Strategy unveiled by F2Pool mining pool founder for managing capital resources
In the dynamic world of cryptocurrency trading, Chinese entrepreneur Shen Yu stands out as a seasoned player. Known for his successful ventures, such as co-founding F2Pool and Cobo Wallet, Shen Yu has accumulated a significant fortune in the digital asset space.
Recently, Shen Yu expressed concern over the dominance of Ethereum, re-entering the market twice after a price increase before concluding that it had become a "monopoly." However, details about his "four-wallet rule" for cryptocurrency asset allocation, a strategy that is widely known in the industry, remain elusive in the search results.
The four-wallet rule, a common practice among cryptocurrency investors, involves dividing assets across four distinct wallets to improve security and manage risk effectively. These wallets serve different purposes:
- Long-term holding wallet: For storing crypto assets intended to be kept securely for a long period.
- Spending wallet: For frequent transactions or daily use.
- Trading wallet: For active trading activities.
- Backup/recovery wallet: As a backup to recover funds in case of loss or breach.
Shen Yu's approach helps separate funds to minimize exposure if one wallet is compromised, enhances organizational clarity, and supports better personal asset management.
In addition to his asset allocation strategy, Shen Yu emphasizes the importance of psychological resilience, limiting impulsive actions, and adapting strategies during market corrections. He also advocates for investing in key assets like Bitcoin and Ethereum through gradual purchases and storing them in cold wallets for long-term holding.
For experimental tokens such as NFTs, Shen Yu advises a cautious approach with a small portion of capital to explore market potential. Reflecting on failures promotes growth, according to Shen Yu, and he encourages investors to rebuild positions after price surges, citing Ethereum as an example.
Shen Yu's mining operations make him one of China's largest Bitcoin miners. To maintain a steady cash flow, he operates a fiat wallet on a "withdrawal-only" basis, with a 4% withdrawal limit, to cover annual living expenses. His cold wallet, reserved for major assets with restricted access, holds over 60% of his assets under management (AUM).
The warm wallet, designed for steady cash flow, stores 20-30% of assets, while the hot wallet is used for speculative or high-risk activities like NFTs. Funds here are limited, and profits are periodically moved to cold or warm wallets. This multi-tiered approach mitigates risks associated with emotional reactions to cryptocurrency market volatility.
In November 2023, ForkLog reported that several mining pools, including F2Pool, blocked transactions involving addresses from the OFAC SDN list. Despite the challenges, Shen Yu maintains a trading journal to document emotions, reasoning, and predictions for later analysis.
In conclusion, Shen Yu's strategies in the cryptocurrency market demonstrate a focus on risk management, long-term investments, and a cautious approach to new and experimental tokens. His four-wallet rule, while not explicitly mentioned in the provided sources, is a common practice in the industry and aligns with best practices for multi-wallet strategies in crypto asset management.
Shen Yu, a renowned Chinese entrepreneur, advocates for investing in key assets like Bitcoin and Ethereum through gradual purchases and storing them in cold wallets for long-term holding. However, for experimental tokens such as NFTs, he advises a cautious approach with a small portion of capital to explore market potential. Shen Yu's approach to cryptocurrency asset allocation involves dividing assets across four distinct wallets, including a long-term holding wallet, a spending wallet, a trading wallet, and a backup/recovery wallet. He also manages his digital assets on Ethereum, a platform that he expressed concern might be approaching a monopoly status in the cryptocurrency market.
