Podcast Notes | Interview with Full-Time Trader Ansem: Cryptocurrency Investment and Trading Strategies
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Podcast Notes | Interview with Full-Time Trader Ansem: Cryptocurrency Investment and Trading Strategies
Ansem suggests setting specific time periods to avoid looking at the market in order to maintain balance.
Navigating Web3 tides with focused insightsCompiled: Revelo Intel
Translated: TechFlow
On the December 13, 2023 episode of the Crypto Market Wizards podcast, Taiki and Ansem discussed current market conditions, the crypto bull market, Layer 1 versus application tokens, and other topics.
Host: Taiki Maeda - Founder of HFA Research
Guest: Ansem - Full-time cryptocurrency trader
Original Title: Crypto Market Wizards – Crypto Markets with Ansem
Air Date: December 13, 2023
Ansem's Thoughts on the Market
Ansem said he has been trading cryptocurrencies since 2017. He first learned about crypto while studying computer science at Georgia Tech in 2016.
He added that after graduation, he began trading crypto while working as a software engineer. Since mid-2021, he has been trading full-time.
Ansem said he expected Q4 to be bearish but was surprised by the strong rebound in October. Many altcoins achieved significant gains.
He added that BTC is consolidating around $40,000 and may continue to range through Q1 2024. The recent rally was driven by expectations of ETF approval in January.
The Upcoming Bull Market
Ansem said Layer 1 trading will continue to evolve because certain L1s like Solana offer functionalities still missing on Ethereum’s mainnet. Compared to Ethereum, Solana offers higher throughput and lower transaction fees, which are attractive to developers.
He added that as more applications gain traction in DeFi and other sectors, different L1 blockchains will compete based on performance and user adoption. Other L1s such as Celo also show potential due to technological innovation.
Layer 1 vs. Application Tokens
Ansem finds the application layer the most interesting part of this market cycle. He is excited to see what kinds of new applications can be built beyond DeFi lending.
He mentioned that NFTs were one of the key innovations of the last cycle. In this cycle, he looks forward to exploring social apps, decentralized physical infrastructure networks (DePIN), and AI-related projects.
Ansem said that with improved technical infrastructure, developers can now build various innovative applications.
Additionally, he is excited about the possibilities for AI developments within crypto.
Ansem said projects like Helium and Hivemapper demonstrate that crypto offers more than just speculative opportunities. Unlike protocols such as AMMs or lending markets, Helium is not easily replicable.
He regretted not investing directly in $HNT, instead purchasing mining hardware. He believes active crypto users should be the first to explore and promote new applications.
Using Twitter for Crypto Investing
Ansem said he had always been active on Twitter even before entering crypto. He added that in 2017, he learned trading skills from experienced traders on Twitter. Over time, he used Twitter to gather information across various areas of crypto.
Ansem's Trading Style
Ansem recommends allocating 70% of the portfolio to major coins like BTC, and investing the remaining 30% into more speculative altcoins.
He mentioned that there is a strong case for short-term altcoin trading based on fundamental events and technical chart analysis.
How Investment Decisions Are Made
Ansem said he spends time researching a project and clearly understands why he holds its token, generally favoring projects he intends to hold for at least six months or longer. If there's strong long-term conviction, he isn't concerned about short-term dips or sideways movement.
He added that he started watching Solana in early 2021, observing its network issues and lack of applications at the time. He has since witnessed the growth of Solana’s ecosystem, with new teams building on it.
Ansem engages in short-term trading involving GameFi, AI, memes, and similar sectors. He combines technical analysis (TA) and fundamental analysis (FA).
By drawing historical comparisons, Ansem illustrates trends in innovation—history shows that being first doesn't always lead to ultimate success. Examples include Yahoo vs. Google, Apple vs. Microsoft, highlighting how initial consensus opinions often prove wrong over time.
He added that considering long-term prospects and technological progress is important when evaluating potential success.
Ansem said Solana’s past outages could undermine his bullish thesis. If the network stability issues attempted to fix in 2022 persist, Solana may need to be reevaluated.
He added that market performance is another factor. If the market fails to reflect bullish expectations, investment decisions may need reassessment. For example, with underperforming altcoins like $LTC and $XRP, if prices remain stagnant, investors should reconsider whether the position remains justified.
Avoiding Information Bubbles
Ansem said investors tend to form information bubbles during sharp price increases. $BTC experienced this in its early days, and $ETH faced similar skepticism from $BTC supporters.
(Editor’s note: An information bubble typically refers to an environment where individuals are only exposed to information and viewpoints that align with or reinforce their existing beliefs. In such environments, people rarely encounter or consider perspectives that differ from their own.)
