To crypto newcomers: 7 practical tips for the next bull market

Written by: The DeFi Investor

Compilation: Deep Tide TechFlow

During my first few months in exposure to cryptocurrency, my portfolio was in the red, costing me a significant amount of money. There were several reasons for this, the main one being that I didn’t understand how the market worked at the time.

But after some time, I managed to turn a loss into a profit.

If you’re a beginner and don’t have to repeat my mistakes, here are 7 crypto tips I’ve rounded up to help you succeed in your next bull cycle:

Reduce the number and bet on the point

Many people like to diversify their investments, and although diversification is a good way to invest, it can only preserve wealth, not accumulate wealth.

Indeed, if you know that your investments are spread across 15-20 projects, even if one of them dies, it won’t affect your portfolio too much, and you can still get a good night’s sleep.

But it is difficult to grow wealth. For example, if you like 25 projects, then just make some big bets with high returns on the top 6-7 projects that you think are the most promising,

It’s much easier to manage 6-7 locations well than it is to manage 25 locations well.

Don’t Sell “Winners”

This is one of the biggest mistakes a lot of people make, when you see one of your tokens go up and another doesn’t perform well, so you sell the best performing token… But this increases your risk on a losing token, so it’s not a good idea.

There’s nothing sadder than selling a token after a 2x increase in a token and then going up 10x in the following months.

When the price has reached your selling target or your non-crypto friends start calling to ask what token you should buy. **

Original post: cevo

In a bull market, it is necessary to understand the truth of “speculation > fundamentals”.

Pumpamentals are factors that drive the price of a token up quickly, such as a narrative, catalyst, or some kind of tailwind, but have nothing to do with fundamentals.

In the last bull run, XRP reached a market cap of $80 billion, which would not have been possible without its extremely active community. There are many other tokens that have also reached extremely high valuations due to their strong flush toilet effect.

While fundamentals will eventually be the main driver of price increases, it seems to me that we are far from that point. So, instead of focusing only on finding the strongest fundamentals, try to understand what makes retail investors buy a certain token and find a simple logic for retail investors to invest in. **

In a bear market, these things are most important:

• Fundamentals *Income
• Market fit of the product

But in a bull market, Pumpamentals become extremely important.

• Community Spiritual Leaders
• Social media hype
• The narrative fits the market
• Powerful marketing

Previously, I shared more thoughts on “Pumpamentals” in this thread:

Original post: The DeFi Investor

Write down your investment thesis

It seems boring, and it’s not something that a lot of people do. But as Louis Cooper says in the tweet below, writing can help you build investment convictions.

It can also help you better understand what you invest in and identify gaps in your knowledge. In addition, forcing yourself to write an analysis before buying a token also makes it easier to avoid investing because of FOMO.

Original post: Louis Cooper

Review your portfolio every 1-2 months

Unless you’re buying BTC or ETH, you can’t “buy and forget”. Cryptocurrencies are growing at an extremely fast pace, with most projects disappearing less than two years after their launch.

Therefore, I recommend that they be reviewed on a regular basis.

When reviewing the items in my portfolio, I check a few things like:

• Recent progress of the team
• On-chain metrics (revenue, fees, TVL, etc.)
• Community strength (is anyone talking about the project on X?)
• Roadmap (what’s next for your investment?)

As George Soros said, “It’s not about whether you’re right or wrong, it’s about how much money you make when you’re right and how much you lose when you’re wrong.”

The only way to minimize losses is to cut the meat early when the fundamentals change.

Be open to new ideas and perspectives

There’s a way to increase your chances of success: invest in unpopular, misunderstood projects before everyone starts talking.

In a bull market, saying “this is going to work” without doing some research is probably the most costly mistake you make.

Trying new things will make you pay off, and you may even get some airdrops along the way.

If you can’t easily change your biases when new important information comes along, then you’re just a member of the project community, not a real investor.

Accept the fact that sometimes you’re wrong, and the greatest traders won’t have any ego problems when it comes to saying “my analysis was wrong and I screwed up”.

Develop an exit strategy

Anyone who didn’t make a profit in the last bull market swears that they will make a profit next time, but it’s easy to get caught up in the excitement of a bull market.

At the peak of each bull run, 90% of influencers say we’re going higher, and we’re just getting started. As a result, selling humiliation became a common phenomenon, and those who made a profit were called fools.

So you need to develop an exit strategy and make sure you’re going to stick to it.

Selling isn’t easy, and you most likely won’t be able to sell at the exact top, but at least you can make sure you’re locking in some profits and not surviving a brutal bear market in vain.

A good exit strategy should include the following two things:

• When to make a profit
• When to reduce losses

Here’s a great topic on how to make an exit plan:

Original post: Res

Alright, that’s all for today.

In the end, the first thing I recommend to everyone is to invest/trade according to the strategy and rules decided by their previous market experience, as the saying goes: “A trader without systematic guidelines is a gambler”. **

It’s hard to build wealth, and it’s easy to lose it, which is why a clear strategy is needed.