Things I wish I had known before…. Hard lessons of a bear market
Don’t you wish you had known about Bitcoin before and bought in 2012? Or 2015? or 2018 even? What a dream come true right? Afterwards, we are always wiser right?
And this is how we learn the lessons the hard way. Below I am offering you a list of things I conclude after my second bull market. I hope this can help people out there.
1 Have a plan, an exit strategy. This is one of the simplest things and yet most people don’t apply it. When you buy, you should know already when – at which price – you will sell. For any newbie this is weird.. because we want to do the “sit and wait” strategy right? And just wait until it goes to 1 million. You too? I admit I did it too. Partially. Yes, I am human.
Markets will never go up or down in a straight line and there will be pull backs and short term rallies. The best is to know exactly when you enter, when you exit so you can make some profit. This takes out the emotions which is helpful. Trying to use emotions to tell us when to buy and sell is a recipe for disaster. You will not win. Even if you think your heart is made of stone. Trust me on this one.
2 Take profits when prices are high! What are you saying? Doh.. of course I will do that! But what happens usually when prices are high? We think it’s going even higher. It’s called greed.
3 If you rely on this income during a bear market: have a savings account which lasts you at least one full year. Yes one full year (or more) and preferably another emergency fund which is really only for medical emergency or the like. Again this goes back to having a strategy in the bull market and knowing a number you want to take out. Don’t worry, there will always be full backs later where you can enter the market again.
During a bull market everything seems great, and taking a bit of profit looks great and doesn’t hurt the portfolio much if we need some cash. However, once your portfolio only has one fourth of its previous value, things will look very different. Grey. Black… oh no… ! And if you don’t have other income things will look pretty gloomy. Stay on the safe side.
-> Never invest what you need for living. It should be extra money, additional “fun” money that you can throw at Crypto.
4 Keep some cash on the side to buy more when we have bottomed. This is a big one.
Once everything that possibly could has crashed and blood is in the streets, total capitulation has arrived, THEN it is time to buy again. And if you look around… all is at a huge discount. Yay! In Crypto it’s often 99% discount! Time to profit from this. But hey, got no more cash on the sidelines? You miss out.
Moreover, I usually get very angry at myself for not keeping some long-term buy orders at really low cost on the major crypto coins. Why? Because this takes out the emotional rollercoaster again. It helps to just get another great position which you almost forgot.
5 Most alt coin projects will disappear. Newsflash…. 99% of the shitcoins not recover. So better if you took all your profit. And if you didn’t? Just cut your losses. Look to get out if needed whenever there is a little relief rally.
There will be new shiny objects coming out soon. This is one thing I emphasise in my crypto classes. Buying the shiny objects is really just high speculation. Better to start with BTC only and ETH if you are rally optimistic about it.
Ok I hope this is helpful. As usual, this is no financial advice.