Introduction:
"The only way to learn is through experience," they say. And when it comes to the world of cryptocurrencies, 2022 was a year that left an indelible mark on the entire crypto community. From the unexpected crashes of major exchanges like FTX to the tremors felt when the beloved LUNA coin took a nosedive, the year was riddled with challenges, uncertainties, and even disasters. Yet, amidst the chaos, valuable lessons emerged that shed light on the resilience and adaptability of this dynamic industry. So buckle up as I dive into the thirteen captivating lessons learned during the unforgettable crypto journey of 2022.
1. NOT YOUR KEYS, NOT YOUR COINS.
This famous crypto phrase proved to be true once again in 2022.
With the downfall of so many crypto exchanges and centralised lenders, the importance of self custody is what I took as a lesson in 2022.
2. NOTHING IS TOO BIG TO FAIL.
LUNA was TOP 5 Layer 1 Blockchain and FTX was TOP 3 Exchange in the world in 2022.
But their mechanism was a total failure in the end. So here is the lesson I took:
Don't get brainwashed by the size of the project rather do further research on it. If a project is fundamentally flawed, then nothing can prevent it from inevitable collapse in the future.
3. DEFI IS THE KEY 🗝️
Decentralisation is the key to prevent failures like FTX, Celsius, Blockfi, Voyager etc. The more human mind is involved in a project/system rather than the Technology, more vulnerable it becomes.
The need for DEFI is much clearer after this incidents.
4. DON'T HODL BLINDLY.
Don't sleep on your investment thinking it's going to Moon overnight. Rather do further research on the tokens you are holding. Try to connect with the project socials like Discord, Twitter etc.
Re-evaluate your thesis frequently. Ask yourself: Why am I holding this particular token? If you aren't confident enough after researching on the project, you shouldn't HODL/BUY the token.
5. PREDICTING BITCOIN TOP/BOTTOM ISN'T EASY AT ALL. DEPENDS ON MACRO SITUATION.
Almost everyone that tried to predict the top/Bottom was wrong.
Because, Predicting the TOP/BOTTOM of Bitcoin or any other cryptocurrency is inherently difficult, and many predictions often turn out to be incorrect. The crypto market is influenced by a multitude of factors, including the macroeconomic environment, government regulations, technological advancements, investor sentiment, and market manipulation, among others. These factors are highly unpredictable and constantly evolving, making it challenging to accurately forecast market movements.
My advice is to Implement risk management, and stick to a plan which doesn’t require timing the market.
6. PORTFOLIO DIVERSIFICATION IS THE KEY 🗝️
Portfolio diversification in the crypto market is crucial to manage risk. It involves spreading investments across multiple cryptocurrencies rather than putting everything in one. If you are over-invested in a certain project it's not healthy at all in terms of risk management. Diversification will help you reduce the impact of losses from a single asset and provides exposure to different opportunities.
Some people lost all of their life savings because they over-invested in a single coin in 2022. Moving on, It's one of the biggest lessons I took in 2022.
7. BEWARE OF CRYPTO INFLUENCERS WHO SHILL RANDOM TOKENS/PROJECT TO YOU.
Beware of crypto influencers who shill random tokens/projects. They may promote them for personal gain, using misleading information and exaggerated claims, undisclosed conflicts of interest. Conduct independent research before investing and avoid relying solely on influencer advice to make informed investment decisions.
8. ALWAYS THINK AHEAD OF TIME AND HAVE MULTIPLE PLANS.
It's important to have Plan A, Plan B. For me why it's an important lesson, because when Bitcoin was trading at 16K for a month, influencers were like Bitcoins going to die, Bitcoin is going to 10K etc. But I never listened to them rather I started buying Bitcoin when it was trading at 21K. I DCA'ed the whole time when price was down from my entry. Now I can laugh at those guys who were rather bearish at 16K.
9. DON'T WORSHIP CULT FIGURES.
SBF, Do Kwon, Zhu Su etc. were all lauded for their genius.This blinded many people’s views on their respective projects.When they failed, their tokens went with them.
No one in crypto is untouchable.
10. TAKING PROFIT IS VITAL WHEN A COIN DOES MULTIPLE X LIKE 2X 5X 10X.
In the cryptocurrency market, it's vital to take profits when a coin achieves significant gains like 2x, 5x, or 10x. Selling a portion of your holdings at these milestones secures profits and mitigates the risk of potential reversals. Establish a clear profit-taking strategy based on your goals and risk tolerance.
11. CHASE REAL YIELD NOT FAKE JUICY APRS.
If a project is paying a juicy APR, ask yourself:
• What is the source of the yield?
• Is the yield sustainable?
• Is the strategy delta neutral or does it involve a directional bias?
Finding real yield should be your priority.
12. DON'T GET TOO CONFIRMED THAT A PROJECT IS GOOD BY CRYPTO TWITTER SHILLING IT TO YOU.
POV: You’re researching a project.
You search it on Twitter, everyone is bullish. You join the Discord, everyone is bullish.
“That’s enough research, it must be a good project.”
No. Go a step further and research the downsides.
13. LOSE MINIMAL RATHER THAN LOSING MAXIMUM.
In the context of cryptocurrency, minimizing losses is crucial. Rather than risking maximum losses, it is important to implement risk management strategies such as setting stop-loss orders, diversifying your portfolio, and conducting thorough research. Protecting your capital and minimizing losses should be a priority in the volatile crypto market.
Thanks for reading this long article. I hope you enjoyed reading this article.
If you want to share your lessons from 2022 you are always welcome. Just comment below so that others can learn from you.
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