In the volatile world of cryptocurrency, few traders manage to consistently outperform the market while preserving capital. One such outlier is Paleking, a former retail trader who grew a $3,000 starting balance into a $50 million fund through disciplined, cycle-driven trading. As a partner at MVC, Paleking’s journey reflects a rare blend of patience, data-driven analysis, and strategic simplicity.
This deep dive explores how Paleking built his edge—using on-chain metrics for macro timing, identifying alpha through structural analysis, and evolving toward trend-following in a fragmented market.
The Trader’s Journey: Riding the Cycle, Not Fighting It
Paleking entered crypto in October 2017, starting with EOS—a project that turned $10,000 into $100,000 and introduced him to the space before he even knew about Bitcoin or Ethereum.
He began trading seriously with around $3,000 (200,000 CNY), but 2018 and 2019 were largely unproductive. A brutal bear market wiped out gains, and fleeting profits in 2019 evaporated by year-end.
His real breakthrough came in 2020. With global liquidity surging due to pandemic-era monetary policy, Paleking capitalized on the macro tide to build initial capital—without ever taking excessive leverage or suffering catastrophic drawdowns.
By mid-2021, he sensed the bull cycle was ending. Well before the infamous "5.19" crash, he exited positions entirely. While others chased NFTs and gaming tokens, he stepped away. In 2022, he spent the year traveling—only returning in late 2022 when Bitcoin hovered near $20,000.
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This rhythm defines his philosophy: trade aggressively in bull markets, disappear during bear markets. To him, the most powerful move isn’t buying low or selling high—it’s doing nothing when the market offers no edge.
“I believe in participating only during favorable cycles. When it's time to wait, I go travel, date, live life. The best traders know when not to trade.”
Core Strategy I: Mastering Macro Timing with On-Chain Data
Paleking’s primary goal? Achieve stable returns and outperform beta—a feat achieved by only about 2% of market participants over full cycles.
His method: macro cycle timing using Bitcoin’s on-chain behavior.
Rather than relying on news, sentiment, or technical indicators, he focuses on two key metrics from Glassnode:
1. NUPL (Net Unrealized Profit/Loss)
NUPL measures the collective profit or loss across all Bitcoin holders. It visualizes market sentiment in a “rainbow chart”:
- Deep red = widespread losses. Panic selling occurs, weak hands capitulate.
- Deep blue = extreme profitability. Greed dominates; a top signal.
When NUPL hits deep red—indicating maximum pain—he sees accumulation opportunity. When it turns deep blue—signaling euphoria—he exits completely.
2. HODL Waves
This tracks holder cohorts by duration:
- Short-term holders (<1 month): sensitive to volatility.
- Long-term holders (1–3 years): represent conviction.
During bear markets, short-term holder supply drops sharply as panic selling peaks—confirming bottoming structure. Conversely, when long-term holders start dumping while short-term ownership surges, it signals distribution: the top is near.
He used both signals to exit before the 2021 crash and re-enter at ~$18,000 in late 2022—validating their long-term reliability.
“Macro narratives don’t move markets—capital flows do. On-chain data reveals where money is moving before price reflects it.”
Core Strategy II: Hunting Alpha with the “Zeroing-Out” Framework
After mastering market timing, Paleking turned to alpha generation.
In 2022–2023, he developed a strategy called “zeroing out”—identifying projects that had been beaten down but met specific structural criteria:
- Born in bear market: Founders with conviction to launch during downturns.
- Low valuation: Cheap token price after prolonged decline.
- Clean unlock schedule: Minimal sell pressure; early investors washed out.
- Strong backers: Credible investors or ecosystem support.
- Top-tier exchange listing: Ensures liquidity when sentiment shifts.
These traits indicate teams with skin in the game, motivation to succeed, and access to global capital.
Using this filter on the top 1,200 projects—excluding those launched before October 2021—he selected ~30 assets. Most delivered strong returns by early 2024.
But he warns: the age of easy alpha is over.
Markets have shifted from broad-based rallies to structural bull runs, characterized by:
- Sector rotation (e.g., AI → DeFi → RWA)
- Extreme divergence: most altcoins underperform BTC
👉 Learn how to identify high-potential altcoins before the crowd notices.
Core Strategy III: Trend Following Over Fundamental Guessing
With alpha harder to find, Paleking pivoted again—this time abandoning fundamental forecasting entirely.
His new rule: follow strength, not stories.
From November 2023 to February 2024, he ignored Twitter trends and roadmap updates. Instead, he deployed a bot tracking 9-month price breakouts.
His logic? If a coin breaks out after months of consolidation—with volume and clean fundamentals—it likely means a well-funded player is accumulating.
Examples:
- Solana: Ranged $15–$30 for nine months → tripled post-breakout.
- TON: Broke multi-year resistance → surged 3x.
- RNDR & INJ: Followed similar patterns.
This approach embraces the reality of crypto: price action often leads fundamentals.
“I don’t care what the whitepaper says. I care who’s buying—and whether they’re serious.”
Core Strategy IV: Recognizing Winners Among Giants
As his fund grew to $50M, Paleking faced a new challenge: scale limits opportunity.
Large positions require deep liquidity—ruling out small-cap gems. His focus shifted: instead of chasing 100x moonshots, he now seeks which large-cap assets will outperform Bitcoin.
To him, that’s the new alpha.
“For institutional-scale capital, identifying which top-20 asset will beat BTC is the ultimate edge.”
This means prioritizing:
- Exchange listings
- On-chain activity
- Developer momentum
- Market structure
Not hype.
The Mindset: Simplicity, Discipline, and Anti-Fragility
Paleking attributes his success not to genius insights—but to removing noise.
Key shifts in his evolution:
- From chasing narratives → observing capital flows
- From technical analysis → understanding market structure
- From fundamental analysis → tracking price strength
He identifies three pillars of price movement: funds, chips (supply), and sentiment—with sentiment being the bridge between narrative and money flow.
His golden rule?
“Small wins. Small losses. Occasional big wins. Never big losses.”
Loss control is managed at the portfolio level—not per trade. If overall drawdown hits a threshold? He exits everything.
FAQ
Q: How does Paleking avoid FOMO during bull runs?
A: He sticks to his framework. Any trade not aligned with his system triggers discomfort—and usually leads to poor outcomes. He avoids emotional decisions by trusting process over impulse.
Q: What role does leverage play in his strategy?
A: Almost none. Given his focus on capital preservation and long-term compounding, he avoids leveraged positions that could force liquidation during volatility.
Q: Can retail traders replicate his approach?
A: Yes—with adaptation. While fund-scale constraints differ, the principles of cycle timing, on-chain analysis, and trend following are accessible to all via free tools like Glassnode and exchange APIs.
Q: Why does he ignore social media trends?
A: Because by the time a narrative trends, it’s often priced in—or nearing exhaustion. He prefers leading indicators (on-chain data) over lagging ones (hype).
Q: How does he validate breakout signals?
A: He checks for clean fundamentals—no major unlocks, credible team, real usage—and ensures volume confirms momentum. Not every breakout is trustworthy.
Q: What book does he recommend for traders?
A: Blossoms in Adversity (The Legend of Awakening). Specifically, the stock battle over the Clothing Company—a fictional yet eerily accurate portrayal of market manipulation and psychology seen in crypto listings.
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Paleking’s story isn’t about luck—it’s about systems, patience, and knowing when to act… and when to walk away. In an industry obsessed with constant action, his greatest weapon may be restraint.