6 tips to succeed in this bull market

Some advice on how to survive and thrive in crypto
Apr 19, 20218 min read

Dear Bankless Nation,

Bull markets always bring in a wave of new interest into crypto. People see the price moving up and start to fomo in—many not knowing what they’re getting into.

And that’s okay—everyone starts from zero. Everyone makes mistakes along the way, us included.

So we’re dedicating this post to highlight a few common traps to look out for if you’re just getting started on the crypto journey.

1. Thinking you’re too late

I remember when I came into crypto in Summer of 2017. ETH was $300 at the time, with no signs of going down. While going down the crypto rabbit hole, I was overwhelmed with words I didn’t know, unfamiliar technologies, and projects that were working to solve seemingly impossible tasks.

I felt very late. I had a very small stack of ETH, and everyone else had more than me. I felt like I wasn’t going to make it.

This turned out to be entirely a psychological trap. When you first arrive into crypto, by definition you are “behind” everyone else who is already down the path of understanding the industry. But there are extremely few people who are actually on that path at all. If you find yourself amongst them, you are not late. You are early.

Controlling these emotions is important to keep a cool head while you experience your first market cycle.

Feelings of “I’m so behind everyone else!” can lead to irresponsible trades and risky portfolio construction. You’re not too late—don’t invest like you are.

That leads us to #2 and #3.

2. Having a low time horizon

Crypto is a multi-decade paradigm shift.

This isn’t going to happen overnight. It’s not going to happen by next month or next year. On a fundamental level, this industry progresses day by day, block by block—doesn’t matter what the price is doing.

The most important thing to understand when you’re investing in crypto is to have a long time horizon. You should be investing with the perspective of years and decades, not weeks and months.

It’ll help you build conviction and keeps you away from #3.

3. Overexposed to low-caps

One of the ways people try to outperform in bull markets is to invest in low market cap tokens. Bull markets are ‘risk-on’ markets, and money generally flows from the crypto money assets like BTC and ETH down the risk spectrum to low cap tokens.

It’s perfectly rationale too—BTC is already worth $1 trillion so it’s going to be tough for BTC to get you that 100x you’re dreaming of. Dangerous thinking.

People that feel like they are late will try and make up for this by trying to find a hidden gem with 1,000x potential, because they're feeling FOMO from missing BTC to $60k or ETH to $2,500.

Low market cap tokens are high-risk tokens. That promising project you found with a decent community may be the thing that everyone else is missing. But it’s not Bitcoin, with its 12 years of sticking power. It’s not ETH, with its massively growing application layer.

It’s not sound money. It’s not ultra sound money.

It’s gambling. Treat it like that.

Don’t over-allocate to low cap assets. It won’t be fun in a bear market.

4. Too much leverage

A similar strategy people use to ‘get ahead’ is leverage.

Did you miss ETH’s run up from $200 to $2,000 or BTC’s from $5K to $50K? Well, if you go 10x leverage and hold from $2,000 to $20,000, then it would be the same as if you had bought ETH at $200, right?!?

Wrong. While leverage can allow you to make outsized gains and even manage portfolio risk, it’s also the easiest way to delete your entire portfolio.

The first rule of crypto is to not put yourself into a position where you are removed from the game. It’s all about staying in the game. Good portfolio management means that your losses don’t remove you from playing.

Too much leverage can easily put you into a position that you cannot come back from. Be careful, and stay in the game.

5. Not knowing what your buying

The easiest way to get shaken out of your position is by not truly knowing what you own.

Even if you are just ‘following’ what experts are doing, and you’re using someone more informed than you to make investment decisions, it can lead you into sub-optimal portfolio performance.

You can copy someone's position, but you can't copy their conviction. The best way to weather 30-40% drops, or even 3-4 year bear markets, is to have serious conviction. If you want conviction, you need to understand.

In order to understand, you need to research. You need to learn.

Only an intimate relationship with the assets you own and the value proposition they provide will you be able to weather volatility, fear, uncertainly and doubt that can propagate token communities.

That token that your friend says is going to 100x… do you know why it’s going to 100x? Do you still have conviction that it will 100x if it drops 50%?

It’s simply easier to sleep at night and to make less emotional trades if you know what you are buying.

6. Engagement Articles & Fake Announcements

Bull markets are noisy. Everyone is clamoring for attention because attention is one of the most scarce assets in the mania side of a market cycle. Projects that don’t have real fundamentals or merits will resort to marketing and hype in order to get their token to pump.

Be aware of fake announcements of insignificant updates! Ignore announcements of announcements!

Even crypto-media publications will resort to click-baity headlines that are suited to attract as much traffic as possible, even if the substance in the article is completely absent.

‘Top Analyst’ in crypto is not actually a title that can be bestowed on anyone in this industry. We are all discovering this industry. No one is at the top, and no one is capable of truly being an authority as to what happens next.

Headlines like this are the result of a race-to-the-bottom competition of crypto-media trying to capture as much attention as possible, so they resort to more and more vapid headlines that answer to the reptilian side of peoples brains.

You can easily see this in Crypto YouTuber thumbnails as well:

Crypto YouTubers who try and attract the bull-market energy must always be more bullish and more excited than their youtube competition, because attention is scarce, and the way to win more engagement is to be more bullish than everyone else.

First Bull Cycle? We got you.

If this is your first crypto bull cycle, don’t get consumed by it.

You have to stay grounded. You have to stay level headed.

So just remember:

  1. You’re not too late
  2. Invest with a long term horizon
  3. Don’t be overexposed to low caps
  4. Don’t use too much leverage
  5. Understand what you’re buying
  6. Avoid the click-bait & moon juice

All you have to do is buy long-term assets and survive.

The rest takes care of itself.

- David

Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.

Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.

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