When investing in cryptocurrencies, it is important to pay attention to reducing the quantity, focusing on the key bets, and waiting for the price to reach the selling target or when friends start asking you what to buy before selling. Pay attention to factors such as “Pumpamentals” and community spirit, regularly review your investment portfolio, develop exit strategies to lock in profits, and accept the fact that sometimes you make mistakes. This article is sourced from “Crypto Tips I Wish I Knew Earlier” by The DeFi Investor, compiled and organized by Deep Tide TechFlow.
Table of Contents:
Reduce Quantity, Focus on Key Bets
Don’t Sell the “Winners”
In a Bull Market, Understand the Importance of “Speculation > Fundamentals”
Write Down Your Investment Thesis
Review Your Investment Portfolio Every 1-2 Months
Keep an Open Mind to New Ideas and Perspectives
Develop Exit Strategies
In the first few months of my involvement in cryptocurrencies, my investment portfolio was constantly in a loss, causing me to lose a significant amount of money. There were several reasons for this, primarily because I had no understanding of how this market operates. However, after some time, I successfully turned my losses into profits.
If you are a beginner, you don’t have to repeat my mistakes. Here are 7 cryptocurrency tips I have summarized that can help you succeed in the next bull market cycle:
Many people like to diversify their investments, which is indeed a good investment strategy for preserving wealth but not for accumulating wealth.
Certainly, if you know that your investments are diversified across 15-20 projects, even if one project fails, it will not have a significant impact on your investment portfolio, and you can still sleep well at night.
But this approach makes it difficult to achieve wealth growth. For example, if you like 25 projects, then you only need to make high-return bets on the top 6-7 projects that you believe have the most potential. Managing 6-7 positions is much easier than managing 25 positions.
This is one of the biggest mistakes many people make. When you see one token performing well while another token is underperforming, you sell the best-performing token… but this increases your risk on the failing token, so it’s not a good idea.
Let your “winners” run in the next bull market! Nothing is more heartbreaking than selling a token after it has doubled, only to see it increase tenfold in the following months.
So when should you take profits? When the price has reached your selling target or when your non-crypto friends start calling you asking what token they should buy.
Pumpamentals refer to factors that drive token prices to quickly rise, such as narratives, catalysts, or some kind of positive news, but they have no relationship with fundamentals.
In the previous bull market, XRP reached a market capitalization of 80 billion USD, which would not have been possible without its extremely active community. Many other tokens also reached high valuations due to their strong pumpamentals.
Although fundamentals will eventually become the main driver of price increases, I believe we are still far from that point. Therefore, instead of only focusing on finding projects with the strongest fundamentals, it is better to try to understand the factors that lead retail investors to buy a certain token and look for the simple logic behind retail investments.
In a bear market, the following things are most important:
Fundamentals
Revenue generation
Product-market fit
But in a bull market, pumpamentals become extremely important.
Community leaders
Social media hype
Narratives and market fit
Strong marketing
I have previously shared more thoughts on “Pumpamentals” in this thread:
This may seem boring and not something many people would do. But as Louis Cooper mentioned in the tweet below, writing can help you build investment beliefs.
It can also help you better understand your investment objects and identify gaps in your knowledge. Additionally, forcing yourself to write analysis articles before buying tokens also helps avoid investing based on FOMO.
Unless you are buying BTC or ETH, you should never “buy and forget”. The development of cryptocurrencies is extremely fast, and most projects disappear within two years of their launch.
Therefore, I recommend reviewing them regularly.
When reviewing projects in my investment portfolio, I check the following:
Recent progress of the team
On-chain indicators (revenue, fees, TVL, etc.)
Community strength (are people talking about the project on X?)
Roadmap (what is the next step for the project you are investing in?)
As George Soros said:
The only way to minimize losses is to cut them early when fundamentals change.
There is a way to increase the chances of success: invest in unpopular and misunderstood projects before everyone starts talking about them.
In a bull market, saying “this will never work” without doing some research may be the most expensive mistake you make.
Trying new things constantly can bring fruitful results, and you may even receive some airdrops.
If you cannot easily change your biases when new important information emerges, then you are just a community member of a project, not a true investor.
Accepting the fact that you are sometimes wrong, the greatest traders have no problem saying “my analysis was wrong, I messed up”.
Extended reading:
BRC-20 Market Volatility, Is the Bitcoin Ecosystem a Flash in the Pan or a Bigger Breakthrough?
Those who did not profit in the previous bull market swear they will profit next time, but it is easy to get caught up in the excitement of a bull market.
At the peak of every bull market, 90% of influential people say that we will go higher and that we have just begun. Selling then becomes a common occurrence, and those who profit are called fools.
So you need to develop an exit strategy and make sure you stick to it.
Selling is not easy, and you are likely not to sell at the exact top, but at least you can ensure that you lock in some profits and don’t go through the harsh bear market for nothing.
A good exit strategy should include the following two points:
When to take profits
When to minimize losses
Here is a good thread on how to develop an exit plan:
Alright, that’s it for today.
Lastly, I recommend that the first thing everyone should do is to invest/trade based on strategies and rules determined by their past market experience, as the saying goes, “A trader without systematic criteria is a gambler.”
Accumulating wealth is difficult, losing wealth is easy, which is why a clear strategy is needed.
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Cryptocurrency
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Beginner
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Bull Market