A Conversation with Data-Driven Traders: How to Find Certainty in the Crypto Assets Market

The founder of CoinKarma, Benson, shared in detail how his trading strategies have evolved over different cycles, as well as how CoinKarma's indicators guide trading in various market conditions. Benson has always thought about how to build his own trading structure in a non-consensus way, in order to outperform others, because essentially, contract trading is a game of how to win over the majority.

1. About the trader Benson

1. What is a trading strategy?

• In a volatile market, Benson will find positions with high safety margins to participate in the market based on indicators; at the same time, he pays attention to BTC inflow and exchange CVD indicators to determine market trends.

• Benson allocated more than half of the positions ( to quantitative strategies for coin-based appreciation, primarily holding coins; about 40% of the positions are focused on stablecoins, used for guerrilla trading, participating in on-chain transactions or first contract trades.

• Benson's trading strategy does not pursue explosive growth, but focuses on stability. His goal is to outperform the market index, with a performance of approximately 2 to 3 times since the beginning of the year.

• Different assets have different operating methods. For assets that may become market hotspots, Benson will hold them until market attention or the bull market ends; for larger market cap tokens, he will use technical analysis or fundamental analysis to determine the possible price trends.

2. Why is such a trading strategy formed?

• Initially, like many novice traders, Benson frequently cut losses and suffered significant losses from chasing highs and selling lows. This experience made him realize that market fluctuations are often manipulated by major funds, especially in the contract market, where the main players create volatility to harvest liquidity from weaker retail investors. Contract trading is a game of how to win over the majority, overcoming most by aligning with the direction of the main players. To this end, Benson began to think about how to use data to follow the operations of the major players.

• From 2019 to 2022, Benson found that the funding rate has a significant impact on trading. When the contract open interest is high and the funding rate reaches extreme values, the market trend may reverse. Benson profited from counter-market sentiment operations during the bull market.

• However, in 2022, the Federal Reserve began to raise interest rates. Benson believes that the Federal Reserve's interest rates are like a stabilizing force, affecting the entire financial market and determining how to price risk assets. Bitcoin has never encountered such rapid interest rate hikes during its growth cycle, which affected the sensitivity of funding rates in the coin circle, causing Benson's original trading system to fail. After that, Benson started to study order book data and developed the CoinKarma indicator to find safer trading positions.

) 2. Benson's Trading Indicators

1. About the market

1. What data should be used to guide trading in a unilateral market and a volatile market?

• A cycle can be simply divided into a unilateral market and a volatile market:

One-sided market: A one-sided market characterized by rapid rises or rapid falls typically lasts for a short duration. For example, this year's market trend from the end of January to mid-March lasted for about a month and was a one-sided market. At that time, it was observed that the market price buying intensity on major exchanges with large spot trading volumes was very strong, and the net inflow of funds for BTC ETF was also quite staggering.

Volatile Market: After a one-sided market ends, it usually enters a range where the coin price fluctuates widely within that range. The volatile market accounts for most of the time in the entire market situation. For example, in the past six months, Bitcoin has been in a wide fluctuation range, with the bottom around fifty to sixty thousand and the top possibly at seventy thousand.

Unilateral market conditions are relatively rare, while volatile market conditions are more common. When assessing the market, you can determine whether it is a unilateral market or a volatile market by observing indicators such as the exchange's CVD### Cumulative Trading Volume( and the net inflow of BTC ETFs.

• CoinKarma is a data website developed by Benson, which connects to the real-time APIs of major exchanges with significant spot trading volumes to obtain order book data, and uses certain algorithms to convert this data into indicators to help traders assess market conditions.

• Overall LIQ)Overall Liquidity Status( is an important indicator in CoinKarma. Its principle is to determine potential reversal points in price by depicting the liquidity status of the market. Specifically, CoinKarma obtains order book data through real-time API integration with exchanges, and then compiles this data into a database to illustrate the current liquidity status of the market. When the price approaches the upper or lower limit of the range determined by Overall LIQ, a reversal is likely to occur. In a volatile market, it helps traders find positions with a higher margin of safety. For example, during the broad fluctuations of Bitcoin over the past six months, the Overall LIQ indicator has been able to accurately reflect local tops and local bottoms.

