As has been mentioned several times, we are currently approaching the end of the cycle of the crypto market. Every rise is always followed by a fall. Nevertheless, many do not realize the importance of taking profits. Many people actually prefer to take pictures of their portfolio rather than actually taking profits. So, why is taking profits mandatory in crypto?
1. There is a Bull Market, There is Also a Bear Market.
Crypto is a market that moves according to cycles. There is a bull market cycle where crypto prices experience a non-stop rise for 3 consecutive years. Meanwhile, there is also a bear market where the possibility of crypto prices falling lasts for a year. Therefore, after experiencing high profits in crypto for these 3 years, it is not wrong to reduce exposure before the potential bear market.
2. Taking Profits Helps Compounding.
Although it's difficult to perfectly time the market, when we successfully take profits and wait for the downturn cycle to finish, we will be able to compound more effectively by buying at lower prices (if given) with the hope of obtaining a larger amount of coins.
3. If 'Stuck', It Takes 3 Years to Return to Entry.
The fact for those who are 'stuck' at the all-time high price and made purchases with a lump sum method is: it takes almost 3 years for the price to return to the entry point. For example, if we buy Bitcoin at its peak (price $60K) in April 2021, it takes 1000 days for the price to return to $60K, as it only managed to get back to that point in February 2024. We could use our money better than being 'stuck' for 3 years and experiencing a decline. Although in the end crypto prices tend to rise, no one is patient enough to wait for 3 years.
4. The DCA Method and Saving is Not Suitable for Everyone.
Indeed, we can choose not to time the market and, as taught: we can do DCA and make regular purchases every month by looking at past price performance where there tends to be high performance if we use this method. However, many among them are 'impatient' with this method and hope it can be applied and see results immediately, even though like 'saving', it takes time to achieve results.