More than 130 million people are estimated to have started cryptocurrencies since late 2021, and millions of investors could soon be considering buying their first cryptocurrency, with some speculating as early as 2024.
Crypto newbies should know that a bull market is "like nothing you've ever experienced," according to Ben Simpson, founder of Collective Shift, a cryptocurrency education platform.
"It is complete and utter chaos. It's just a tornado.”
In August, Cointelegraph spoke with hedge fund managers, research heads of digital asset companies and other crypto traders to understand how they are preparing for the impending bull market and what lessons they can teach newcomers.
Come in, come out
Simpson said that one of the biggest mistakes new crypto traders make is holding on to their crypto wallets for too long, often for the euphoria of being able to make more money.
“In my first fight I had no plans. 2017 has had me up and down.”
Instead, Simpson says, it can be helpful for investors and traders to write a clear investment objective and understand which assets are in their portfolios, with a fixed selling price for each.
Setting a hard exit reduces the chance of losing an investment because "when music stalls in a bull market, it stalls very quickly," Simpson said.
At the same time, James Butterfill, head of research at CoinShares, told Cointelegraph that dollar averaging (periodic small asset purchases or stock sales) can reduce the volatility of the cryptocurrency, both bullish and bearish.
"Dollar cost averaging can help reduce the average cost of ownership and reduce the impact of volatility on a portfolio," Butterfill said.
Avoid memcoins
CK Zheng, co-founder and chief investment officer of hedge fund ZX Squared Capital, advises investors to look at well-established cryptocurrencies such as bitcoin (BTC) and ether (ETH).
Butterfill said Bitcoin behaves like other alternative assets and has "significant diversification benefits" over assets such as gold, commodities or real estate.
Meanwhile, Derick Graham, founder of cryptocurrency hedge fund Portal AM, said he would consider balancing investments between speculative and mature cryptocurrencies.
Graham breaks down investment sectors (such as Tier 2 or Metaverse) and selects related tokens that have "little or no practical utility," ie avoids memcoins.
"Consider tokenomics, development team trajectory, whether or not whale investors are involved, community size, speed to market and liquidity," he said.
Find a topic
Marcus Thielen, head of research at Matrixport and author of Crypto Titans , told Cointelegraph that Bitcoin has "reached an all-time high" in a bull market, but added that new challenges are fueling new cryptocurrency bull markets, replacing previous bulls. , an idea they support. . invest in new currencies. run away
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At the same time, investments with a high degree of certainty will help protect the target, Simpson said, since most "have no choice" to stick with their altcoin portfolio.
“I was talking to a guy the other day who had 80 altcoins in his wallet. An individual investor cannot know what 80 different coins are doing at the same time.
Simpson, Zheng, and Graham caution against excessive exposure to cryptocurrencies by borrowing funds to invest in the market, investing more than a person can afford to lose, or trading with leverage.
"An overdeveloped position can lead to a complete write-off of capital when it is least prepared," Zheng said. "It's important to have an investment mindset, not a speculation one."
Simpson added that it's important to spend time away from cryptocurrencies and keep an eye on the markets. He advised trade veterans and newcomers to look after their mental health.
“Walk often. run, go to the gym. Be human."
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This article does not contain investment advice or recommendations. Every investment and trading action involves risk and readers should do their research before making a decision.
