’s appealing.
Trend-chasing is tough. It suits two types: those who create trends—like Western funds that craft narratives to pump their holdings—or those extremely diligent, monitoring news 24/7 via teams or algorithms. We fit neither. We prefer long-term fundamental bets. One edge as a primary fund: direct access to teams, progress updates, roadmaps—giving deeper insight into fundamentals.
Lawrence: I use both. Buy fundamentally sound, familiar projects driven by catalysts. Also dabble in narrative-driven plays—usually small positions. Based on observed market sentiment, I’ll buy tokens with unclear models but strong stories. Goal: earn alpha over ETH.
Specific Sectors and Picks
Alex: Let’s go deeper. Any specific sectors or picks you’re acting on? E.g., favor DeFi, or sub-sectors like derivatives—any particular projects? Our team recently screened secondaries—why not start with Lawrence?
Lawrence: I focus on stablecoins and derivatives. Recent screeners flagged DYDX, GAINS, SNX, Liquity. Also lower-cap stablecoins like Reflexer and OHM—small projects worth watching. Bullish on derivatives because they’ve outperformed broader market this bear cycle. GMX alone contributed nearly half of Arbitrum’s peak TVL, with high DAU. Sector health is solid. Plus, innovation—e.g., Apollon offering high-leverage, gambling-style products. Adoption and product depth are rising. Derivatives have been my top pick this past year.
Stablecoins present another case. Market potential is huge, but few standout projects. Leading ones all have issues. Current RWA wave—MakerDAO to Frax—seems near completion. I didn’t include them. Staking is similar—few compelling picks. Was strong pre-2023, but now tracks ETH closely—no alpha. Plus, changes in ecosystem—Vitalik’s recent thoughts. So my preferred sector is derivatives. Stablecoins and staking are neutral.
Jiang Xin: I like sector rotation logic. First, I expect DeFi to lead. Narratively, people love stories—BTC/ETH price rises boost DeFi TVL mechanically. But DeFi’s core issue now is capital outflows—especially vs. high U.S. bond yields.
RWA acts as a hedge—like allocating to Treasuries. When DeFi yields beat bonds—say 10–20% in bull runs—capital flows in. So I prioritize early beneficiaries. Key DeFi “reservoirs”: lending (MakerDAO), RWA, or other leaders—depending on token structure and market cap. I’ll allocate across major DeFi pillars: DEXs, lending, staking. Also bullish on derivatives—but caveat: explosion of new primary market projects.
I don’t actively track the space, but weekly a new perp DEX pitches me. We’ll overweight established secondaries, but monitor new launches for innovation. Legacy players like DYDX, newcomers like Vertex, Hyperliquid—all have potential. GMX lacks innovation now, but team may evolve. On decentralized stablecoins, I agree—no breakout project yet. But I expect new designs in bull market. Prisma’s recent buzz—liquid staking tokens as collateral—is illustrative. Restaking tokens as stablecoin backing? New mechanics possible.
I’ll wait—see if new projects launch at sane valuations. LSTs may be ripe now. I was very bearish on Lido late last year, but now market recognizes concentration risks. Centralization awareness creates entry opportunity. Watch for upgrades—Cancun pre-Q1 2024. ETH is weak now—breathing room. While BTC pauses post-rally, ETH ecosystem may catch up. I’m optimistic long-term—problems exposed are healthy. Discussion around them benefits secondary markets.
Zheng Siwei: Early in this bear, I sought overlooked or nonexistent sectors poised to explode next cycle—like GameFi or NFTs circa 2018–2019. Disappointingly, after two years of searching, I haven’t found one. Represents massive opportunity—but missed it. Possibly two reasons: I’m wrong—narratives exist but I lack imagination. Or I’m too focused on secondaries, missing primary innovations. Truly novel ideas may emerge off-public-radar. So mid-cycle, I shifted—now exploring existing sectors with big potential. Currently, L2s and NFTs. Let me explain.
L2s feel like last cycle’s L1s. Each cycle sees new chains/platforms/infra. 2015–2016: Bitcoin clones with improvements (privacy, throughput). 2020–2021: “Ethereum killers.” Now? Maybe not. Trend favors Ethereum-centric stacks—L2s, even L3s. If I launched a chain today, I wouldn’t aim to kill ETH/BTC. Instead, build on Ethereum’s momentum.
So next battleground may be L2s themselves. Beyond the “Four Heavenly Kings”—Optimism, Arbitrum, zkSync, StarkNet—others may emerge. History repeats: L1s rose and fell—each strong contender had moment of glory, leaving residue. E.g., BNB Chain retained mass-market users, gaming-focused. Solana carved niche via exchange alliances, survived rug pulls with unique rhythm. Same for L2s? Native events, token wealth effects, user migrations. Post-cycle, some L2s retain users/ecosystem, others fade. Opportunity exists.
Second: NFTs. Honestly, in 2018–2019, I imagined DeFi, gaming—but NFTs? Never crossed my mind. Their emergence stunned me. Missed early opportunities. Despite one boom, NFTs remain early. I agree with Shima (Token Labs): if ERC20s represent money, NFTs represent objects—both trusted, verifiable digital assets on blockchain. Real-world equivalents: money and property.
Today’s NFTs are PFP-dominated—far from diverse. PFPs have flaws—many projects misexecute. Still, early days. Most projects experimental. Room to grow. But picking becomes painful: strong projects often expensive; cheap ones unappealing. Trade-off persists.
Alex: On NFTs—do you prefer direct NFTs or related protocols (lending, perps)?
Zheng Siwei: For large allocations, I prefer protocol tokens. Better liquidity, higher certainty. NFTs offer sky-high upside—could see >100x, unlike blue chips. But certainty low—quality rate poor. Bull market spawns thousands: PFPs, metaverse, land, art. I doubt I can identify winners reliably. Might need to invest in 20 to catch one 100x. Net return? Not impressive.
So I prioritize infra. Occasionally, if a PFP/art piece strongly resonates—shows desired traits—I’ll buy, but small size. Unlike tokens, no AMM liquidity. Exiting failed NFTs is hard.
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