Dialogue KOL: From Novice to Alpha Hunter, the "Grassroots Counterattack" of Sleeping Wildly in the Rain

Author: BlockBeats

In the crypto space, it is becoming increasingly difficult to be a KOL. After the migration from the Chinese crypto community to Twitter, the market and ordinary investors demand KOLs to be knowledgeable, professional, and capable of discovering Alpha opportunities early. Under the increasingly stringent market standards, crypto KOLs are undergoing a new round of elimination, with the older generation gradually fading from the spotlight, while also providing opportunities for the rise of a new generation of capable KOLs.

Recently, we spoke with a capable KOL, Yuzhong Kuangshui (@0xSleepinRain), who has transformed from a "crypto novice" to a Weibo influencer, and now operates his own paid community. His growth trajectory is undoubtedly an inspirational example of a grassroots retail investor's success. Among a group of capable players, Yuzhong Kuangshui feels like the top student in class, organizing and sharing his study notes every day. In his words, his secret to success is "the early bird catches the worm."

From Media Person to KOL

Yuzhong Kuangshui (hereafter referred to as Morty) studied mechanical engineering in college, focusing on material forging, blueprint design, and other engineering techniques. In his own words, "After graduation, I was likely to end up working in a factory tightening screws." However, as a STEM student, he has had quite a bit of connection with writing. From his gold mining adventures during student days to his first job in the crypto space and his current daily work, all have a close relationship with writing and content creation. It must be said that in the current crypto industry, content leverage seems to be the most effective leverage.

Entering the Crypto Space

During college, Morty discovered opportunities on content platforms like Baijiahao, Toutiao, and Huoshan Video, so he and his classmates began operating self-media accounts in bulk, earning their first pot of gold. In fact, at that time, doing Douyin might have been a better choice, but because he wasn't very good at making videos, Morty gave up that opportunity. Looking back now, this basically laid the foundation for his love of writing.

In 2018, Morty graduated, and the platform dividends gradually faded. Realizing the limitations of the industry’s prospects, he went to Hangzhou to seek opportunities. After sending out three or four resumes, Morty joined the crypto media Bibi News, thus beginning his connection with crypto. Once, he had the opportunity to interview Gavin Wood, who had just started Polkadot, and thought he was impressive, so he bought some DOT. Later, at an industry event in Shanghai, Morty received an invitation from the Cointelegraph Chinese team, so he sold his position without hesitation and went to Shanghai.

Before this, the daily tasks in the media were purely work for Morty; he did not participate in trading. By the end of 2021, watching his sold DOT rise from $5 to $60, Morty gradually realized that he could also try trading, "I have a life motto, which is to create memories; you can't just work every day; you have to do something."

BlockBeats: Which project had a significant impact on you at that time?

Yuzhong Kuangshui: The project that impacted me the most was Burger Swap, the first DEX on BSC, which rose from $0.5 to $27 at that time. Since I didn't have much money, I skipped a meal every day to buy it, purchasing a relatively large amount of BURGER at around $0.5, which was about $2000 for me back then. I sold half at around $7, and later it rose to $27, but I didn't sell, and I only sold everything when it dropped back to $7. At that time, I didn't really understand; if I could go back now, I would definitely do better.

BlockBeats: Are there any other projects that had a significant impact on you?

Yuzhong Kuangshui: Avalanche and Solana had a considerable impact on me, with Solana being the most significant. I bought SOL at around $35 to $45, sold 25% at $80, another 25% at $100, and then sold the remaining 25% at $120, finally selling everything at $140. I didn't expect it to rise to $200 in the end.

At that time, I had a position on Binance, but after buying, it "519ed," and when SOL dropped to $26, I added some more. I remember that in the second half of that year, SOL was one of the first to rise, reaching $70 to $80, and then the market went crazy. Later, I also considered Avalanche because the foundation launched Avalanche Rush, providing a lot of incentives, which I thought could attract market attention. However, I completely missed Luna.

BlockBeats: The previous crypto cycle was dominated by "Weibo calls," making it difficult for most newcomers who entered the market in 2021 or 2022 to learn useful investment logic from "signal teachers." How did you build your understanding?

