We are now in the epicenter of a crypto mania. That minority of the population who have joined this crypto fervor are enjoying the Bull Run. We are in the middle point of it if we compare it with bitcoin price expectation. The previous market top was 20000 USD and people expect 100000+ USD bitcoin this time. Till now we reached about 65000 USD ATH. So we have come 45000 USD till now and another 35000 USD pump required to meet people’s expectation. Similarly other coins have their own journey, expectation and targets.
The previous market cycle was driven by price and in this market cycle defi is playing a major role. In the previous cycle we did not have so many different block chains working together but this time apart from bitcoin and ether, we have Solana, polygon, terra, Binance smart chain, Polkadot block chains to name a few. And there are bridges to jump from one block chain to another. There is no doubt the market has matured from the previous bull run and the variety of investment opportunities had increased many fold. Staking and liquidity providing is a major investment opportunity this time not to mention the various lending platforms.
Being in the middle of bull run is like living a life of euphoria. Many have doubled their investments many times over and expecting much more. Even when I joined this platform in July 2020, BCH was around 200 USD and now it has comfortably crossed 1000 dollars. I bought a few Matic bought for 275 dollars in Nov 2020 and it is worth more than 12000 dollar as I write, just to give an example how much appreciation can some crypto make in bull market.
Now is the time when you lose your control and the market controls you through greed. The expectation hype is so much that people postpone booking profits periodically. We all understand that this bull market will end at some point of time, but we get so attached to the price of the coins that we forget that the whole purpose of most of the people is to make money out of it. When the market will start to correct we don’t know and when some knowledgeable person will tell that now we are reaching the market top and we should plan our exit strategy, we will not heed those words because of the greed.
It is always better to start booking profits both when the market is going up as well as when the market is going down. As we DCA in, we should also plan DCA out. It is foolish to expect that you will catch the top to exit your positions. Now most of us have two types of holdings. One is the core holding of the coins which we consider to consist of the coins which we believe in the most, like Bitcoin, Ether, Chainlink, BCH, etc and would not let go off completely. Next are the coins which we invested to make the most out of this bull run. The problem is not with the core coins but with the second category. We tend to get attached with these coins so much as they generally give better returns that the core coins.
So be very clear with your strategy and be very brutal with your mind, do not get attached with all the coins which you hold and dump the ones which you originally planned, as per your strategy. These are the coins which will fall more than 90% in bear market wiping out your gains, if you are not disciplined. Even with your core coins you must be doing DCA at various prices. Plan your partial exit strategy in these as well. Suppose you are holding 1 Ether from previous market cycle and in this cycle you have bought 3 more at various price points using dollar cost averaging. You need not hold all these 4 coins till the next market cycle. You can keep a 2.5 Ether and plan your exit strategy for the rest as per your liking. I am sure you will get Ether at cheaper rate in bear market than some of your DCA price.
Some defi platforms like Binance smart chain gives insane returns for some obscure coins. People FOMO in to them but after getting insane gains they do not exit the position and thereby get stuck with those coins as liquidity dries up. So if you are doing this then don’t wait till the pool to end and then withdraw but do it in the middle so that you can actually withdraw and exchange those coins to some good ones, or else there are high chances you will get stuck.
A common strategy is to convert earnings to stable coins and then using them in some platform to earn some interest out of it. When you are doing it then do not put all your stable coin earnings in one platform but spread it across 2 or 3 platforms. We have seen even the most popular ones been hacked, so spread your risk to minimize it.
Also with so many options available now do not stick to one block chain and platform. You can spread your investments across Ether, BSC, Solana, Anchor chains. This will also help in reducing the risk.
The primary aim of using crypto should to create a passive income source for middle class people like us so that it augments our primary source. If you want to develop a passive income of say 500 USD per month then you have to plan well. Suppose you are earning interest from 3 platforms, in some you will be earning more and in some less. Use the passive income from one source to increase the capital of another source, this way you will be able to create an equal source of income from three sources. Example- Suppose you are earning in Nexo, BSC and anchor protocol and the most earning you are getting from BSC. In that case periodically transfer the earning from BSC to Nexo and anchor protocol so that you can create an equitable amount of passive income from the three sources. The benefit of this is that if one collapses then you will have 2 more good sources. This way you are ensuring that your risk is equally spread out and secondly you are not too much dependent on one source. Your primary aim should be not to touch the core investment but to use the interest or reward earned out of it.
In the midst of this bull run it is important that we keep ourselves grounded and stick to a strategy. Exiting is more difficult than entering the market- always keep that in mind. These are some of my learning’s from the crypto market which I wanted to share with you all so that you make the most of it rather than lose the most of it. My point is whatever plan you follow, just follow it, do not deviate from it feeling greedy. If you don't have a plan then make one that suits you.