With as many as 130 million people exposed to cryptocurrencies since the end of 2021, millions of investors may soon see their first crypto bull run, with some suggesting it could be as early as 2024.
However, unlike the current bear market, a bull market is “unlike any other market you’ve ever experienced,” said Ben Simpson, founder of education platform Collective Shift.
“It’s total and utter chaos. It’s just a tornado.”
In August, Cointelegraph spoke with hedge fund managers, research directors at digital asset firms, and other cryptocurrency traders to find out how they are preparing for the upcoming bull run, and what lessons they can pass on to newbies.
go in, go out
Simpson said one of the biggest mistakes new cryptocurrency traders make is holding on to their cryptocurrency wallets for too long — most often by getting caught up in the excitement that they could make more money.
“My first cycle, I had no plan. Back in 2017, I just rode it all the way up and all the way down.”
Instead, Simpson said, it can be helpful for investors and traders to write down clear investment goals and know what assets are in their portfolio, and to set a hard sell price for each asset.
Setting tight market exits may reduce the likelihood of investment losses because “once the music in a bull market stops, it stops pretty quickly,” Simpson said.
There are indeed tumbleweeds rolling in cryptocurrency right now.
no price change
I suspect there will be a big move soon.
— Ben Simpson (@bensimpsonau) August 16, 2023
Similarly, James Butterfill, director of research at CoinShares, told Cointelegraph that dollar-cost averaging (regular small asset purchases or position sales) can mitigate cryptocurrency volatility, whether in bull or bear markets.
“Implementing dollar-cost averaging can help lower average purchase costs and reduce the impact of volatility on a portfolio,” Butterfield said.
CK Cheng, co-founder and CIO of hedge fund management firm ZX Squared Capital, advised investors to focus on more established and recognized cryptocurrencies such as bitcoin (BTC) and ether (ETH).
According to Butterfield, Bitcoin behaves similarly to other alternative assets and has “significant diversification advantages beyond assets such as gold, commodities or real estate.”
Bitcoin and the “Top Altcoins” of 2013.
— James Todaro, MD (@JamesTodaroMD) August 21, 2019
At the same time, Deryck Graham, founder of crypto hedge fund Portal AM, said that it is necessary to consider balancing investments between speculative cryptocurrencies and mature cryptocurrencies.
Graham added that it’s important to segment investment areas — such as Layer 2 or Metaverse — and select relevant tokens, while avoiding tokens that have “little or no real use,” known as memecoins.
“Consider token economics, track record of development teams, whale investors coming in and out, community size, market dynamics and liquidity,” he added.
find the topic
Matrixport Research and Director Crypto Titan Author Markus Thielen told Cointelegraph that Bitcoin “always hits new highs” in booming markets, but the addition of new themes fuels new bull markets — the idea of investing in new cryptocurrencies rather than those in previous bull markets.
related: Cryptocurrency 2024 Could Be Very Optimistic — Here’s Why
At the same time, Simpson said, making high-conviction investments will help stay on target, as most people “have no chance” of keeping pace with their altcoin portfolios.
“I was talking to a guy the other day who had 80 altcoins in his portfolio. It’s impossible for an individual investor to stay at the same time and understand exactly what 80 different coins are doing.”
Simpson, Zheng and Graham all cautioned against getting overly exposed to cryptocurrencies by investing in the market with loans, investing more than one can afford to lose, or using leverage to trade.
Invest $1000 in 4 Crypto Assets > Invest $100 in 40 Crypto Assets
With the second strategy, you have too little dispersion and a much lower chance of success.
And you have no idea what those 40 coins are actually used for.
It means you are not making a logical decision.
Who are you…
— Ben Simpson (@bensimpsonau) August 22, 2023
“When one is least prepared, a leveraged position can cause capital to disappear completely,” Cheng said. “It’s important to have an investment mentality, not a speculative one.”
Simpson added that it is important to stay away from cryptocurrencies and watch the market. He advises veterans and beginners alike to protect their mental health.
“Walk regularly. Go for a run. Go to the gym. Be human.”
Magazine: How Smart People Invest in Dumb Memecoins – A 3-Point Plan for Success
This article does not contain investment advice or advice. Every investment and transaction involves risk, and readers should do their own research when making a decision.