Original title: How I Built 8-Figure Wealth in Crypto (And Aiming for 9)
Original author: @WarrenNakamotoX, crypto investor
Original compilation: Groove Small Deep
Editor's note: This article shares the author's experience of how to achieve an eight-figure fortune with cryptocurrency and aim for a nine-figure goal. The core lies in designing a long-term compounded portfolio, emphasizing discipline, patience and realistic expectations. The author consistently outperforms Bitcoin by holding Bitcoin, borrowing funds for short-term trading, cyclical ace investing, and angel investing, while protecting downside risks. The key to success is to focus on your circle of competence, avoid chasing short-term profits, and enjoy the investment process to achieve solid wealth growth.
The following is the original content (the original content has been edited for ease of reading and comprehension):
What's the best thing cryptocurrency can give you?
= Life-changing rewards
What's the ugliest thing that cryptocurrency can take away?
= All the benefits you've ever made
I know why you're here, for the same reasons as me:
= Make money. Life-changing money.
We know it's possible because we've all heard the success stories. But let's be honest, you've also heard of people who have nothing in crypto and have never turned over.
So, the real question is: what distinguishes these two types of people?
What is the real formula for success? How to stop "losing all the games"?
That's exactly what I'm going to break down in detail in this article.
As you know, the total cryptocurrency market capitalization has been growing. I believe it will continue to grow and may even reach $100 trillion one day.
· The global stock market is currently $126 trillion,
· The global bond market is $140 trillion,
· The real estate market is about $400 trillion,
· Cryptocurrencies are only $3.5 trillion.
Bitcoin (BTC) is already one of the top five assets in the world by market capitalization, and I am not at all surprised that it could become the number one asset in the future. In the next 24 months, I believe Bitcoin will surpass Microsoft, Nvidia, Apple to become the world's second largest asset.
But it's a shame: if the market continues to grow and you're still losing money, there's definitely something wrong. It could be that your approach is wrong, or that your strategy or skills need to be improved.
In any case, something needs to change.
The most important change, and what most people get wrong, is expectations. They see someone achieving a 50x or 100x return, so they jump in and chase the same gain.
I've seen too many of these people. Some people even make a lot of money at one point, feel invincible, and then quickly lose it again. Why? Because they never had a system, they lacked discipline, they didn't set really reasonable goals.
I was able to reach an eight-figure fortune, not because I was a genius, but because I set realistic expectations. Before getting into cryptocurrency, I was around the stock market for more than a decade. My goal is simple: to achieve a compound annual growth rate (CAGR) of 40%. After seven years of compound interest, the capital has increased tenfold. I did it, and I couldn't be prouder.
I know that hearing about a 40% annual return is like a failure for most crypto traders, but at the time, it was already top-notch. Warren Buffett, the greatest investor of all time, has grown at an average CAGR of just 19.8% since taking over Berkshire Hathaway in 1965.
19.8% made him a legend. Sounds low, right?
But can you maintain a return of 19.8% every year for 60 years in a row? Experiencing wars, market crashes, recessions, and chaos?
That's the real strength! Not those huge returns that come and go, but those that are quiet, boring, and consistently outperform the market.
In the stock market, how can you tell if your returns are good?
= consistently outperform.
What about cryptocurrencies?
= consistently outperform Bitcoin.
Why outperform Bitcoin, you may ask? Because if you can't, what's the point of investing in other currencies? Just buy Bitcoin and just lie flat.
As a reminder, Bitcoin has risen more than 10x in the last five years. Do you know how many people have lost money during this time? A lot. If they just buy and hold Bitcoin, the return can reach 1,000%.
For example, when it comes to outperforming Bitcoin, such as:
· If Bitcoin is performing +30% this year and you earn +40%, you're good.
· If Bitcoin falls -25% this year and you only lose -15%, you're still good.
To measure this, you need at least 5-10 years of performance to judge if you're good at it. So, like I said before, it's a long-term game.
It's a game of patience, a game of snowballing.
So, forget about the question of "how to do 100x faster". The real question is: how to consistently outperform Bitcoin and never return to zero?
