Navigating Floating Losses: Liquid Capital's Strategic Dip Buying Approach for 2026

Liquid Capital founder Yi Lihua has outlined an investment philosophy that separates temporary floating losses from long-term wealth creation. The fund’s approach demonstrates consistency across multiple market cycles, combining disciplined entry-exit tactics with a conviction about the crypto market’s directional bias heading into 2026.

Understanding Paper Losses in Market Cycles

Floating losses represent a psychological and narrative challenge that tests investor conviction during downturns. According to Yi Lihua’s recent commentary, these unrealized losses should be contextualized within the broader bull market framework. The perspective here emphasizes that short-term drawdowns are inevitable features of bull markets rather than signals to abandon positions.

Liquid Capital’s track record illustrates this philosophy in action. The team accumulated positions in the early part of this year, subsequently trimmed exposure before October, and has now resumed aggressive buying during recent pullbacks. This sequencing reflects neither blind confidence nor panic selling, but rather systematic analysis of market conditions and valuation opportunities.

Strategic Accumulation at Market Bottoms

The firm’s research indicates they are currently positioned in what they term the “bottom range” of this cycle. Rather than viewing floating losses as failures, the team interprets them as confirmation that assets are trading at depressed valuations relative to their long-term trajectory.

This conviction supports an aggressive accumulation strategy. Liquid Capital has committed substantial capital—approximately 1 billion dollars—specifically for purchasing ETH on pronounced market dips. The rationale underlying this deployment is straightforward: the potential returns from major bull market appreciation dwarf the discomfort of short-term paper losses.

ETH Strategy and 2026 Bull Market Thesis

Ethereum emerges as the core focus of this investment thesis throughout 2026. The fund’s stance reflects belief that the current environment presents generational buying opportunities that would be foolish to bypass due to minor price fluctuations of a few hundred dollars.

This positioning represents the culmination of Liquid Capital’s disciplined, research-driven approach. By maintaining alignment between conviction, analysis, and action—even during periods of floating losses—the fund positions itself to capture significant upside as the market transitions from capitulation zones into the anticipated bull cycle. The message to investors is clear: floating losses are temporary obstacles, not terminal outcomes.