F2Pool Founder Unveils Capital Management Strategy

Shenyu, co-founder of the mining pool F2Pool and digital asset custodian Cobo Wallet, shared his “four-wallet” asset distribution strategy during an AMA session. Journalist Colin Wu provided excerpts.

Shenyu, one of China’s largest Bitcoin miners, described his four-wallet strategy:

Cold Wallet: This is for core assets, with barriers to accessing them. It discourages impulsive actions during FOMO. Typically, this wallet holds over 60% of my assets.

Warm Wallet: Used for… pic.twitter.com/mX5ufaPktK

— Wu Blockchain (@WuBlockchain) December 26, 2024

The speaker recommended investing in major assets like Bitcoin and Ethereum through phased purchases and storing them in cold wallets for long-term holding.

For experimental tokens such as NFTs, Shenyu suggested a cautious approach with a small portion of capital to explore market potential.

He emphasized the importance of psychological resilience by limiting impulsive actions and adapting strategies during corrections.

In his view, such principles offer a rational foundation and long-term strategy to overcome volatility.

The strategy involves creating four types of wallets:

1. Cold Wallet. Designed for key assets with access barriers. It prevents impulsive actions during FOMO. Typically, this type accounts for over 60% of AUM.
2. Warm Wallet. Used for stable cash flow to maintain composure during bear markets. It holds 20-30% of assets.
3. Hot Wallet. Intended for speculative or high-risk activities like NFTs. The allocation is small, and profits are periodically transferred to the cold or warm wallet.
4. Fiat Wallet. Operates on a “withdrawal only” principle and covers annual living expenses with a 4% withdrawal limit. This ensures financial independence even if losses occur in other wallets.

Shenyu discussed maintaining a trading journal to record emotional states, reasoning, and forecasts for subsequent analysis. He noted that this practice has helped identify patterns and areas for improvement.

“Mistakes are valuable feedback. Reflecting on them fosters growth,” he explained.

The F2Pool co-founder highlighted the importance of focusing on “core” assets. Transitioning from the “entertainment” category occurs only after a coin endures several market cycles.

This multi-layered approach reduces risks associated with irrational reactions to cryptocurrency dynamics, Shenyu pointed out.

The expert admitted that he also had to rebuild positions after price increases. This happened twice with Ethereum before he concluded that Ether had become a “monopolist.”

In November 2023, ForkLog reported that several pools, including F2Pool, blocked transactions involving an address from the SDN by the OFAC.

Earlier, Colin Wu shared the success story of a 24-year-old crypto trader whose rapid trading and high profits caught the attention of Binance’s risk control department.