Since the end of 2021, it’s been projected that more than 130 million individuals have been exposed to cryptocurrencies. As a result, many investors may soon be anticipating the first crypto bull run, which some believe might happen as early as 2024.
A bull market in such assets is unlike anything you’ve ever encountered, warns Ben Simpson, the founder of the crypto education portal Collective Shift, warning those who are new to the industry.
The situation is pure anarchy. It is merely a tornado.
Get in, get out
One of the main mistakes new cryptocurrency traders make, according to Simpson, is holding onto their crypto bags for an excessively long period of time. This mistake is typically brought on by getting carried away with the idea that they could gain more money.
He had no strategy during his first cycle. In 2017, he rode it all the way up and back down.
Instead, according to Simpson, it may be beneficial for traders and investors to set firm sell prices for all of the assets in their portfolios as well as to clearly define their investing objectives in writing.
In a bull market, if the music stops, it stops very quickly, therefore setting hard market exits may lessen the likelihood of losing money on an investment, according to Simpson.
In a similar vein, James Butterfill, Head of Research at CoinShares, told that dollar-cost averaging, which involves making regular minor asset purchases or sales, could lessen the volatility of cryptocurrencies in both bull and bear markets.
According to Butterfill, implementing dollar-cost averaging can lower the average purchase price and lessen the impact of volatility on a portfolio.
Avoid memecoins
Hedge fund manager ZX Squared Capital co-founder and chief investment officer CK Zheng advises investors to research the more well-known and recognizable cryptocurrencies like Bitcoin and ether.
Bitcoin, according to Butterfill, acts similarly to other alternative assets and offers superior diversification advantages to assets like gold, commodities, and real estate.
Deryck Graham, the creator of the cryptocurrency hedge fund Portal AM, advised investors to balance their holdings of young and established cryptocurrencies.
To avoid tokens with “little or no practical use, namely memecoins,” Graham advised breaking down investing sectors like layer 2’s or the metaverse and selecting related tokens instead.
Take into account tokenomics, the track record of the dev team, whale investors entering and exiting, the size of the community, market momentum, and liquidity, he advised.
Find the theme
According to Markus Thielen, head of research at Matrixport and author of the book Crypto Titans, Bitcoin has “always hit a new high” in a booming market, but he also noted that new themes drive new bull markets, supporting the idea of investing in new cryptocurrencies rather than those from the previous bull run.
Simpson added that most investors have “no chance” of keeping up with a portfolio of cryptocurrencies, so having high-conviction investments will help investors stay on course.
Simpson, Zheng, and Graham all cautioned against overexposing oneself to the cryptocurrency market by trading with leverage, spending more money than one can afford to lose, or taking out loans to engage in the market.
When one is least expecting it, a leveraged position can lead to a complete wipeout of capital, according to Zheng. It’s crucial to approach financial decisions with an investment attitude rather than a speculative one.
In addition, Simpson emphasized the value of taking breaks from trading and cryptocurrency. He counselled traders, both seasoned and novice, to protect their mental health.
“Go for regular walks. Go for a run. Go to the gym. Be a human.”
