Hello degens,
I think it is more than fair to say we did it. We survived.
2022 was one of the worst years ever for the crypto industry. We had blow up after blow up. One of which led me to lose 90% of my gains from the 2020-2021 cycle.
As this is my second full cycle from start to finish (hopefully we still have plenty of time this cycle!), I will share some tips and tricks that I think will make you and I achieve better success in this bull market.
Below will be a number of the things to do or avoid to generally increase your overall performance and not give back to the market when the eventual bull market ends.
1. Planning!
This includes plans for when your tokens go to X price or XX price. Make a plan for the worst case scenario, make a plan for if competitors make a superior product. Making plans help you visualise the goals you’re trying to achieve and helps you to keep focus.
Examples could be:
‘My ETH target price is $7000-8000. I will start selling ETH at $7000 and at $8000 I’ll have sold 80% of my position. 20% is my allowance to let run if ETH continued to $10,000.’
‘I will sell once my portfolio reaches $150,000, taking profits and dollar cost averaging out of the market over a 4 week period’
‘I will remove my liquidity from this pool if TVL drops to $10m or if the APR drops below 20%’
‘I will sell if the revenue generated from this protocol drops below 10% of the industry category' (due to competitors taking market share)
There are many different things to plan but as long as you have a plan, you’ll do fine. One of the common issues I see is people doing is continuing to raise the bar of where they’d like to sell. Bias, emotions and lack of clarity come big when the stupid money comes into crypto.
2. FOMO Psychology - Don’t fall for it
This is something that is easily done. Why do fundamentals always look so much better when prices are 5x higher?
It’s super easy to get sucked into the latest AI coin or the latest meme coin on Solana. You can do it, but don’t do it because you’ve seen 4 people on Twitter make some big bands from some quick trades.
‘MAN PEOPLE ARE MAKING 10x IN ONE DAY ON SOLANA MEMECOINS, WHY CANT I?, ITS NOT TOO LATE’.
The worst is when people who don’t know anything about crypto, people who have never been in crypto start making more money. In fact when new retail users make more money than you, that affects human emotions significantly. The psychology of the trading experience is important to ensure you manage risk accordingly. Things like this can often make you feel like you need to be in or do trades against your original thesis.
A few apes later and you’re down 80%.
If you like a coin, why don’t you DCA in? Why not write a page research going over the bull and bear case first. Spending that time gets you to stop fomo and buying quality assets without high emotions. I can’t imagine how many people FOMO bought the top on ADA only to be still so down many years later.
3. Wallet safety, please get a hardware wallet
Simple one really. I see far too many people clicking on phishing links and getting their wallets drained. It costs $100 but could possibly save you 100 to 1000 times that amount. Safety first guys.
4. Eggs in one basket?
I learnt this the hard way. Last cycle I went all in on UST as I took profits. Terrible decision. Likewise, don’t put all your ETH in one smart contract. I know that most of you are smart enough to know that diversifying your portfolio a little is a good idea. Sometimes we forget that diversification also refers to your stable coin and smart contract exposure. Please remember this! The last thing I want is one of these hot restaking protocols to get exploited and you decided to put all your ETH in that specific one.
Here is a list of the current leaders in the liquid restocking scene.
5. Diversify, but just a little
Similar story to the above but the focus on this point is to avoid over diversification. A common story I see across new comers to the market. Why on earth do you need 20+ coins? There is no need to diversify that much, you miss out on concentrated bets and generally will underperform the market. How will you possibly keep up with all the updates within that ecosystem, the revenue, the users, the new products, the competitors. It is just not possible. Stick to the niches you’re strong in and don’t try to be an index fund. You’re better off just buying Bitcoin and Ethereum if that is the case. Over diversification will ruin your gains.
