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As Bitcoin surpassed historical highs of $69,000 and $70,000 successively, it's safe to say that we're back in a bull market. While it's uncertain how high Bitcoin will rise or whether other altcoins like Ethereum or meme coins will follow suit, every ordinary person has the opportunity to create and accumulate wealth in this bull market through sensible investment decisions.
This article will discuss some time-tested strategies to ensure that you make the most of this bull market wave without getting carried away.
During bear markets, Dollar Cost Averaging (DCA) is one of the best strategies for accumulating assets in both traditional and crypto markets.
The concept of DCA involves setting up automated periodic purchases over a period of time instead of using all your funds at once. This ensures that investors enter at more average prices, mitigating the impact of volatile price fluctuations and overall capital risk.
On the other hand, a similar strategy can be employed during bull markets—repeatedly automatically selling a certain amount of holdings, which can be set weekly or monthly or related to your desired profit-taking target. For example, when Bitcoin first broke $69,000 a few days ago, many investors sold their Bitcoin, only for BTC to retrace nearly $10,000 afterward. Taking profit is not shameful; otherwise, your portfolio is just numbers on a screen rather than actual returns. Equally important is making the selling decision as soon as possible before the excitement and emotional decisions of the bull market overshadow rationality.
While it may seem like everyone could get rich with meme coins, the reality is closer to gambling than investing, to be precise, degenerate gambling (DG). These markets suffer from survivorship bias, with mainstream media reporting on five to six meme coins, making everyone think they can easily find the next Dogecoin or DogeWifHat.
In fact, thousands of meme coins are created every day, and most of them have never surpassed $10,000 in market value. Either they've been abandoned by early investors, proven to be elaborate scams, or never garnered attention. While this type of speculation is not inherently problematic, meme coins are purely bets on community behavior and psychology, and other types of cryptocurrencies may offer lower returns but have the potential to be safer and more long-term investments.
Trading in meme coins, day trading (or "T," "same-day offsetting," or "same-day trading"), and leveraged trading often result in instant losses of large amounts of capital. While it may seem like a good idea to use derivatives or perpetual exchanges to buy $1,000 worth of Bitcoin for $50 when the price is rising, waiting for you is liquidation when the price rapidly declines. Using DeFi protocols to buy, hold, or earn interest is much safer than risking leverage. Trying "T" is also a risky strategy, and unless you are very adept at reading trend charts, it's generally not recommended. This strategy is far from foolproof, with more losers than winners.
In every cryptocurrency bull market, there are always projects that seem to make everyone believe they're the next big thing. Then, when the next bull market arrives, these projects either die or are on the brink of death.
There were many examples in 2017 and 2021 of tokens and protocols worth billions of dollars at the time that are unheard of today. The safest bets in the cryptocurrency space are Bitcoin and Ethereum, followed by other historically significant currencies with practical utility or interest.
Speculative utility gaming refers to games that currently have not attracted much developer attention or user interest or are still under construction but show potential to create better systems than current market leaders. Even with these tokens, investors must exercise caution, as good technology doesn't always win. For example, Ethereum remains the market leader in smart contracts and DeFi despite its slow speed and extremely high transaction costs. In theory, alternatives to L1 like Avalanche, Fantom, and Solana are easy bets to attract investor bets, but ecosystem development and activity are arguably more important than pure technological achievements.
Finally, many DeFi protocols will offer high percentage returns, but the tokens they issue will increase in supply accordingly. Unless using services like Beefy Finance for manual or automatic compounding, this income will eventually be worthless, so taking profits quickly is crucial.
Joining a bull market and mastering it is an exciting experience. For those who have accumulated tokens throughout the entire bear market period, now is the time when patience and belief are rewarded, but only if you have enough determination and dedication. Don't become too fixated on specific tokens or believe that they only rise and never fall. If Bitcoin continues to surge to hundreds of thousands of dollars, it's just as easy to fall back to current prices (if not lower), and profits are just numbers until they're secured. It may sound pessimistic, but it's indeed the safest way to ensure you don't waste the bull market and achieve personal wealth accumulation. |
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Post time 22-3-2024 10:04:27
