3 Things To Help You Survive The Crypto Bull Market
The crypto bull market is relentless right now. With bitcoin breaking $50,000 and most other digital assets climbing higher, you may be asking yourself what to do next? These 3 things can help you get the best out of the bull run and also survive it emotionally.
1. Get your crypto mindset right
It’s easy to get consumed by the current “crazy gains” to be had in the crypto market. And for many people, these gains can and will be life-changing.
With that said, bull runs can be physically and emotionally exhausting. The fear of missing out on further gains and the fear of losing out on current gains are enough to keep most people awake at night.
A good mindset towards crypto will help you sleep better and stop you from putting the rest of your life on hold. Not only that, but it will probably lead to better “gains” in the long run.
Here are some things that might help with this:
- Take time off to focus on other non-crypto aspects of your life. Spend time with your family and friends, who will still be there long after the bull run is gone.
- Turn your phone off two hours before you go to bed so you can’t look at your portfolio during the night. Sleep in a separate room from your phone.
- You won’t catch every crazy altcoin pump. You will also have many days when your crypto portfolio will be down 5, 10 or even 15 percent. Accept this and move on.
- Define how much time you are willing to spend each day looking at crypto charts. If you are a long-term investor, you only need to look at the charts once a day. Any more than that and you are wasting time that could be used more productively elsewhere.
- Don’t compare your gains to other people’s. Set a financial goal that suits you and stick to your strategy.
2. Define your strategy and implement it
You may have started investing in crypto when bitcoin was below $10,000 and already be sitting on large profits. Or, you may have just learned about bitcoin and other digital assets and only recently taken the plunge.
Whatever your circumstances are, you need a crypto strategy that that is tailored towards them. While each person may have a different strategy, I have found that the following principles tend to work well in strong crypto bull markets:
- Define your financial goal. What do you want to get out of the bull market? Once you know what would make you “happy” then you can work towards this. Anything else is a bonus.
- Define how much you are willing to invest—or what you are willing to lose if the market turns south. Bull markets don’t last forever and they can end just as quickly as they begin. Understand that digital assets are risky investments and you should only be willing to invest what you can afford to lose in the short term.
- Define how often you will invest. You may be lucky enough to have already “loaded up your bags” months ago and not wish to invest any more cash into crypto. But if you are new to crypto, then don’t invest everything in one go. Many people learned this the hard way by buying bitcoin at $20,000 in Dec 2017. It is much safer to dollar-cost average or value average into your investments over weeks or months instead. As an example, I used value averaging in 2017 with a relatively small amount of capital and it worked out quite well. While I would not invest in all the same coins this time around, the same principles would still apply today.
- Don’t try anything too fancy. Rather let the bull market do the work for you. When markets are ranging sideways or trending down, then you may need to work harder for your returns by trading crypto long and short (if that’s your thing). But in a major bull run, all you have to do is sit tight and follow the trend. I learned this the hard way in December 2020 when I tried to short bitcoin at around $20,000. I will not be shorting bitcoin until the bear “officially” comes out of hibernation.
- Don’t chase altcoin pumps. If you are going to load up on new altcoins, don’t buy them on days when they have already gone up 20 percent. Buy them on down days instead.
- Don’t use leverage unless you really know what you are doing. Crypto bull runs are extremely volatile. Leverage can wreck you, fast.
- Have an exit plan. This is important. Paper gains are nice to look at but they will not make you financially better off. Have a clear rule to take profits in small increments as the bull run goes on. This way, you can bank some gains but also have exposure if the crypto market continues to go up.
- Decide if you want to take profits in bitcoin or in fiat currency (or in both). Altcoins are speculative. Bitcoin is less speculative. If your goal is to accumulate more bitcoin by profiting from the current “altseason”, then take profits in bitcoin from time to time. If you are more concerned about your fiat bank balance, then take profits in fiat. Not sure? split your profits equally between bitcoin and fiat.
3. Don’t try to call a major crypto market top (rather wait until it is officially confirmed)
Digital assets could go much higher than anyone thinks in this bull run. Or, the party could be nearing its end. I am personally bullish on crypto right now. But if a 25 percent “red candle of death” engulfed the bitcoin chart today, then I would need to rethink my opinion!
Search the internet and you will see a range of “expert” price predictions for bitcoin and other digital assets in 2021. Since these “predictions” all differ, they can’t all be right. Not only that, but unforeseen events can have a huge impact on the price. Look at what happened below when Tesla bought bitcoin:
Rather than trying to predict when the current crypto “bubble” will burst, it is far better to use simple technical analysis for confirmation that the long-term trend has changed.
If past crypto bull market history is anything to go by, then there are two ways to determine when this particular party will be over:
- Bitcoin puts in a major “lower high” on a weekly candle close.
- Bitcoin closes a weekly candle below the 20-week moving average.
The next two charts show these two points in action respectively for past bitcoin bull runs:
Waiting for the bull market to end with a chart confirmation is a reactive rather than predictive approach. By definition, this means that you will not make the perfect exit at the absolute top. Then again, how often do people sell everything at the absolute top anyway?
If you are going to make logical predictions of when you think this crypto bull market will top out, then you may want to only take some profits at these levels in case you are wrong. Accept that your portfolio “All Time High” will not be the final value at which you get out. But if you can capture a good chunk of the upside, then you would have done very well.
Disclaimer: this is not investment advice. I currently hold bitcoin and other digital assets and I am not selling them, yet…