Shen Yu's Four-Wallet Rule for Cryptocurrency Asset Allocation
Revealed: F2Pool Mining Pool Founder Outlines Investment Approach
Shen Yu, co-founder of F2Pool and Cobo Wallet, has outlined a four-wallet rule for managing cryptocurrency assets. This rule aims to mitigate risks associated with emotional reactions to market volatility and ensure steady cash flow during bear markets.
The four wallets in Shen Yu's rule include a Cold Wallet, Warm Wallet, Hot Wallet, and Fiat Wallet. Each wallet serves a specific purpose in the asset allocation strategy.
The Cold Wallet
The Cold Wallet is designed for long-term holding and stores over 60% of the assets. Its restricted access prevents impulsive actions during periods of FOMO (Fear of Missing Out). Shen Yu recommends investing in key assets like Bitcoin and Ethereum through gradual purchases and storing them in cold wallets for long-term holding.
The Warm Wallet
The Warm Wallet is designed for steady cash flow to maintain composure during bear markets. It holds 20-30% of the assets and is used for storing assets that may experience short-term volatility but have the potential for long-term growth.
The Hot Wallet
The Hot Wallet is used for speculative or high-risk activities like NFTs. Funds here are limited, with profits periodically moved to cold or warm wallets. Shen Yu focuses on "core" assets and only moves a token from the "entertainment" category after it endures several market cycles.
The Fiat Wallet
The Fiat Wallet operates on a "withdrawal-only" basis to cover annual living expenses with a 4% withdrawal limit. This wallet helps ensure financial stability and avoids the need to sell assets during market corrections.
Shen Yu emphasizes the importance of psychological resilience, limiting impulsive actions, and adapting strategies during market corrections. He also maintains a trading journal to document emotions, reasoning, and predictions for later analysis.
While there is no specific information on Shen Yu's rule, a hypothetical four-wallet rule might involve allocating cryptocurrency investments into four distinct categories or wallets. This could be based on different risk levels, geographic diversification, or asset types.
By following such a rule, investors could potentially manage risk, improve liquidity, and achieve higher returns by leveraging different investment strategies. It is essential to consult financial advisors or resources that specialize in cryptocurrency investment strategies for specific advice.
- Shen Yu advises investors to allocate a significant portion of their assets to long-term holdings like Bitcoin and Ethereum, which he suggests storing in a Cold Wallet for security and stability.
- For steady cash flow during bear markets, Shen Yu recommends storing assets with short-term volatility potential in the Warm Wallet, which holds 20-30% of the assets.
- When it comes to speculative activities such as investing in NFTs, Shen Yu suggests keeping funds in the Hot Wallet, while only moving tokens from the "entertainment" category to other wallets after they have sustained several market cycles.