Ansem added that crypto markets easily develop cult-like followings around specific tokens, regardless of their actual value or potential.
Traits of Successful Traders
Ansem said the ability to accept mistakes and remain humble is crucial. Managing emotions during market volatility is key to making sound decisions.
He added that accepting errors enables continuous learning and improvement. Good risk management and maximizing risk-reward ratios are more important than being right on every trade.
Ansem said consistent practice, learning, and adaptation are necessary to become a successful trader. Continuously refining strategies, analyzing market reactions, and keeping trading records are all part of growth. In trading, price is paramount; news and fundamentals may influence decisions, but he primarily relies on technical indicators.
Balancing Trading and Life
Ansem said it's essential for traders to properly handle losses without letting them affect future decisions. Many people avoid trading for a week after a loss due to emotional reactions.
In response to a viewer question about balancing trading with other life priorities like family and mental health, he recommended setting specific periods to stay away from the market to maintain balance. This might include weekends or certain hours each day. It's important to have strict time boundaries and not be fully immersed in trading at all times. Maintaining relationships and activities outside of trading is essential.
Most Common Trading Mistakes
Ansem said overexposure and going all-in are common investment mistakes that can lead to significant losses if predictions are incorrect. Diversified investments and maintaining a long-term portfolio represent a more sustainable strategy.
He added that using leverage and heavily betting on altcoins without proper risk management can result in massive losses. Being overly attached to certain assets regardless of market conditions may cause one to hold losing positions even as they depreciate. Regardless of long-term belief in an asset’s potential, timely profit-taking is critical.
Ansem recommended objectively evaluating each position in the portfolio. For example, if you sold all your holdings today, would you repurchase 10% of that asset tomorrow? If the answer is no, consider reducing or exiting that position. This method helps maintain objectivity and make informed portfolio decisions.
He added that in real life, most people still view crypto as a scam. However, over the past decade, crypto has demonstrated intrinsic value, with BTC widely regarded as digital gold. For people in developing countries lacking traditional banking infrastructure, stablecoins represent another vital aspect of crypto, offering remittance solutions independent of centralized banks.
He added that DeFi is an innovative component of crypto with significant potential for financial advancement, so it shouldn’t be dismissed as fraudulent.
Ansem said while decentralized exchanges like AMMs have succeeded, there remains room for improvement in speed and cost compared to centralized exchanges like Binance or Coinbase.
He believes further innovation in DeFi could narrow the gap with centralized exchanges. The future of DeFi may involve advances in gaming and other application areas, extending far beyond the current infrastructure.
Trading Rules vs. Intuition
Ansem said a key trading rule is allocating 70% of the portfolio to long-term holdings and 30% to short-term trades. Keeping trading records and adhering to predefined rules benefits trading performance.
He added that failing to follow one’s own rules can lead to errors and poor decisions. He emphasized reviewing past trades through recorded logs.
Ansem added that understanding one’s emotional responses under different market conditions helps improve current trading decisions. Intuition may play a role in trading. Sometimes, an opportunity arises and one acts immediately based on instinct. Intuition should not replace proper analysis, but experienced investors may legitimately act on intuition.
Cosmos Ecosystem
Ansem said he remains bullish on $ATOM. For many people, understanding the diversity of the Cosmos ecosystem can be challenging because each chain operates independently.
He added that unlike Ethereum, there is no single dominant chain in the Cosmos ecosystem that serves as a focal point for investor attention.
He added that when making trading decisions, he considers capital flows into different ecosystems. He emphasized the importance of identifying which projects within an ecosystem are likely to attract investment.
Valuation Framework
Ansem acknowledged that valuing cryptocurrencies is challenging due to the industry’s early stage. Traditional metrics like P/E ratios may not apply, as crypto is primarily driven by the growth potential of blockchains and protocols.
He added that for him, comparative valuation is a more practical approach. He compares different cryptocurrencies based on factors like market cap and market share.
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For instance, if $ETH has a market cap of $250 billion and $SOL has a market cap of $10 billion, he might consider $SOL undervalued relative to $ETH.
Ansem said he frequently engages in hedged trades—holding long positions in one asset while shorting another. This strategy allows him to capture relative value opportunities between different cryptocurrencies.
He said due to speculative premiums and unpredictable market behavior, he finds it difficult to predict specific price targets for cryptocurrencies. However, he relies on technical analysis to identify price trends in real time.
Ansem said technical analysis helps him understand how price tops and bottoms form, enabling him to make informed judgments about future price movements. He emphasized that understanding the human psychology reflected in candlestick charts is crucial for successful trading decisions.
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