Whether you prefer the patience of a long term investor or the tenacity of a short term trader, you definitely need to wrap your head around the best practices anyone should have amidst an extended bullish trend. This is imperative as every rally comes with its fair share of traps that can completely mess up your portfolio. This post sets out to review the key things you need to remember in order to keep your head above water despite the rally's gaping risks.
Following the unprecedented success of DeFi this year, the crypto market has embarked on an impressive run, with a high likelihood of living up to the famous 2017 rally. Since then, the cypto-space has gone through a period of remarkable transformation , especially the Ethereum blockchain. Currently, Ethereum has replaced Bitcoin on the top spot in terms of transaction fees, DeFi is quickly becoming a household name as it’s key projects are proving a formidable force on the market, while as Link has made its way into the elite 5 based on market capitalization.
In short, the Ethereum blockchain may be thought of as a leader in the current bullish market. This is quite interesting, as the blockchain was also instrumental in the 2017 rally due to the role it played in the great ICO explosion as a reliable platform for smart contracts.
The major reason behind Ethereum blockchain's ability to spearhead yet another bull run seems to be an unwavering effort to further develop its fundamental architecture, which laid forth a strong foundation for fundamentally sound projects.
However, the risks associated with the previous bull run still stand today. Additionally, new developments in the crypto-space also come along with new risks, which need strong mitigation measures in order to stay on the safe side of things. Let’s take a quick review.
Don’t take a blind fall for anything that looks promising
Let’s take a look at a good example before we hit the nail’s head. DeFi came in with an incredible feature known as Yield farming, which affords it’s participants rewards for contributing liquidity to a range of available projects. The program provides an interesting earning portal rarely seen in other projects.
The case of Yam finance should give us something to think about. The project managed to rake-in assets amounting to around $600 million in just a few hours after its launch. However, disaster followed as a bug was exposed, leaving the project in shambles. In the beginning, Yam finance had all the signs of a great program with a credible team working tirelessly behind the scenes. What most interested parties didn’t know was that the project hit the ground running without any proper auditing procedures. When the bug was exposed, most investors were left in the dark with incredible losses.
The key lesson is that the every bull run is never short of mouthwatering projects, but the risks involved can be great. Don’t just jump in at first sight, exercise caution, and be sure to define the risks. Going after everything that promises larger-than-life returns often proves disastrous.
Look out for scammers
While the Yam project had all signs of a committed team, other projects come with red flags all over the place. A bull run can be a great bleeding ground for scammers as they relentlessly try to take advantage of the excitement. Therefore, be sure to come across scams as the rally extends it’s run in the next few weeks.
Scammers can get to great lengths in order to trick unsuspecting users. They can fork some credible protocols and create seemingly lucrative projects, which are clever copy-cuts of existing ones. In short, it’s always prudent to keep yourself from projects which promise the world, but carry disproportionate risks on their backs.
Remember, knowledge is power
By now you probably know that great information is key to success especially on the turbulent cryptocurrency market. This makes it imperative to have reliable sources of information. The good thing is that the internet has gifted us with an incredible range of avenues to keep us updated on whatever is happening on the cryptocurrency market.
Since the Ethereum blockchain is at the spearhead of the current rally, it’s great to be conversant with some of the credible sources which are capable of furnishing some reliable Ethereum and DeFi updates. DeFipulse is great when it comes to keeping yourself updated on key statistics relating to the DeFi protocol. Zapper and Coingecko are also proven great DeFi sources. Though not as famous, Dune analytics also affords a great resource for tracking Ethereum activity.
Gas prices aren’t as cheap anymore; but there are options
Ethereum gas prices skyrocketed to a record high, chiefly due to unprecedented interest and participation on DeFi. A range of solutions to counter this are still in the making, however, there are a few things you can do to keep your expenses minimal.
The first trick you can explore is tracking gas prices with the aim of transacting only when they are at reasonable levels. The Ethereum Gas Station can help you do this efficiently through providing real time and accurate data. Another great app to look out for is the Looping pay, which essentially allows you to carry out Ethereum transactions without any cost.
Remember, volatility is still a reality
Well, this is just a reminder as chances are that by now you know that crypto prices can easily go either way by crazy margins. This may not always be the case, but it calls for extreme vigilance and prudence. The basics still apply despite a rather optimistic future. Stay focused and don’t let FOMO engulf your hard-earned money.
Don’t compromise on keeping your funds secure
Hackers tend to evolve along with the targeted technology. Some of these new and exciting projects are only half-baked when it comes to security issues, thus the security question should always be taken seriously. Hardware wallets are still the king when it comes to securing your funds. Practice the basics, do not let yourself be a victim of phishing attacks, ignore suspicious sites and questionable projects. Again, refrain from offers with unrealistic promises.
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Thanks for the exposition