• CVD) Cumulative Trading Volume( is another indicator used in CoinKarma to assess market conditions. It determines whether the market is in a range-bound or trending condition by observing the strength of market orders. When there is significant selling pressure on the order book, low CVD strength, and weak market order activity, the likelihood of a decline is higher, indicating that the market is in a range-bound condition; conversely, when CVD strength is high and market order activity is strong, a trending market may be on the horizon.

2. How to determine the cycle through data?

• The market peak is usually characterized by a lot of outside attention to the field. For example, the peak of NFTs was in the first quarter of 2023, when many Web2 and Web3 projects were linked to NFTs. The download ranking of the Coinbase APP, during the last bull market, the Coinbase APP was ranked among the top three financial apps in North America for a long time, but its current ranking has not reached that level. The page views of Bitcoin on Wikipedia can indicate whether there are signs of retail investors entering the market on a large scale.

• If Bitcoin wants to break through its historical high, it must have external capital forces involved; it is very difficult to achieve this relying solely on internal funds. For example, this year Bitcoin rose steadily from the end of January to mid-March, forming a unilateral market trend, because it was observed that the market price buy-in strength on major exchanges with significant spot trading volume was very strong, and the inflow of funds into BTC ETFs was also quite exaggerated.

2. About Altcoins

1. Why is SOL optimistic?

• Technical Perspective: In the crypto market, most public chains with large market capitalization and a high number of users are EVM compatible, whereas Solana is different as it is written in Rust. This means that developing applications on Solana requires developers to learn a language from scratch. In terms of application purity and developer skill level, Solana is clearly superior to other chains.

• The community's value gained the support of core developers: Solana experienced the collapse of FTX, the FTX creditors' committee planning to sell coins, and other turmoil, but during the toughest times, it received vocal support from Ethereum bigwig Vitalik and MakerDAO founder Christensen, as well as support from the external ecosystem, demonstrating strong community cohesion and resilience against adversity.

• From the perspective of the ability to rise from the ashes, looking at the BTC pair price: After experiencing numerous difficulties, Solana's performance is still able to keep up with the overall market. It is one of the few Altcoins that has not entered a long-term downtrend against the BTC trading pair since the last bull market. From the perspectives of price trends, fundamentals, and cyclical rebirth potential, Benson believes that if one were to choose an asset that might break through the previous bull market high, Solana has a relatively high chance.

) 3. Benson's trading experience

1. What mindsets are needed for high win rate trading?

• Benson believes that the main players use price fluctuations for liquidation, aiming to achieve the maximum return at the minimum cost. Investors must understand the sources of market volatility, the entities that create fluctuations, namely the market main players, as well as the costs and potential returns associated with creating fluctuations, in order to better comprehend the workings of the market and thereby formulate appropriate trading strategies. After gaining a basic understanding and knowledge of the market, they can then develop their own trading strategies to succeed in the market.

• Establish the right mindset, be aware that most people in the market use technical analysis for trading, therefore it is necessary to have a different perspective or focus on different things. For example, when using technical analysis tools, consider the reflexivity of trading, think about what many people would do when they see the same pattern, and then make different decisions.

• The effectiveness of indicators can change. Sometimes useful, sometimes not, which indicates that the validity of this indicator is decreasing, and new deterministic alpha needs to be sought to adapt to market changes.

What is the daily trading routine?

• In the morning, first look at the overview of market liquidity, judging whether to take action based on the liquidity of mainstream coins and the overall market liquidity published hourly in the Telegram channel. Only intervene in the market when there is a higher likelihood of a reversal. The decision on whether to operate as net long, net short, or simply hedge spot leverage long or leverage short is based on the certainty of the opportunity.

• Check if the existing positions of the altcoins meet expectations and whether the reasons for holding them still exist. If the expectations have been met or the reasons for holding no longer exist, then choose to sell.

3. How to avoid making big losses in trading?

• Avoid buying tokens in the same way as buying stocks: Investing in some tools with a seemingly reasonable PE ratio may seem rational, but due to the rapid changes in the crypto space, when the hype fades, these projects may collapse. Benson believes that investment should focus more on projects that have an air of mystery and imaginative potential but are not yet fully realized, rather than purely tool-based projects, while also paying attention to whether the project’s demand is a last long demand that won't fluctuate significantly with economic cycles.

• Sell in time: When a project has reached expectations or the reason for holding no longer exists, it should be sold in time.

• Control Leverage: In the crypto asset market, leverage is generally high, but the volatility is also significant. Using high leverage can easily lead to being harvested by the main forces.

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