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To read Part 1 of “How to Prepare for the End of the Running of the Bulls,” click here.
So you’ve made a million dollars this cycle and you’re trying to figure out how to turn those life-changing wins into real-world money before the inevitable crash. But at the same time, you don’t want to sell now and miss out on upside potential. So what should you do?
For the founder of Quantum Economics, Mati Greenspan, the answer is simple: be optimistic. He is not a supporter of trying to time the market.
“As someone who has traded my entire life - I mean, long before cryptocurrencies - you will find that it always pays to be bullish, and taking your money out of the market has almost never been a good thing. long-term strategy. Not for any market over almost any period.
Greenspan points out that even the few people who bought Bitcoin at the peak of the 2017 bull run rose 250% just three and a half years later.
“Anyone who’s been wise enough to predict the crypto winter and pulled out all of their money, when are you coming back?” No one can time the markets at a T. The best we can do is determine, based on the information we have, what are the best investments to make over time. “
No one can predict the top
Unlike Decentrader Filbfilb and Philip Swift analysts in Part 1, Greenspan does not believe that it is possible to use chain indicators to accurately predict the end of a bull run. He warns that unexpected events like bad regulatory news from China or a tweet from Elon Musk can occur at any time, causing markets to tip bearish.
Filbfilb says that’s why good traders don’t just look at one type of data, but view chain analysis in the context of sentiment, cyclical data, technical analysis and everything in between to assess direction. of the market.
“If you’re kind of sitting there waiting for a chain analysis to give you the answer, and we have a black swan event, you’re not going to do anything in time,” says Filbfilb. He adds that even the events of the Black Swan do not present major issues for sophisticated traders, noting that the March 2020 “Black Thursday” crash had been announced for weeks:
“If this sort of thing were to happen again, as a trader myself, I would have enough time to act. I am in and out of the market all the time.
“For me, it’s a much more fluid situation. I have other tools like I know how to cover. I have other ways of managing risk, which means I don’t necessarily have to sell my Bitcoin to put myself in a position where I can hedge any downside risk.
Needless to say, it takes a lot of hard work, time and training to be able to play in the market like Filbfilb. What about us?
Filbfilb recommends taking enough profit to stay happy during the crisis. “If you’ve made life changing money, consider changing your life a little bit now. For me, I personally did it - I took money off the table, ”he says.
“What this has allowed me to do is to kind of be able to hold out for the rest of the cycle, potentially at much higher prices.”
Profit from profit taking
Scott Melker, also known as “The Wolf of Every Street,” agrees that profiting from your trades all the way is key to success, whether at predetermined levels or more haphazardly. “People should be taking profits on the upside, just like you should be averaging the dollar costs in a downward asset,” he says.
“I firmly believe that once your investment has doubled, take your initial investment off the table. So if it was $ 100,000, now you have $ 100,000 to play and you have absolutely no risk.
This has the added benefit of reducing the risk of you making a big mistake by selling too early, too late, or too much, when you think the top has come.
“You know, when you take a profit, every time you sell something, you release the pressure on your future decisions. Which is mentally a great place to be.
He adds, however, that you are allowed to have diamond hands with your long term, high conviction holds. “I buy Bitcoin for my kids - I don’t worry about cycles,” he says.
The constant process of adjustment
Greenspan’s approach is to take profits when he needs money, and he passes his coin allocations that have had a big lead to new projects that he believes will perform better in the future. He tends to take 10% profit at a time at different stages - back in Bitcoin or to invest in new investments.
“You can limit the decline in your portfolio while maintaining upside potential through diversification,” he says.
While he’s not convinced that it’s even possible to identify the top of the market when it occurs, he points out that it’s usually pretty obvious when you’re in a bearish or bullish market - so you need to act. Consequently.
“Prices are going down and we expect them to go down: now is the time to reduce exposure. I see no reason to try to identify the top, ”he said.
“We can recognize when we are in a bear market - now is the time to lean. So take matters into your own hands, consolidate your portfolio, take out the leveraged bets, ”he adds.
this jpeg of a tulip sells for $ 3.2 million pic.twitter.com/7ppboKsBwO
- Turner Novak (@TurnerNovak) August 29, 2024
Having witnessed the end of the bull market in 2017, Melker says that peak euphoria and overly bullish sentiment from newcomers to retail are the most reliable primary signals.