The answer is portfolio design.
· Design to last;
· Design to compound interest;
· Designed to protect against downside risks while seizing upside opportunities.
Even if you lose, you still have a good chance of winning in the long run. That's how I build and design my portfolio.
Okay, now let's talk about how to actually outperform Bitcoin.
First, make sure your portfolio is 100% Bitcoin owned. This way, you have already matched the long-term performance of Bitcoin by default.
Then, I would borrow money, never more than 50% of my Bitcoin holdings. The annualized interest rate on borrowing is usually around 5%. There are a few things I would do with the funds:
Short-term trading, up to 3 months
I only hit projects with strong fundamentals and easy 2-3x returns, usually those that fall in a bear market but the product is still solid. I usually exit at 50%-100% of the profit.
For example, if you've followed me: $ETH, $PENGU, $ANIME, $COOKIE, $KAITO, and some other things I don't disclose much: $HYPE, $RAY, $JUP, $SUI.
I actively accumulate in a bear market and sell after making a 50%-100% profit. When it comes to a bull market and all coins hit new all-time highs, I usually stop trading.
$KAITO and $HYPE are my key projects for this cycle. But when they fall, I sometimes add to them and do short-term operations.
Cycle Ace, a single-cycle high-conviction investment for up to 12 months
This one really makes me happy. Currently I allocate up to 10% of my funds, but before reaching eight figures, I used to allocate almost 20%. Early success stories were $UNI and $CAKE, which I didn't yet name a "cyclical ace" at the time. Last year I participated in the TGE (Token Generation Event) of $HYPE and achieved a 10x return in a month. Now I'm holding $KAITO, which has doubled and is still strong.
There are two conditions for the cycle trump: "screening" and "timing".
The selection criteria were high-quality founders that are growing fast, have a strong community, have a product that is actually being used, have a lot of attention, and are still in the early days.
Timingally, I only start looking for it in the first year after the Bitcoin halving, and exit after two years at most. At present, this rule has not changed, and it may be adjusted in the future.
Angel investment, up to 24 months
The only reason I created this X account was to get better angel investment opportunities. So far, the results have been good, and through the introduction of friends I know, I have come into contact with excellent project parties.
I now support more than 15 projects. I know it's high risk and high reward, but the money comes from the borrowing proceeds, so there's nothing to lose for me. I did invest in a few bad projects, but the overall return is still good.
With these three strategies, if I make money, I use the proceeds to repay the loan and unlock my bitcoins. This way I only play with profits. If the profit is big enough, I will buy more when Bitcoin is down and repeat the cycle.
What if my trades and cycle aces are performing poorly? First of all, your combination is not dead, Bitcoin is still supporting you. If Bitcoin continues to grow, you can borrow more money to continue playing.
Your portfolio will only end if you borrow 50% of Bitcoin, all your operations go to zero, and Bitcoin plummets by 50%. You're going to have to be very unlucky and make every wrong move to come across this combination.
That's all I do. I don't play small-cap meme coins, I don't trade NFTs, and I don't play perpetual contracts because I'm not good at it. I tried to learn but found out that it wasn't my field. If you're good at it, you can borrow Bitcoin money to do what you're good at. Focus on your own circle of competence, each with different skills.
The most important thing for me: I love my life. I design my portfolio in such a way that I can sleep soundly, enjoy each day, do what I love, and never feel stressed about investing.
Even when I started my Web3 journey in 2017, the goal was never to get rich quick, but to build wealth slowly but surely while enjoying the process.
In 2017, I decided to achieve a fortune of $100 million by 2030. Not by luck, not by gambling, but by building a bulletproof system that compounds over time. I feel like I'm on the right track at the moment, and that's why I'm here to share everything. You don't need to copy 100% of the time, just choose the parts that suit your risk, life, and goals.
I'm not sharing this because I think I'm amazing. I'm still in the learning phase and I'm trying to keep up with this fast-changing industry every day. Hopefully, you can learn something from this article and find useful ways to make your portfolio perform better.
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