When the crypto market experiences a correction, many people start shifting towards stocks and precious metals, chasing assets that have already risen. Frankly, this is a classic case of chasing gains and selling on dips—seeing others make money and rushing in, only to often suffer the fastest losses.

The biggest problem with this approach is that it completely violates the fundamental logic of asset allocation. The real challenge in investing isn't chasing short-term hot spots, but rather making long-term asset allocations based on the relationship between risk and return.

Let's first look at the characteristics of three types of assets. Stocks and precious metals perform relatively well during stable periods, with less volatility, but honestly, their long-term returns are actually limited. Cryptocurrencies are entirely different—during bull markets, returns can far surpass traditional assets, but the cost is more intense volatility. Based on data from 2015 to 2024, nearly ten years, the potential returns of cryptocurrencies indeed significantly exceed those of traditional assets, but the downside risk is also much greater. Whether this fits you depends mainly on how much risk you can tolerate.

The current market situation is quite interesting. Stocks and precious metals have already experienced a substantial rally, with valuations at relatively high levels; in contrast, cryptocurrencies are still undervalued, and their fundamentals are continuously improving. This is precisely the time to test your investment wisdom.

The old saying in asset allocation is "don't put all your eggs in one basket," but a more critical principle is "switching between different assets during their valuation cycles." The truly smart approach is to combine traditional assets that have already risen significantly with undervalued crypto assets—this way, you can leverage the stability of traditional assets as a safety net while capturing future growth potential through crypto assets. This is what rational allocation looks like.