Layer 1s, Alt Layer 1’s, Layer 2s, DEXes, Perps, Options, Money Markets, Yield aggregators, LSTs, LRTs, Eigen Layer, Compute, Storage, Machine learning, DePin hardware, AI, Gaming, Gaming Infra, Infrastructure, Oracles, Bridges, Launchpads, store of value, bitcoin ecosystem, ordinals, BRC20s, NFTs, Solana ecosystem, Etheruem ecosystem, Meme coins, Modularity, Real World Assets, ZK Tech, Privacy, Gamblefi - I haven't even named them all. There is no way you can get exposure to all of these without becoming an index fund yourself. Just pick the main categories you’re most bullish on!
For me, the perfect balance is 10-15 coins. Anymore I can’t keep up and any less I feel I haven’t got enough exposure to bullish sectors of which there is many more this time round than last cycle.
This is what I have currently allocated to - although if you’re watching this even 1 week later, it may have changed so go check out my latest video or click on the portfolio link in the description to track it in real time.
6. Over rotation will get you wrecked
In crypto, narratives come and go every week. In a bull market, new coins will be popping off every single day. Don’t over trade, you will get wrecked with slippage, bridging and gas fees. You clearly lack the confidence to hold your bags if this is the case. Trading too much can affect your portfolio in a negative way especially if you’re someone who is always chasing the most recent pump. Stick to your research and it’ll pay off. Something is not wrong with a coin if it doesn’t pump in 3 days. We often lose ourselves in the short term mind frame. This can haunt you. The never ending rotations without making anything.
Long term HODL portfolios often perform really well.
7. Everyone is a genius in a bull market
Everyone is a genius in a bull market. No matter what coin you touch, the likelihood is in a full on bull market (like we are in now) you’re coins will be up massively. Don’t let yourself get carried away with it because when a bear market or draw downs come, the market doesn’t let anyone get away with it. Bitcoin and ETH both have had 80% drawdowns last cycle and your favourite alts were closer to 90%. Whilst it might not be as bad, it’ll happen again.
8. Use of TOO MUCH leverage
Some people say leverage is dangerous, it is. For the vast majority of people, stay away from it. Only a very select few people are really able to take its benefits whilst most get wrecked. Funding fees and liquidations are big risks.
Small use of leverage can be advantageous. Often retail participants don’t understand what this means.
There are a variety of ways to get leverage too. Perps, Options, Money markets and Native leverage tokens. For those that want to use it, learn and figure out which one you’re best at managing. Use that instrument more.
9. Take something into the real world
The round-trippers. It’s funny that this is an actual term thats come out from crypto investors making unrealised gains of 1000%+ before running them back down to zero. As I mentioned in the first tip, making plans helps you to take profits. It’s nice to take this into the real world. You can diversify your asset basket and buy real estate, index funds, stocks, even luxury items if you want. The main point I want to make here is to not give your portfolio back to the market. Things will always go higher, you can rarely sell the top. Put that in your head and you’ll be happy when you’ve got something out of the hard work you’ve put in during the bear. It is a very hard balance to get expectations and taking profits, they’ll be different to everyone, but when you make life changing gains, don’t give it back please.
I’m a watch guy so something I’m going to make sure I do is add to my collection! They’re not the worst store of value things to buy too.
10. Try not to put too much of your portfolio in smart contracts
Smart contracts are incredible but time and time again, we’ve seen many exploits. Avoid this by reducing your smart contract risks. Remember, there are exploits every single month. Just because your protocol has an audit, doesn’t mean it’s safe.
These are just a few of many tips I have to new market participants. This space is wild at times and learning quickly is key to doing well. I have many more so perhaps a part 2 will be another issue I decide to write if you guys are keen.
I want to hear your stories too! Let me know below, what advice do you have to share!
Awesome thread as always.
This will be my 3rd cycle.
Many lessons learned newbie in the first cycle
2nd cycle. Was early on Luna AVAX and dot.
Ust and anchor protocol took most of gains.
3rd bought early in the bear market and have targets when to sell.
Thank you for the threads and others helping us navigating through crypto.
Amen!