Original Article Title: "The 'Diamond Hands' of Long-Termism vs. the 'FOMO Hands' of Short-Termism: Who Will Win?"

Original Article Author: Ice Frog, Crypto Researcher

Back then, I was still too young to know that the price of all the gifts of fate had already been secretly marked — Stefan Zweig

Part One: The Crypto Casino Theory: Luck or Skill, the Path to Success Is Not in Difficulty

Whether any game is gambling or not ultimately needs to prove a fundamental question: Is this a "game of luck" or a "game of skill". Undoubtedly, in the early days of the crypto world, luck played a major role. As long as you were daring enough to take the plunge, you could win, and the crypto world rewarded early explorers handsomely. As the industry has evolved, we continue to see the myth of crypto wealth emerge from time to time. However, the opportunities for victory brought by mere luck are becoming increasingly scarce. We have witnessed so many stories of overnight fortunes, but we have also witnessed the tragedies of instant ruin.

The importance of luck lies in giving you an opportunity, while the importance of skill lies in turning that opportunity into wealth. At this moment, for retail investors, we must acknowledge that luck still plays a role in the crypto world. However, we must also recognize that the importance of skill is increasing.

For the crypto world, what is the ultimate skill to win victory? Different people have different opinions. Some believe it is the king of short-term invincibility on the candlestick charts, while others believe it is the king of hodling with conviction. However, in terms of ultimate success rate, both of these strategies have seen victors emerge, but also witnessed ordinary players facing a tragic defeat.

From the perspective of an average retail investor like me, it is important for the majority of the market to remember: Embracing low-difficulty investments is the only magic weapon to win. Pay attention to the limiting modifier: ordinary people, and specifically ordinary retail investors.

Holding diamond hands and succumbing to short-term FOMO hands both undoubtedly present considerable difficulty in achieving ultimate victory.

Part Two: Survivorship Bias of Diamond Hands: If You've Got It, You Can Go Up; If You Don't, Don't Force It

Before discussing diamond hands, we must assume we are truly ordinary, with no significant talent other than being bold, having a mediocre understanding of Web3, unable to hodl for long, feeling anxious seeing others getting rich, and being a typical paper hand who loses as soon as I jump in. Next, let's further discuss the probability of an ordinary person becoming a diamond hand, so you can completely give up.

The term Diamond Hands originated from forums such as Reddit, referring to those investors who resolutely refuse to sell regardless of how volatile their holdings are.

It is important to note that two conditions are implied here: highly volatile financial assets and a resolute hold strategy. Investors who hold gold long-term may not necessarily earn this honorary title. Only those who hold in highly volatile speculative markets, maintain a long-term commitment without selling, and ultimately achieve significant gains are eligible to be called Diamond Hands.

In the world of cryptocurrency, a realm of sudden wealth and opulence, everyone wants to be a Diamond Hand. However, not everyone can achieve this status; otherwise, the number of Diamond Hands in the crypto sphere would not be so rare, with only a few having already become legendary figures.

To become a Diamond Hand, you must possess the following qualities:

1) Exceptional insight + luck, being able to foresee the future growth potential of an asset over a period of time. Before it takes off, you can already envision its significant growth potential and the certainty of that growth.

2) You have ample free capital that, when invested to a certain extent, does not affect your current lifestyle or mentality.

3) You must be steadfast, having a cognitive edge over the majority and maintaining this insight over a long period.

These three points are not complex, but very few can truly practice them. Easy to say, hard to do. Particularly for most retail investors, the difficulty in implementing the first, second, and third points demonstrates how rare Diamond Hands truly are.

The fundamental characteristics of a Diamond Hand are as follows: first, you need some spare cash, something most people have; second, you need a cognitive ability far beyond the general public, a trait that has already disqualified many; and finally, you need ongoing emotional stability and steadfastness, which further eliminates a large portion of the population. Thus, the probability of an ordinary person becoming a Diamond Hand becomes very low.

It needs to be clarified that the above discussion pertains to the probability of an average person. This market is not lacking in individuals who are willing to wager their entire fortune, endure prolonged massive drawdowns without flinching, and among them, a few have achieved great results, but these individuals are not ordinary.

The harsh reality is that we only witness one person easily achieving victory, and we may exclaim, "How noble and majestic! What a cry of bravery!" yet we may not comprehend the pain they can endure, a burden we ourselves could not bear even a fraction of. This is both talent and luck, as well as the refining process of life.

You can do it, only if you are capable. If you can't do it, don't force yourself. Sometimes, waiting will reward you with value because you understand what true value is. However, most of the time, waiting does not create value and eventually turns into an obsession. This is because truly valuable players are rare to identify. They are either extremely wise, extraordinarily talented, or exceptionally hardworking, with at least one outstanding quality.

