Investment Guide: How to Ride the Next Bull Market for Newbies

原文标题：《8 Tips to Master the Next Bull Market：Enter the bull market fray responsibly》

By William M. Peaster, Bankless

Compilation: Kaori, BlockBeats

“Is the bull market returning?” This is the question everyone is asking after last week’s Bitcoin ETF sparked signs of exciting activity in the cryptocurrency market.

Only time will tell, but there is no doubt that more and more people are starting to embrace the idea that we may be on the verge of the next crypto bull run.

So, if you’re a newbie or acquaintance looking for solid advice on how to prepare for your investment in the next cycle, I’ve put together a roadmap with 8 essential pieces of advice drawn from my personal experience as well as the collective wisdom of the crypto community to help you get robust guidance on your journey forward.

1. Develop an investment thesis

Cryptocurrency investing is the kind of thing in life that requires you to have an argument. It doesn’t have to be long-winded, original, or monolithic. But without an argument, you run the risk of wasting money and time in the market without guidance.

For example, I remember the first time I participated in the 2017 bull market, like a kid in a candy store. At the time, it seemed like every new coin I saw was more dazzling and interesting than the last, so I bought a lot of junk because I didn’t have a serious argument other than “haha, crypto is cool”.

That didn’t get me very far. But fast-forward to 2021, and after a little more thought, I established a guiding vision in the ensuing bull market to double down on my investment in Ethereum because, in my opinion, it’s becoming the next great open finance and cultural layer globally. So, by delving into a real argument, my second attempt was a considerable success!

2. The most important thing is to suit yourself

Browsing through crypto social media, you’ll see a wide variety of flat avatars, and it’s easy to forget that the people behind these accounts come from different ages, have a variety of different life experiences, everyone has a different story, and everyone has different financial resources.

All of this is to say that in the next bull run, you may see people around you putting a lot of Ethereum into the “next big coin” or “next big NFT”, which may trigger your FOMO sentiment, and you may be tempted to try to keep up with the trend and invest more in Ethereum than you can afford.

Don’t do it! Respect the different stages of your investment journey and recognize that accumulating your crypto assets is a marathon, not a sprint. By methodical approach, rather than acting recklessly, you will reach your goals.

Invest according to your financial resources and only invest in the size that suits you.

3, DCA is your friend

In the crypto space, prices can fluctuate wildly in a matter of minutes, and it’s not uncommon to see double-digit percentage changes in a single day. For newbies, it’s both exciting and nerve-wracking.

Rather than experimenting with timing during periods of volatility, Batch Average Cost Investing (DCA) is a common and reliable strategy.

The DCA method consists of committing to buy specific assets, such as ETH, BTC, SOL, etc., at regular intervals, for a fixed dollar amount, regardless of their price. Rather than trying to enter the market at the “perfect” moment, you spread your purchases over a period of time, which can be weekly, bi-weekly, monthly, or any other interval that suits your investment plan.

By diversifying your purchases, you reduce the risk of buying at the highs, and even if you start investing at the highs, subsequent purchases during the trough will average your entry price. DCA also removes the emotional factor from investing. You don’t have to constantly try to predict where the market will move next, which can lead to hasty decisions out of fear or greed. Instead, set a plan, stick to it, and watch your investments over time without constant monitoring or overthinking.

4. Don’t shy away from profits

When I first ventured into crypto in 2017, I put the only $300 I had into Ethereum and grew it to $25,000 through “up, not down” small coin trading. Bitcoin had just reached $20,000 for the first time in December of that year, and there seemed to be no sign of slowing down, and it seemed that the entire crypto market was looking forward to the future.

However, a month later, the bear market began. I held my small coins in the first half of that bear market, thinking things might get better. But the price of these tokens never recovered, so that $25,000 became zero except for my Ethereum. There was no doubt that it was life-changing money, and I should have put it to good use.

I didn’t make the same mistake in the bull market of 2021 because I locked in some profits along the way. But I know some people who thought that $5000 of Ethereum that year was just a halfway point to $10,000 and didn’t sell it when they had a chance to lock in some good profits before the next bear market.

In the next cycle, make sure you have a strategy to turn a portion of your virtual gains into real money, which you’ll thank yourself for later.

5, NFT as a leveraged bet on Ethereum

By investing Ethereum in the NFT of your choice, you may be able to capitalize on the bullish momentum in the NFT market with a view to achieving higher Ethereum returns when selling NFTs at a later date, which is the classic buy-low-sell-high strategy.

That’s easy to say, right? And many NFTs shouldn’t just be seen as financial instruments that can be flipped. However, in many cases, when the entire market is rising, a flip is possible.

The idea here is the potential for amplification gains, as NFTs can be highly volatile in price and have significant potential for price appreciation, so the yield from investing in NFTs (if you choose the right NFT at the right time) may increase relative to holding Ethereum. This strategy is worth considering for newbies, but once again I warn against treating every NFT as a flippable object, some are okay, but not all!

6. Familiarize yourself with your tools

Sometimes, when visibility is limited, pilots have to “fly by instrument,” meaning they can only rely on mastery of the aircraft’s resources to navigate. So, when I say “get familiar with your tools” here, I’m figuratively suggesting that you practice and use all the cryptographic applications available to you in order to become proficient in the Web3 toolbox.

Not only will this process propel your progress through your personal “crypto skill tree” and provide you with experience and mastery, but it will also begin to feed back into your application of other strategies, such as what your overall investment thesis is, how you make a batch average cost investment, which NFTs you buy, and so on.

In other words, learn about the projects here. Learn what they offer, how to use them effectively, what challenges they face, and more. In this way, you will gain wisdom that will further enhance your investment approach.

7. Don’t ignore taxes

In a bull market, people make a lot of money, and that money is taxable income. At the start of the next bear market, the value of their assets fell significantly, but the tax burden they incurred in previous bull years was still high.

So, what are the important points? If you don’t set aside some benefits and be tax-ready in good times, you could be hit hard during tough times. More crypto investors than you might think have experienced this, and I’m one of them.

On the other hand, one tool in your toolbox to deal with this problem is to strategically lock in capital losses. Selling assets at a loss during a bull year can help offset the taxes you’ll have to pay on your profits. This tax-saving strategy is called tax loss harvesting, and it allows you to minimize the overall tax burden so that the tax burden is not unbearable.

8. Maintain work-life balance

The cryptocurrency space is a non-resting market with no closing bells of traditional financial markets. Sometimes, it can also get very messy. This ongoing experience can easily turn into a whirlpool that pulls you away from other aspects of your life. The frenzy of a bull market can lead to overwork and exhaustion.

That said, prioritizing your peace of mind and taking a step back on a regular basis cannot be overemphasized. Setting specific hours for market analysis, trading, and portfolio management is one way to ensure that you don’t overdo it and create balance.

In addition, “disconnecting” from time to time can provide a new perspective when you re-engage. It’s easy to get caught up in minute-by-minute drama, intrigue, price fluctuations, and more. However, if you also invest in rest, you will be more awake in the face of all these things.