Trading Strategies and Market Insights: A Conversation with HighFreedom

HighFreedom is a cryptocurrency trader with a background in macroeconomic analysis at a brokerage. He shares his trading strategies, insights on the macroeconomy, and predictions for the future trends of the cryptocurrency market. Based on years of trading experience, HighFreedom has a deep understanding of Bitcoin, altcoins, and their relationship with traditional financial markets. This conversation also covers the growth path of novice traders and how to build a systematic trading logic.

All text is for sharing only and does not constitute any investment advice.

1. About Trader HighFreedom

1. Trading Strategy

• Earning money in the right direction: During a bull market, earn profits from the overall market rise by holding Bitcoin and not trading for the long term.
• Make money from volatility: Under the premise of controlling leverage, establish a coin-based long position when the BTC price falls into an appropriate range, pledge Bitcoin to borrow part of the funds when the price is right, and then close the coin-based long position after the price rises to increase the holding of Bitcoin.

2. Reasons for the formation of trading strategies

• After experiencing several cycles, I believe this strategy aligns better with my risk preference and capital management strategy, effectively avoiding missing opportunities and reducing holding costs.
• In the high-risk, high-drawdown cryptocurrency market, this strategy essentially achieves a similar effect to high buying and low selling in the spot market. The advantage of using a coin-denominated long strategy is that it can avoid missing the main upward wave in a bull market. The disadvantage is that it is inherently a leveraged long position, which carries the risk of liquidation, so it is important to manage the leverage position risk effectively.

3. Trading Strategy Logic

• Core Logic: Combine directional returns with volatility returns, avoiding missing out on the overall market increase while increasing Bitcoin holdings through volatility operations. Especially during bull markets, timely use of volatility tools to optimize holdings.
• Avoid risks: By using a currency-based long strategy, the risk of prematurely selling and missing out on the market is reduced, especially in cases of a sudden rapid market rise.

4. Expected Earnings

• Long-term gains: During a bull market cycle, this strategy can achieve an overall return of 3 to 5 times.
• Drawdown management: The expected drawdown is controlled at around 20%-30%, with extreme cases potentially experiencing a 40% drawdown.

5. Considerations for Implementing Trading Strategies

• Leverage Control: It is important to strictly control the leverage level during trading, especially when the coin price is high or the market is highly volatile. It is generally recommended to keep leverage within 50% to ensure a larger safety margin.
• Timing: Trading in the currency-based long position requires selecting the appropriate market timing; this strategy is most suitable for a bullish market with fluctuations. It is not applicable during a rapid main upward trend, as the costs of leveraging for long positions are high when the market is at its peak or very heated. The profitability of this strategy is relatively poor, especially in cases of low spot liquidity, so it is advisable to avoid excessive capital costs.

2. Macroeconomics, US Stocks, and the Crypto Market

1. Why do people in the crypto space need to understand the macroeconomic situation in the United States, and what are the core points of focus?

• There are two types of trading entities in the market: on-exchange participants and off-exchange participants. On-exchange participants are usually veterans in the crypto space; they generally have more coins and less money, focusing on indicators such as market cycles, popular sectors, and on-chain data. Off-exchange participants typically enter the market through channels like spot ETFs, characterized by having more money and fewer coins, viewing Bitcoin as a risky asset and flexibly entering and exiting based on market liquidity. In the early days of the market, mainly on-exchange participants were involved, and the scale was small, only requiring attention to technical indicators and candlestick patterns. As the market developed, off-exchange capital surged, significantly increasing its impact on the market, thus it's also important to pay attention to the US stock market and the overall macroeconomic situation in the United States.

• The US stock market has a pyramid-like structure, with money market funds and government bonds at the bottom, and high-risk, high-reward dream companies at the top, where risk and return incrementally increase. HighFreedom believes that Bitcoin's risk and return positioning can roughly be benchmarked against the Russell 2000 and ARKK, possessing certain fundamentals and growth potential, and is a form of digital gold. Altcoins carry even higher risks, similar to high-risk stocks in the US market like GME and AMC.

( 2. How to determine the direction of the current altcoin market through the logic of the US stock market?

• When the price of Bitcoin rises to a certain level, some funds in the market may shift towards higher-risk altcoins, triggering an altcoin market.
• The trends of altcoins fundamentally depend on the liquidity of the entire market. If high-risk stocks in the US stock market, such as ARKK, GME, AMC, perform well, it indicates ample liquidity, and the altcoin market may also experience an upward trend. However, current liquidity is relatively tight, which may suppress the performance of the altcoin market.
• It is believed that the recent market has experienced a leveraged cleanup both on and off the exchange. The cleanup on July 4th was mainly a deleveraging process within the crypto space, while the cleanup on August 5th was primarily related to the deleveraging of funds from the U.S. stock market ), which has little to do with the crypto space itself. However, a macro-level reversal is expected, and a new bull market cycle may emerge in the fourth quarter. Nevertheless, there are still differing opinions and controversies in the market regarding the extent of future price increases.

3. What steps should beginners take to learn trading?

• Basic Learning: It is recommended that novice traders obtain CFA Level 1, to systematically learn the fundamental knowledge of financial markets and master key skills such as macroeconomic analysis and industry analysis.
• Deliberate Training: Pay attention to market dynamics every day, analyze the reasons behind the token gain rankings, and cultivate market sensitivity and trading intuition. At the same time, learn risk management, especially how to control leverage in a volatile market.
• Multidimensional analysis: In addition to fundamental analysis of financial markets, one should also pay attention to on-chain data, the fundamentals of different currencies, etc., to build one's own trading logic and system.

What is a Stop Doing List?

• Overuse of leverage: When trading on-chain, it is essential to strictly control leverage levels. The cyclical effects of on-chain trading are significant, especially paying attention to the behavior of large holders.
• Over-reliance on indicators: With the emergence of spot ETFs, the effectiveness of on-chain indicators may be weakened, and investors need to continuously adapt to new market logic and changes. In the long run, if the macroeconomic logic changes, the indicators that investors focus on should also change accordingly.

3. Recommended Traders

1. Fu Peng: from Northeast Securities, has deep insights into U.S. dollar assets, specializes in systematic analysis, and enjoys sharing insights.

2. Arthur@CryptoHayes: Has a deep understanding of the US macroeconomics. Although the language in the article is somewhat difficult, the viewpoints are highly valuable for reference.

3. Victor@VictorL1024: Fund manager, veteran in the crypto space, early miner, has a unique perspective on the market.

4. Bperson sunong@BensonTWN: An old hand from the last bull market, some key cyclical indicators provided are helpful for trading.