OCTOBER 8, 2021 – If you’re new to the cryptocurrency world, then this is the guide you need to know. Thanks to this article, soldiers will avoid the main mistakes that beginners commit, so you can protect your capital and actually take advantage of promising investment opportunities.
We will show you everything from understanding market cycles to administering your risk when investing in cryptocurrencies. So, pay attention and learn!
What is the importance of market cycles?
Market cycles are fundamental for any crypto investor. Be it that you want to buy BNB or any other cryptocurrency – you need to buy during the bearish market and sell during the bullish market.
The bearish market refers to when the sellers are in control, and hence, the prices tend to dive. It happened with BTC in 2017-2018, when it took a dive from $20K to almost $3K. Had you bought at the peak, you’d have experienced a rough ride. Sure, you can hold, but it blocks your capital, and that’s not a smart move.
The bullish market refers to when buyers are in control and all the crypto prices start to rise. You can see the dramatic increases in prices. Once again, let’s quote the BTC price, it raised from almost $3K to over $60K. Had you bought the bottom, you’d have x20 your investment.
So, first lesson: buy during the bearish market and sell during the bullish cycle. The bearish market usually lasts 3-4 years whereas the bullish cycle only lasts up to 1 year.
You can buy right now during the corrections, but you should be aware that you will have to sell in the coming months because the prices WILL tank and crash. It happened in previous cycles, it will happen again. So, be smart and protect your capital.
How much money should I invest in crypto?
Even though investing in cryptocurrencies is not gambling, let’s take golden advice from the casino and betting world: only invest what you can afford to lose. You’re playing chances here, so you should never invest money that you need to live, be it for food, rent, clothes, bills, etc.
Let’s say that you’ve decided to invest $10K during the bearish market that’s likely to start in 2022. You envision that this market will last about 3 years, so you make monthly purchases of approx. $277 USD of your favorite cryptos. Some of the best projects include BTC, ETH, AAVE, BNB, SOL, LINK, DOT, UNI, etc. Projects that, when the bullish cycle comes, will give you an exponential return on your investment.
This is how you should handle crypto investments: Be patient and smart. This way, you will make your funds grow and truly make a killing.
Short term vs. Long term: What’s the best approach?
During the bearish market, you can play the long-term narrative. It becomes a simple game: you accumulate when the prices crash, and you sell when the prices start peaking. You can do the latter by selling a fixed % according to the market structure.
Then it’s only a matter of rinse and repeat – every single market cycle until this lasts. Most beginners want to make a quick million – but being impatient will only lead you to make bad decisions, and those kinds of moves make you lose money. Simple – be the smart guy and play it patiently.
If you decide to invest in the bullish cycle, then you must be willing to sell in the short-term. The prices will crash, so you better sell before that. This way, you can use the profits to buy during the bearish market cycle.
We recommend you to adopt this mindset, because this way you will accumulate more profit than the majority of investors. Be greedy when there’s fear, and be fearful when there’s too much greed in the market.
Tips for administering risk
You also need to administer your risk when investing in crypto. With the following tips, you will be administering your risk like a professional:
● As we said, only invest what you can afford to lose
● Make a plan on how much money you want to win, and once you hit that goal, retire your funds
● Always sell in batches during the bullish cycle. Never try to time the peak, because you are not likely to catch it – things in crypto move too fast
● Reinvest your profits outside crypto too – always diversify your investments.
With these tips, you will be in the capacity to invest better than the majority of crypto enthusiasts.
What do you think about our guide? If it has helped you, then leave a comment. We will keep publishing content like this to make you a better crypto investor. Let us know what type of guides you want us to release as well!