Bear market loses money, bull market continues to lose? The bull market survival guide is here.

Bear Market Bleeds Cash, Bull Market Sustains Losses The Ultimate Bull Market Survival Handbook

Author: Day, Speaking of Blockchain

Lately, the overall market performance has been good, with Bitcoin surpassing $42,000 and Ethereum surpassing $2,200. Previously, every day in the community, there were various screenshots of people getting rich overnight, which easily leads to FOMO (fear of missing out). Then, people start making random investments and in the end, when they do the math, they realize they are actually at a loss. Not to mention outperforming Bitcoin or Ethereum.

As an old farmer who has been in the circle for over six years, having experienced a complete bull and bear cycle, I will summarize some survival experiences in a bull market for all of you. Even if it’s only slightly useful to you, it is still the value of this article. After all, knowing something and actually doing it are two different things. Some principles, if you haven’t stepped into any pitfalls, no matter how many times you hear about them, you won’t feel anything. Furthermore, when individuals are caught up in the mass emotions, very few can remain rational.

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01. The Few Who Make Money in a Bull Market

A bull market is a relative concept, referring to when cryptocurrency prices continue to rise in the cryptocurrency market. In this market environment, investors generally have an optimistic view of the future of cryptocurrency, believing that its value will continue to grow.

Why do cryptocurrency prices rise? When the buying volume exceeds the selling volume, the price naturally goes up. Regardless of any good news or technical support, it ultimately comes down to an increase in investment capital. The bull market in 2017 was due to an increase in the number of newcomers in the industry, while the one around 2020 was due to the entry of a large number of institutions and the injection of funds by central banks. The current view in the cryptocurrency industry is that there is a bull and bear cycle every four years, and this rule has not been broken yet. It is currently unclear what the next reason will be to drive the entire market to heat up.

Do we need a survival guide for a bull market? Shouldn’t we be picking up money everywhere? It seems like everyone is picking up money when a bull market comes. Everyone likes to look back at past bull markets and feel like they missed out on too much. But when you actually experience it, there are actually very few opportunities to seize. What you always see is a small number of people celebrating, the bull market just increases the number of people participating in it.

When the market is good, there is really no reason to explain, a race is going on, as long as it is a related concept, or a concept you can tag along with, it will take off. In such a market, it is inevitable to become restless – restless for earning less, for being empty-handed, and even more restless for losing money. Once you become restless, you are more likely to lose even more money. When the market enters a deep bear phase, people usually won’t take too much risk, but they tend to lose a lot of money in the so-called bull market. Keep in mind, Luna and FTX collapsed at the tail end of the bull market.

02. How to Prevent Getting “Leg Broken” in a Bull Market

The development of the blockchain industry so far can be said to have more and more concepts and tracks, and the threshold is also getting higher. For the vast majority of retail investors, it is becoming less and less friendly.

Here are a few points to note in order to avoid breaking your leg:

1) New Narratives

Each round of bull market will give birth to many new narratives. The digital gold concept in 2013, the explosion of blockchain applications in 2017, and the subsequent transmission of DeFi in 2020 to the main ecosystem application track of Ethereum are all narratives generated around Ethereum. So, what potential main direction could come next? Currently, there is a high probability of observing the Bitcoin ecosystem.

The crypto industry has always been “fickle”. In the upcoming market, new narratives will be more popular than old ones. Currently, innovative narratives usually start on-chain. Some relatively new narratives that have emerged in this round of the market include the Bitcoin ecosystem, Layer2, LSD, account abstraction, robots, AI, decentralized social, and more. Feel free to add more.

2) Consensus and Open-mindedness are Important

All concepts can only gain popularity if there is consensus, only then will people have the motivation to understand them. From Bitcoin to Ethereum, and then to the recent NFT and gaming on blockchain. Although everyone says technology is important, without capturing value, nobody would bother; once the price is established, there will be people who give it value. Therefore, the most important thing is to understand new narratives regardless of how many people criticize or oppose it. It is important to always stay curious and have an open attitude in this industry.

3) Market Leaders

How do you determine the market leader in a track? The simplest and most straightforward way is to look at market capitalization, the one with the highest market cap is the leader. Generally, the market leader is pioneering and has a high premium, making the “strong get stronger” phenomenon common. Innovative projects naturally come with higher risks and require a lot of effort. However, there are also tracks without clear market leaders, such as SAND and MANA in the metaverse concept. And even for tracks with leaders, the leader can change, such as CryptoPunks evolving to BAYC in NFTs.

4) Top Institutional Trends

Although top institutions have the suspicion of “market manipulation,” and generally, projects that go through their hands tend to become huge, leading to no profits for retail investors, paying attention to their trends and attitudes towards new things is still necessary. After all, they are at the top of the food chain and their grasp of the industry tends to be more accurate. Here are a few examples: major exchanges, A16Z, LianGuaridigm, etc.

03 Avoiding Pitfalls

Even though the market is good and profits become easier, human nature is there. Those who have lost money want to recover it, while those who have made money want to make even more, especially when they see others making money. It’s easy to develop FOMO (fear of missing out) emotions and end up making reckless decisions that ultimately lead to disaster. Here are four common pitfalls to avoid:

1) Leveraged Contracts

Many newcomers have been advised not to touch leveraged contracts, but the platforms keep pushing them. Playing with them is not the worst thing; if you’re inexperienced, you’ll lose once and hopefully learn your lesson. The problem is when you start making profits at the beginning. It’s like playing a game and being rewarded. You may start thinking you’re invincible and end up trapped. While others are making money during a bull market, you are only trying to recover your losses. Can you make profits with leverage contracts? Of course, some people can, but very few can sustain it in the long run.

2) Going All In Too Easily

Don’t expect to make enough in one go. In this industry, the most important thing is to preserve your capital and stay in the game for the long haul. Don’t wait until the opportunity is right in front of you but you have no chips to play. Also, learn to respect the market. Dates like March 12th and May 19th have been really brutal. Many industry players thought the whole industry was doomed after those days.

3) Frequent Trading

When the entire market is booming, individuals easily get caught up in the market emotions. Making small profits can make you restless, having no positions can make you restless, losing money can make you even more restless. You start wondering why only your purchases are not going up, and then you start chasing highs and changing positions frequently. Eventually, you’ll realize it’s better to just hold on to one thing.

Always remember, when a bull market arrives, as long as the project teams don’t exit scam, things generally go up. When emotions take over, the quality of projects becomes less important. Be patient, patient, and patient.

4) Following the Crowd

Many people like to follow the crowd and make purchases without fully understanding what they are buying. Without a clear understanding of the project mechanism and specific rules, you are easily deceived. For example, with luna in the past, when stablecoins started to de-peg, if you truly understood its mechanism, you wouldn’t have kept investing after the de-pegging occurred.

The above are some common mistakes made during a bull market. Feel free to add or share the pitfalls you’ve encountered.

04 Conclusion

Regarding position allocation and when to exit, it’s different for each individual based on their personal circumstances and background, so I won’t go into that here. The most important thing is to find a strategy that suits you. Also, don’t easily believe in statements that create FOMO emotions, such as “if you miss this market wave, you’ll never have another chance.” Keep thinking independently because this industry is still the same industry as before, and some fundamental things never change.

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