So, following this, if the probability of becoming a diamond-hand player is very low, can I get rich quick through short-term FOMO? The answer is still no.

III. The Trap of Short-Term FOMO: I can do it, I want to get in; I can't do it anymore, but I can't get out

First of all, a financial market bubble is definitely a term of praise, but you need to understand the bubble, embrace the bubble, yet never become the bubble. Short-term FOMO not only tests your resilience but also your operational skills. Its main challenge lies in:

- Everyone is making tenfold gains in a day, will you join?

- Everyone has boarded the train, will you?

- Everyone is looking at 100x gains, will you settle for just a 20-point increase?

- A new meme coin comes out, but you are not onboard

- You get in, only to find yourself trapped

- The endgame

Using the recent MEME frenzy as an example, such a psychological state and cycle play out every day, from observing, getting in, adding positions, to getting trapped, setting stop losses, and exiting.

You will notice a surprising phenomenon: during this time, it seems like there is endless money to be made, but the person who actually makes the big gains is never you. It starts with big gains, then small gains, followed by small losses, ultimately resulting in break-even, being trapped, or incurring huge losses.

Where does the problem lie?

The characteristic of short-term FOMO is: high risk-reward ratio, but the winning rate is not necessarily high. Apart from a general market surge, FOMO markets tend to heavily focus on a few assets for speculation, or hot money rapidly rotates among different sectors, significantly increasing emotional and random factors, as no one knows what meme Elon Musk will tweet tomorrow.

Situations where short-term FOMO can make money: getting in early, running fast, and controlling oneself.

Getting in early: You can discover the value of this asset earlier than most of the market, with a highly acute market intuition and judgment ability.

Probability of Running Fast: You are able to quickly identify top risks and exit in time; ability to control greed

Probability of Holding Back: You are able to refrain from impulsive actions, resist the urge to buy everything when excited; extreme position management and risk management ability

A person who possesses all three of these abilities is definitely rare in the market.

It is important to note that this does not mean that experiencing short-term FOMO will definitely result in losses, but rather that the probability of making big profits during short-term FOMO is very low. For most people, it is still a high-difficulty and undesirable path.

Warren Buffett's mentor Benjamin Graham once said: "A bull market is the main reason why ordinary investors lose money. The profound reason behind this is not the FOMO in a bull market leading to losses, but the huge losses due to ignoring short-term risks."

The irony of the financial market is: a bear market does not necessarily mean high risk, and a bull market does not necessarily mean low risk.

Regarding short-term FOMO, when you are still observing, a small group of people have already established their positions early, and when you try to get in, the multi-fold daily gains make you lose your senses. At this point, some people have already exited early, and by the time you realize something is wrong, you are already deeply trapped.

IV. Will It Be Different This Time: Current Cost, Future Price

When we discuss winning strategies for diamond hands and short-term FOMO, we find that the probability of ultimately winning in these two scenarios is quite low. You might say, "With Trump in office, favorable policies will lead to a huge outbreak in the bull market, so both diamond hands and short-term FOMO will win." The actual situation is likely not so simple. Throughout history, there has never been an eternal bull market, let alone an eternal bear market; everything works in cycles.

For the average person, we need to embrace low-difficulty investments rather than seek out high-difficulty investments. It's also not to say that since diamond hands and short-term FOMO cannot win, then might as well give up. Every choice you make now has a cost, which may lead to either a huge return in the future or an unbearable price to pay.

For most ordinary people, the probability of trying to achieve wealth through any replicable means is very low. Your resources, endowments, personality, and even your environment can all lead to failure at any moment.

The path to sudden wealth is hard to replicate, but the reasons for failure are often very similar.

The so-called low difficulty is to fully understand your own personality, combine it with your innate resources, do what you are best at with the highest probability of success, and persist in it for the long term.

If you cannot even meet basic living needs, you should find a job instead of trying to develop the skills of a diamond-handed trader at this time;

If you are someone who experiences significant emotional fluctuations and cannot tolerate drawdowns, you should not engage in chasing highs in a highly volatile market. Instead, you should identify a target, use a small amount of capital to stake out a long-term position, or focus on a consistent earning method to secure the most certain income.

Overcoming human weaknesses has never been a simple matter. For most ordinary people, it is likely that they will be unable to challenge and overcome them for the vast majority of their lives. Therefore, the easiest thing you can do is to continuously learn from the practices of top experts, absorb and integrate them into your own system, and engage in the type of investment where you excel and have the highest success rate.

This is my insight and advice to the general retail investors. It may not make you suddenly rich, but losing less in the long journey of life can also be a different kind of victory.

Standing at the starting point of a new bull market, regardless of the path you choose, this time, I hope you can win!

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