Foresight Ventures: How can you win the big deal with a small investment?

1. What is a shitcoin project?

On the blockchain, “shitcoin” typically refers to early-stage projects with no project whitepaper and very shallow token trading depth. The decentralization and low entry barriers of DeFi have enabled numerous high-quality grassroots projects to develop rapidly, but they have also provided a convenient environment for those with malicious intentions to exploit. Most ‘shitcoin’ projects are short-lived, with a lifespan of 1-3 days. Only a few of them manage to experience significant price surges, sometimes reaching a hundred or a thousandfold, and become successful projects listed on major exchanges, transforming into “valuable altcoin”. Even so, there are many individuals who consistently profit a hundredfold from “shitcoins” each year, highlighting the effectiveness of specialized skills in this field. Speculating on or investing in early-stage projects is fundamentally a game of probability.

2. How to operate

Here we take the ETH chain as an example, because after long-term observation, although the gas cost of the ETH chain is high, the wealth effect is more obvious. Other heterogeneous chains such as Solana and Avalanche have relatively weak market sustainability.

2.1 Looking for shitcoins:

First of all, market websites such as dexscreener, defined, dextool, ave.ai, etc. have constantly updated hot trading lists. Projects with large trading volumes and large increases are ranked high. Only with trading volume will there be a future.

Secondly, use bots to monitor on-chain behavior. Common bots include pepeboost, alpha radar bot, nerdbot, etc., which can push real-time transaction data trends. These bots have simple interfaces and will analyze comprehensive scores based on contract security, liquidity pools, number of smart money addresses, etc. Selecting among the high-scoring projects pushed by these bots will achieve twice the result with half the effort.

Finally, follow smart money addresses. The more smart money addresses buy shitcoins, the higher the reliability. Many savvy investors (smart money) specialize in speculating on early-stage projects. They can consistently profit between $10,000 to $30,000 USD per month, with an average profit margin ranging from 30% to 50%. It’s crucial to exclude addresses associated with the project team’s insider information or those that won prizes by chance. Instead, focus on addresses that have a proven track record of securing long-term gains and turning into successful projects.

2.2 Buy a shitcoin:

First of all, position control is the most important. On average, there are 1,000 shitcoins every day, and only 10 of them are worthy of short-term speculation. Bet the same amount on the game multiple times, just like you would in a casino. For example, purchase a fixed quota of 3-5 items per day, and each time should not exceed 5% of the total amount, etc. For shitcoins with a large liquidity pool, the position can be slightly larger as appropriate.

Secondly, use market rules to improve the winning rate and profit-loss ratio of transactions. Bulldog is actually a game that loses money in most cases and makes money in a few cases. It is a bit similar to venture capital. For example, it is common for 8 out of 10 shitcoins to lose money, and the remaining 2 need to recover the costs of 10 projects and make a profit. Cut off losses and let profits run. Some useful rules include:

The law of imitation game: A successful project will attract a large number of imitators. Long, two, and three dragons will most likely make money, and then the subsequent imitators will start to run away. For example, after PEPE became popular, PEPE2.0 also surged hundreds of times. After Harry Potter Bitcoin became popular, Harry Potter XRP also surged hundreds of times.

Time pattern: In the long run, when the market is good, an average of one hundred-fold golden dog will appear every week; when the market is not going well, an average of one hundred-fold golden dog will appear in half a month, and it is especially easy to produce a hundred-fold golden dog at the beginning and middle of the month. In the short term, most valuable altcoins appear between 1-3 o’clock and 5-8 o’clock every day, with a small number appearing between 21 and 22 o’clock.

A handful of one or two hidden gems (valuable altcoins) often contribute 90% of portfolio profits. A good altcoin is often a hot event or mentioned repeatedly by big shots. For example, GROK, Tesla’s artificial intelligence product, was mentioned on Twitter. Musk, the world’s richest man, mentioned it repeatedly and attracted a lot of traffic. There are also good altcoin that fit the culture and provide emotional value. For example, BONK originated from satire on SBF and united the Solana community during the low period. Valuable altcoins that meet the above standards can be held for a long time. Common standards include: the number of currency holding addresses on the chain exceeds 8,000, the daily dex transaction volume exceeds 8 million US dollars, the number of Twitter views exceeds 8,000, and the number of people in the Telegram group exceeds 10,000, etc.

2.3 Selling shitcoins:

80% of shitcoins return to zero on the same day, and 99% return to zero in the long term. The reason why smart money addresses have a high winning rate is not because they only buy profitable bullies, but because they run fast. The shitcoin market operates at 10 times speed, doubling and returning to zero in just a few minutes. Some common selling criteria include: the K-line trend is obviously deteriorating, the 24-hour turnover rate is reduced, the growth of the number of held addresses is slowing down or even declining, etc. Unless the market is hot for shitcoins without actual projects, it is not recommended to hold them overnight.

3. Risk warning

3.1 Gas fee:

The strategy of speculating on early-stage projects is suitable for volatile markets but is less effective in strong bull or bear markets. Speculating on early-stage projects is challenging to execute without incurring substantial gas fees. Taking the example of the Ethereum blockchain, the current cost of buying or selling once can be several tens of dollars, potentially resulting in an actual investment of only $100-$200 USD in early-stage projects. This significantly diminishes the risk-reward ratio. In a strong bull market, the transaction cost on the Ethereum blockchain can escalate to hundreds of dollars, making the strategy of speculating on early-stage projects less feasible.

3.2 Wallet security:

With rampant online hacking activities, it is advisable to separate funds designated for speculating on early-stage projects from your primary funds, and regularly change the wallet address for enhanced security.

3.3 Profit withdrawal:

To gain wealth from the end, use your principal to guard it. Profits from speculating on early-stage projects (“shitcoins”) come quickly but can vanish even faster. It is advisable to periodically withdraw a portion of your earnings, keeping it as a capital base for future opportunities.

As Bruce Lee once said, “I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.” In conclusion, I wish everyone success in speculating on early-stage projects, with gains multiplying a hundred or a thousandfold!

Disclaimer：

1. This article is reprinted from [Foresight Research]. All copyrights belong to the original author [Jonas]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
2. Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
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