“Sentiment will be a better indication than charts,” he says. “We saw it in 2017 when people who have never heard of crypto before and still don’t understand it tell you how to buy it.”
He recalls that a friend’s nanny bought “Ripples shares” after seeing her on UKTN in 2017. “These are pretty important signals,” he says.
“If you look at a chart, maybe it’s a shooting star candle on the month that the price rose sharply and came down again and had that long wick on massive volume larger than anything you’ve seen.” previously. These are the kinds of things you are looking for. There is a peak of euphoria, then the price cannot advance on that euphoria.
While the enthusiasm for dog tokens like Shiba Inu and memecoins on Binance Smart Chain seemed to be the most important signals a few months ago, Melker believes the crypto is now big enough for the bubbles to grow and expand. burst into various pockets of the market without wasting everything. He cites DeFi Summer as well as this year’s rise and fall - and again - NFTs as examples.
“Things like DOGE and Safemoon are their own island bubbles, in my opinion, but I don’t think they indicate a bigger bubble in the whole market,” he says. “If we see this kind of behavior on Ethereum or Bitcoin, it will be time to take note.”
Zoom out
Greenspan says the emphasis on trying to choose the end of the cycle distracts people from the bigger picture. According to him, the market is essentially in a long bullish period since the global financial crisis. Sometimes the price gets a little ahead and temporarily pulls back, but the overall trajectory is up.
“What happened in 2014 for Bitcoin, the same thing happened in 2018 - it got ahead,” he says. “I don’t think we’ll see another crypto winter like we’ve done these two times.”
This is actually something all of the people interviewed for this article agreed: None of them forecast an 80% drop with an extended grind along the bottom, as seen in 2018 / 2019.
“I think we’ll see some healthy fixes, but we’re continuing,” says Melker. “I’ll be surprised if Bitcoin doesn’t hit six digits well in this cycle.”
Bobby Lee, CEO of Ballet and author of The promise of Bitcoin, believes that BTC is on its way to becoming a global reserve asset like gold, silver, and bonds - that it will be worth millions and be held by nation states. “Bitcoin, in my mind, is worth at least one, two or even several million dollars,” he explains.
So if you share this point of view, if you stay long enough, you will become a winner. Even if you don’t, Lee advises against giving in to the temptation to try to sell high so that you can buy more low.
“It’s not possible - no one can catch the top,” he says, adding that even his brother, Litecoin founder Charlie Lee, didn’t pick the exact top in 2017 to sell his entire stash.
“If you ask my brother, I don’t think he got the upper hand. […] He unloaded his Litecoin, but he didn’t unload all of his crypto, ”he says.
“The way to make a profit is to climb up to $ 100,000 billion. But most people want to take money off the table as it grows. So, the prudent method is to set aside small amounts that you need to sell at fixed price intervals of up to $ 1 million.
This time is it different?
Increasingly, the best and brightest in crypto are starting to think that the era of four-year market cycles is coming to an end and that the market is in fact entering a ‘supercycle’ as adoption. massive is coming. With institutions adding Bitcoin to their balance sheets and central banks embracing modern monetary theory and printing endless dollars as policy, the industry is certainly entering uncharted waters this time around.
“There is an argument we are entering a supercycle, which means that Bitcoin will effectively become the store of value,” Filbfilb said. “And if that happens, we could be in a much longer cycle. “
“If the dollar continues to deteriorate etc. then there is no reason for anyone to really start throwing away their Bitcoin because there is nowhere to go for value.”
In the context of a macro cycle, long-term investors continue to climb towards their peak of accumulation, which marks lows. The first signs are showing me that the bull market may continue until 2022 and that BTC is breaking free from the internal 4-year cycle of halving.
- Willy Woo (@woonomic) August 18, 2024
Melker also believes that Bitcoin could potentially be in a supercycle and notes that time in the market is beating the pace of the market.
“If you believe in Bitcoin someday there will be six digits, if you believe it will go to a million dollars, […] you’re just starting to buy, ”he says. “If you invest money that you can afford to lose and do it with a long-term view, you don’t even have to worry about the top. “
“Like any market in history, the best way to approach it is to slowly put money into what you will never need to touch and let it work for you for a long time. This is how people have gained generational wealth in the stock market from the start, and it shouldn’t be any different with Bitcoin except that it has accelerated.