Yuzhong Kuangshui: I encountered many benefactors along my growth path. For example, former colleagues from Cointelegraph Chinese, friends I got to know at the end of 2022, and KOLs I met on Weibo/Twitter taught me a lot. They helped me understand something called information transmission.

For instance, the information from the project party is at layer A, and when it reaches VC, it might be at layer B. If the project party wants to do something, the first to know will definitely be the VC, while the last to know will be the retail investors. This transmission process may determine the price trend, so in the end, retail investors might just be in a "hand-off process." They also made me realize that trading can also be profitable, which sparked my interest in doing a lot of reading and thinking.

Building a Community

In the second half of 2021, while Morty was still working at Cointelegraph Chinese, he initially had no intention of becoming a KOL. However, due to his writing habit, he felt it was a waste to only organize information for himself, so he began sharing it on social media. A year later, he became a well-known crypto KOL on Weibo with over ten thousand followers.

In September 2022, a K-line analyst approached Morty, hoping to collaborate on a paid group, but Morty felt he wasn't ready yet, so he spent time organizing things on Notion and other preparatory work. Although the collaboration ultimately didn't succeed, it provided Morty with a great opportunity to build a community.

By the end of 2023, Morty completely left Weibo and partnered with his good friend Huang Mantou to start his own paid community. Huang Mantou and Morty were colleagues at Deep Tide, where one would gather information while the other would analyze it. After partnering, Huang Mantou focused on finding Alpha information, while Morty analyzed the market and narratives. Since the end of last year, Morty's paid group has grown from 200 members to nearly 500 now. He believes that building a community has also made him a more confident person.

BlockBeats: How large do you plan to grow this community?

Yuzhong Kuangshui: Based on the number of group members, I might stop recruiting after reaching 500. If I were purely looking to exploit people, my community wouldn't have reached this number. I have been very serious about building the community, sharing many important things I see in the group, as well as my personal investment operations.

BlockBeats: Does this judgment bring you positive feedback?

Yuzhong Kuangshui: Yes, and while building the community, I met many interesting people who also provide me with positive feedback. Many group members, although they paid to join, bring me a lot of new thoughts, which I find quite cool. This gives me more confidence and interest in doing this well.

BlockBeats: Does operating this community consume a lot of energy?

Yuzhong Kuangshui: I'm used to it; I combine this with my personal growth. In fact, building a community is also a process of personal growth, which I think is very cool. For example, when you read, you share your thoughts with community members, and then many people will engage with you. This feedback from the community is also a form of information flow, including their current emotions, which I can sense. It’s all about observing the market, understanding the market; trading detached from the market is actually very difficult. I believe this helps me stay more connected to the market.

BlockBeats: Besides your community members, do you frequently communicate with other industry practitioners?

Yuzhong Kuangshui: There are some fixed contacts, including those who trade purely and those who engage in yield farming, as well as some smart money types. I really enjoy this communication process, as it helps me understand, "Oh, they see the problem from this angle." I think it's quite difficult to go solo; there can be information silos in thinking. Currently, Twitter recommendations also create silos, so I expand my information flow through email subscriptions and building Twitter lists.

Cognitive Construction and Investment Logic

Morty firmly believes in the wisdom of the early bird catches the worm. Whether at Bibi News, Cointelegraph Chinese, or later at Deep Tide, he has tried to learn new things from others as much as possible, "You must enhance your understanding; in the end, your assets will definitely return to your understanding curve." His experiences at Cointelegraph and Deep Tide provided Morty with many insights. He learned two crucial points: the transmission of information and the need to establish his own information flow.

BlockBeats: How do you establish an effective information acquisition framework?

Yuzhong Kuangshui: I habitually subscribe to content that I consider good. I have subscribed to many accounts on Substack via email, and I also have lists I follow on X, which contain many other people's viewpoints. I add my own thoughts to make some judgments.

Additionally, I organize what I have been reading into a list. There’s a project library, which includes projects I have looked at, records of community meetings, and many articles I consider good. This method may not be perfect, but I believe it can generate some thoughts and viewpoints. Although I share these things with everyone, very few people actually look at them; it essentially serves as a record of my reading.

