Approaching Crypto’s Potential Surge: Strategies Shared by Traders Anticipating the Impending Storm
A wave of fresh crypto investors might soon witness their inaugural encounter with a bullish market surge, and those seasoned in such events have disclosed their approaches to confront this situation.
With a staggering count of over 130 million individuals estimated to have embraced cryptocurrencies since the culmination of 2021, a multitude of investors could be on the brink of experiencing their initial crypto bullish wave. Some speculate this phenomenon could materialize as soon as 2024.
For neophytes in the crypto realm, it’s crucial to grasp that a bullish market defies conventional experiences, as expressed by Ben Simpson, the visionary behind the crypto education platform Collective Shift. He likened it to “utter chaos” and an unrestrained “tornado.” During August, discussions with hedge fund executives, digital asset company research heads, and other crypto traders aimed to decipher their strategies for the impending bullish market, along with valuable lessons to impart to newcomers.
Engage and Disengage Strategically
Simpson pinpointed a common mistake novices tend to commit: retaining their crypto holdings for an excessive period. This behavior often stems from being swept up in the excitement of potentially higher gains. He confessed, “During my first cycle, I lacked a plan. I rode the ascent and endured the plummet back in 2017.” Simpson recommended devising a distinct investment objective and comprehending the portfolio’s assets. This involves establishing definite sell points for each asset.
Crafting well-defined market exits could diminish the risk of investment loss, considering that “when the music stops in a bullish market, it halts abruptly,” noted Simpson. In alignment with this strategy, CoinShares’ Head of Research, James Butterfill, advocated for dollar-cost averaging – a method involving periodic minor asset acquisitions or sales – to mitigate cryptocurrency volatility, whether in a bullish or bearish scenario. This approach assists in reducing the average acquisition cost and curbing the impact of volatility on a portfolio.
Steer Clear of Memecoins
CK Zheng, co-founder, and CIO of hedge fund manager ZX Squared Capital, advised investors to focus on well-established and reputable cryptocurrencies like Bitcoin ($26,001) and Ether ($1,642). Butterfill corroborated this view by highlighting Bitcoin’s behavior akin to alternative assets, noting its remarkable diversification benefits that surpass gold, commodities, or real estate.
Concurrently, Deryck Graham, founder of crypto hedge fund Portal AM, recommended striking a balance between speculative and established cryptocurrencies. Graham encouraged investors to break down investment sectors and select related tokens while avoiding those with limited or no practical use, notably memecoins. He advised assessing tokenomics, the track record of development teams, influx and exit of whale investors, community size, market momentum, and liquidity.
Identifying the Underlying Theme
Markus Thielen, Head of Research at Matrixport and author of “Crypto Titans,” emphasized that while Bitcoin consistently reaches new highs in booming markets, fresh themes drive new bullish phases. This perspective bolsters the notion of investing in newly emerging cryptocurrencies as opposed to those from the previous bullish cycle.
Simultaneously, Simpson underscored the significance of having high-conviction investments to stay focused, asserting that managing a portfolio with numerous altcoins proves challenging. Simpson, Zheng, and Graham all issued cautions against excessive exposure through leveraging loans for crypto investments, overextending beyond affordable limits, or trading with leverage. Zheng cautioned that leveraging could lead to total capital loss when least anticipated and urged an investment-oriented mindset.
In conclusion, Simpson stressed the value of taking breaks from crypto and market-watching to safeguard mental well-being. He advocated for outdoor activities and human engagement beyond the trading sphere.
