Last week, we discussed the Crypto Bull Market, why it happens, for how long it usually lasts, and what are the indicators that the market is transitioning from a Bear to Bull market. For this particular article, we will discuss how you can prepare yourself from the crypto bull market, how you can leverage its full potential, and why you should not miss it out.
Yes, we know what you’re thinking right now — why should you compete with others for survival when it’s already a bull market? Surprisingly, falling to the deception of the bull market with its associated upward trends of asset prices is a false sense of security. There are still risks and pitfalls that anyone will experience if they are not prepared for this type of market.
More gains than losses is the main goal for investors during the bull market, which is why they prepare themselves through the following:
Spot the earliest bull run
This simply means “do your own research” — that is the best way to be one of the first to spot the bull run. Once asset prices start rising, the hunt also begins. Investors will be searching for the next micro-cap coin that will explode in value. As you join the hunt, be mindful of those who will try to sway your views by suggesting investments you’re not familiar with.
The best course of action is to do research thoroughly and not blindly invest in something based only from the words of others.
Buy early
The sooner you buy crypto assets in a bull run, the higher your gains will be. In the early phases of a bull market, some coins and tokens are undervalued — especially small-cap cryptos that are new to the market. These coins, experts say, could see dramatic, rapid growth in the favorable environment of a bull market.
HODL but with interest
During the peak of the bull run, it is common to see high sale prices on the market, which also means a high Capital Gains Tax bill. The easier way to avoid Capital Gains Tax on crypto is by “hodling” or the holding of cryptocurrency for future profits and not selling. However, this doesn’t outright mean you can’t earn from your assets. There are other ways to earn passive income from the crypto you hodl such as staking, lending, providing liquidity.
Technologies that are problem-solvers
Be on the lookout for specialized tokens that are used for specific purposes such as for decentralized finance, NFT management, and blockchain oracles. These tokens incorporate advanced technology to overcome the limitations of the market’s traditional big-cap offerings. You should consider these technologies in your portfolio as experts believe that tokens custom-built to solve problems or address a promising market could see the biggest gains in a bull market.
Diversify your assets
Any investor, whether in the traditional or crypto market, knows that the diversification of assets is the key to minimize financial loss. A diverse portfolio reduces risk and opens you up more opportunities. So before prices of crypto assets peak, make sure you have owned a few already. Find the ones that you think have a promising future.
Invest and sell in phases
Another effective way to minimize risk during a bull market is to invest and sell in phases. Enter the market bit by bit and if it turns out that some of your buys are losers because their prices fell immediately, your losses are offset by earlier buys. As for selling, you can never be sure you’re getting the best price for tokens, so sell some bit by bit — you can do it weekly. This method smooths out market fluctuations and helps you maintain the overall value of your portfolio.
Prepare an exit strategy
Indeed, it is enticing to stay and continue investing in the bull market for higher profit, not until a market correction brings prices crashing down. This is why crypto experts always suggest investors to plan ahead. Set a decision to leave the market when your portfolio hits a certain price — and keep that commitment. You might miss out on some extra growth, but you could also protect your profits from falling prices.
Define your personal goals
Are you investing to ensure that your toddler will be able to afford university someday? If so, a long-term hodl strategy makes sense. Are you building a retirement nest egg? Then you may want to sacrifice some growth opportunities in return for minimizing risk. If you’re in your 20s and looking to invest discretionary income, then it’s reasonable to include some high-potential high-risk tokens in your portfolio. While it is important to understand the market, understanding your own goals and needs is just as important.
Takeaways
As exciting as it gets, not everyone is a winner in bull markets. Seasoned investors balance growth and risk potentials to achieve portfolios tailored to their needs. Like the first preparation mentioned above, research your options and always have a defined goal in mind as this will lead you to leveraging the bull market’s potential.
Important note:
The news, research, analyses, and other information contained in this article are provided as general market commentary, and do not constitute investment advice, recommendations nor should be perceived as independent investment research. Investing in the bear market poses high-risks. Do in-depth research and seek advice from experts to avoid major financial loss.