I also pay attention to market sentiment. For example, if several KOLs I follow say they don't want to look at the market anymore, or if community sentiment is bleak with little discussion about the market, I think it might be at the bottom range. However, I don't look too much at pure trading aspects, which is a relatively weak area for me; I look at K-lines and technical analysis quite infrequently.

BlockBeats: Do you think technical analysis is important in the current market environment?

Yuzhong Kuangshui: I think the core point lies in the effectiveness of K-lines. In many cases in this industry, others draw K-lines for you. I can only say that K-lines are important, but not that important. If you rely solely on K-lines to outperform Bitcoin, that seems unrealistic. In this highly PVP market, what is tested is your ability to select targets.

Since I have a partner who looks at K-lines, I will show him the K-lines after selecting good targets and choose a relatively ideal entry point; otherwise, I might give up or wait longer. This creates a complementary dynamic. I haven't had much time to learn K-lines recently, but that's actually just an excuse for my laziness.

BlockBeats: So reading is a crucial part of how you build your understanding?

Yuzhong Kuangshui: Yes, I think there are two parts to it: reading and writing. For me, writing is the process of expressing my thoughts. Of course, it doesn't have to be shared on social media, but you can write something for yourself, keep a record, like creating a Notion, and then review these things regularly. My initial understanding of the industry came from the process of writing my knowledge base, covering Bitcoin, public chains, DeFi, NFTs, Gaming, etc., building my own framework and then branching out from there.

Additionally, I have a small notebook where I jot down personal insights or profound quotes I come across. This concept is quite important. Everyone wants to make big money, but the operations you make with $100,000 are completely different from those with $1,000,000. The final question to consider is definitely based on your asset scale to make investment judgments and how to control risks, aiming to survive longer in the market than others. These records of insights and thoughts can help you.

BlockBeats: At the beginning of the year, you started summarizing "Star-Level Narratives," and later updated it every month. What is the logic and standard for determining the star levels?

Yuzhong Kuangshui: I think the main factor is the market's recognition, that is, the ability to attract market attention over a period of time in the future. If a narrative has successfully attracted a lot of market attention in the past, like AI, I would rate it higher.

I believe Bitcoin has always been a five-star narrative. Inscriptions might be a short-term speculative thing, while runes are better; they can help Bitcoin do more things. Although runes may have cooled off a bit before, there will always be people pushing them. The market naturally pays attention to the Bitcoin ecosystem, and once a narrative rises, people will participate.

However, one narrative I didn't handle well at the beginning of the year was Solana. At that time, I rated it as a four-star narrative, but now it seems to perform strongly in all aspects, actually making it a five-star narrative.

BlockBeats: I saw you later rated it above Ethereum.

Yuzhong Kuangshui: I now understand that Ethereum is a very large asset, and Europe and the US are also promoting this point. It may have complexity, but its position is unshakable by Solana. I don't know if Ethereum can be replicated, but it requires time. From this perspective, I haven't participated much in Bitcoin L2; why not play on Ethereum or Solana? Of course, I believe there are wealth opportunities here because there is attention on it, and it is a long-term sustainable thing. Regarding Ethereum, BlackRock's RWA is placed on Ethereum, and since BlackRock is doing this, I would follow up on targets like ONDO.

BlockBeats: Every time you share spot trading ideas in the group, you set stop-loss lines. Where did the concept of "spot stop-loss line" come from?

Yuzhong Kuangshui: Stop-loss is more for the community. Each person's risk tolerance is different. For example, I can bear more risk on certain targets, but you might not be able to. One of my issues is that I am "very left-sided"; I have a high expectation for the price movements of coins I am particularly optimistic about, which leads to holding many coins uncomfortably. For instance, I believe COW has great potential under the narrative, so I just hold it without rushing, and the same goes for WEN on Solana; this recent pullback is all because I was too diamond-handed.

BlockBeats: What are your "left-sided strategies"?

