“Is the bull market back?” That’s the question everyone is asking after last week’s Bitcoin ETF sparked exciting signs of activity in the cryptocurrency market. Only time will tell, but there’s no doubt that more and more people are starting to warm up to the idea that we could be on the verge of the next crypto bull run. So, if you’re new or know someone who is new and want solid advice on how to prepare for the next cycle, I’ve put together a roadmap with 8 essential tips drawn from my personal experience and the collective wisdom of the crypto community to help you get solid guidance on your journey ahead.
First: Develop an Investment Thesis Crypto investing is one of those things in life where you need to have a thesis. It doesn’t have to be long, original, or ironclad. But without a thesis, you run the risk of wasting money and time in the market without guidance. As an example, I remember my first experience participating in the 2017 bull run like a kid in a candy store. At the time, it seemed like every new coin I saw was more glitz and funnier than the last, so I bought a ton of crap because I didn’t have a serious thesis other than “haha, crypto is cool.” That didn’t get me very far. But fast forward to 2021, and after more thought, I have established a guiding vision for the subsequent bull run to double down on Ethereum because, in my opinion, it is becoming the next great open financial and cultural layer for the world. So, by diving into a real thesis, my second attempt has been a respectable success!
Second: What’s right for you is what matters. When browsing crypto social media, you’ll see all sorts of flat avatars, and it’s easy to forget that the people behind these accounts come from all different ages, have all sorts of different life experiences, and each has a different story, and each has a different financial capacity. All of this is to say that in the next bull run, you may see people around you pouring a lot of Ethereum into the “next big coin” or “next big NFT”, and this may trigger your FOMO, and you may be tempted to try to keep up with the trend and invest more Ethereum than you can afford. Don’t do it! Respect the different stages of your investment journey, and recognize that accumulating your crypto assets is a marathon, not a sprint. By taking a methodical approach, rather than acting recklessly, you will reach your goals. Invest according to your financial capacity, and only invest in the scale that is right for you.
Third: DCA is your friend. In the crypto space, prices can fluctuate wildly in a matter of minutes, and it is not uncommon to see double-digit percentage changes in a single day. This can be both exciting and nerve-wracking for newbies. Instead of trying to time the market during volatility, direct cost averaging (DCA) is a common and reliable strategy. The DCA method involves committing to buying a specific asset, such as ETH, BTC, SOL, etc., at regular intervals, regardless of their price. Instead of trying to enter the market at the "perfect" moment, you spread your purchases over a period of time, which can be weekly, biweekly, monthly, or any other interval that fits your investment plan. By spreading your purchases, you reduce the risk of buying at highs, and even if you start investing at highs, subsequent purchases during lows will average out your entry price. DCA also removes the emotional element of investing. You don't have to constantly try to predict the next move of the market, which can lead to rash decisions out of fear or greed. Instead, set a plan, stick to it, and watch your investments over time without constant monitoring or second thoughts.
Fourth: Don’t shy away from profits. When I first got into crypto in 2017, I put my only $300 into Ethereum and grew it to $25,000 by trading in small coins that “only go up and never go down.” Bitcoin had just hit $20,000 for the first time in December of that year, and there seemed to be no signs of slowing down, and it seemed that the entire crypto market was also promising. However, a month later, the bear market began. I held my small coins for the first half of that bear market, thinking that things might get better. But the tokens never recovered, so except for my Ethereum, that $25,000 became zero. There is no doubt that that was life-changing money, and I should have made the most of it. I did not make the same mistake in the bull market of 2021, because I locked in some profits along the way. But I know some people thought that the $5,000 Ethereum that year was just a halfway house on the way to $10,000, and did not sell when they had the opportunity to lock in some big profits before the next bear market. In the next cycle, make sure you have an exit strategy to turn some of your virtual gains into real money. You will thank yourself later.
Fifth: NFTs as a Leveraged Bet on Ethereum By investing Ethereum in an NFT of choice, you may be able to take advantage of the bullish momentum in the NFT market with the goal of realizing higher Ethereum returns when selling the NFT later, which is a classic low Buy high sell strategy. That's easy to say, right? And many NFTs should not be viewed solely as financial instruments that can be flipped. However, in many cases, a reversal is possible when the entire market is rising. The idea here is the potential for incremental returns. This is because the price fluctuations of NFTs can be large, with significant price appreciation potential. Therefore, the returns gained by investing in NFTs (if you choose the right NFT at the right time) are relatively There may be an increase in holdings of Ethereum. This strategy is worth considering for newbies, but again I caution against treating every NFT as a flippable object, some are, but not all!
Sixth: Get familiar with your tools. Sometimes, when visibility is limited, pilots have to “fly by instrument,” meaning they can only rely on their mastery of the aircraft’s resources to navigate. So when I say “get familiar with your tools” here, I’m metaphorically suggesting that you practice and personally use all the crypto applications available to you in order to gain proficiency in your Web3 toolbox. This process will not only drive your progress on your personal “crypto skill tree,” providing you with experience and mastery, but it will also start to feed back into your application in other strategies, such as what your overall investment thesis is, how you do tranche-cost averaging, which NFTs you buy, etc. In other words, get to know the projects here. Understand what they offer, how to use them effectively, what challenges they face, etc. In this way, you will gain wisdom that will further enhance your investment approach.
Seventh: Don’t ignore taxes. In the bull market, people made a lot of money, and that money was taxable income. When the next bear market started, the value of their assets dropped significantly, but the tax burden they incurred in the previous bull market years was still high. So, what’s the important point? If you don’t set aside some of your gains in good times and prepare for taxes, you can get hit hard in bad times. More cryptocurrency investors than you think have experienced this, and I am one of them. On the other hand, one tool in your toolbox to deal with this problem is to strategically lock in capital losses. Selling assets at a loss in the bull market year can help offset the taxes you would have paid on the profits. This tax-saving strategy is called tax-loss harvesting, and it allows you to minimize your overall tax burden so that it is not unbearable.
Eighth: Maintain a balance between work and life. The cryptocurrency field is a non-resting market without the closing bell of the traditional financial market. Sometimes, it can also become very chaotic. This continuous experience can easily become a vortex that pulls you away from other aspects of your life. The frenzy of the bull market can lead to overwork and exhaustion. That said, it cannot be overemphasized to prioritize your peace of mind and take a step back regularly. Setting specific times for market analysis, trading, and portfolio management is a way to ensure that you don't overwork and create a balance. In addition, "disconnecting" from time to time can provide new perspectives when you re-engage. It's easy to get caught up in minute-by-minute drama, conspiracy, price fluctuations, and so on. However, if you also invest in rest, you will be more sober when facing all of these things. That's all for today. Welcome to leave a message in the comment area to share your views. If you think this video is helpful to you, please collect and forward it to let more friends see this video. I am Lao Dan. Like and follow us and see you next time!