Yuzhong Kuangshui: Judging the catalysts for narratives. For example, I believe the narrative around intention might rise around Cancun, so I bought UNI and COW. Of course, their final rise might not be due to this reason; part of it is luck. For some targets, luck might not be as favorable. I need to wait a long time to validate my logic, but if it has risen a lot before, and I determine that the catalyst I am waiting for hasn't arrived yet, I probably won't sell. In this PVP market, narratives rotate quickly, and diamond hands can easily get hurt.

BlockBeats: In fact, many people didn't have time to exit during the pullback in April, and almost no one expected the bear market to last this long.

Yuzhong Kuangshui: The market has actually told you, for example, Bitcoin's monthly line had six consecutive rises, which indicates a need for a pullback. I believe I had the opportunity to exit at that time, but I just didn't think clearly, which was one of my mistakes.

BlockBeats: What didn't you think clearly about?

Yuzhong Kuangshui: I didn't think clearly about what the demand for a pullback might be and how strong it could be, as well as the emotional attachment I developed towards altcoins.

Views on the Market

BlockBeats: What speculative expectations do you think are left in this cycle?

Yuzhong Kuangshui: Besides the expectation of liquidity returning after interest rate cuts, there are also macro expectations regarding the elections. Under this expectation, the demands from all sides should be stability and the competition for crypto voters. However, if there are no new expectations to support the market later, it might enter a state of silence. Currently, liquidity is also not very good. I won't be too optimistic. Of course, once liquidity returns, a new wave of opportunities will emerge. This is a very long-term matter.

BlockBeats: Hmm, each cycle is quite different, right?

Yuzhong Kuangshui: Yes, I think predicting is not important; it’s more about considering what state the market is in. For example, on April 29, I thought the market was entering a bottom phase because I saw the community sentiment was too pessimistic, giving off a deep bear feeling. But you think about it, this year is an election year, so it's unlikely that a major event will break out; at least it should be more stable.

At that time, there were too many people bearish, so I thought I could bottom fish some targets. I chose Ethereum and bought many related targets in its ecosystem. Anyway, I had stop-loss lines, so if I judged wrong, I would just surrender.

BlockBeats: There’s a lot of discussion about high FDV and low circulation now; what are your thoughts?

Yuzhong Kuangshui: I think this will bring about new narratives, and the market will look for fully circulated, zero-unlock tokens that have already been fully priced by the market. In fact, I also read that article by Cobie; his core point is that the market's buying actually happens at the primary level, not at the secondary level, which might lead to new coins not performing well upon launch.

In fact, there has already been discussion about "not picking up after each other" on social media; I think an important point is that this is a market issue, and the market will gradually realize and improve. I believe the market will slowly grow into a smarter state, and essentially, it is due to insufficient market liquidity.

BlockBeats: Do you think the crypto market will still see the "super high returns" of past bull markets?

Yuzhong Kuangshui: I believe there will be, because the crypto space gives us a gambling opportunity. Although we can't always treat the crypto space like a casino, as GCR mentioned, many people participate in crypto because it feels like a casino; it’s more convenient than going to Macau, and the certainty of making money (possibly) is higher than in Macau. Therefore, the crypto space and altcoins will not disappear; as long as there is market demand, they will always exist, and people will continue to write about altcoins.

BlockBeats: In the coming period, which direction will you focus on?

Yuzhong Kuangshui: My main position is currently in Ethereum; for example, Pendle is my long-term position. I mentioned this in my May outlook, although I placed ETH relatively lower in my writing. Additionally, AI is also placed relatively lower, partly because there have been many catalysts recently, and partly because the overall market is very counterintuitive; when everyone is optimistic about AI, its performance tends to be poor, needing to wash out those who are optimistic.

I also hold some positions in Solana, but I generally won't actively purchase. The main task I have for Solana is also written in the group name, which is to accumulate my SOL holdings. Participating more in the Solana ecosystem is all about increasing my SOL holdings.

BlockBeats: Last question, how long do you think it will take for the altcoin market to return to its previous price levels?

Yuzhong Kuangshui: I am still quite optimistic about the future, especially for Ethereum, which has a chance to break new highs. Once the expectations are exhausted, I will choose to take a break.