With the bull market roaring, it’s easy to get caught up in the hype. However, many investors still end up with little to show despite the gains, often due to repeating common mistakes and poor risk management. Let’s look at how you can avoid these pitfalls and set yourself up for success.
1. Chasing High Yields
In crypto, there’s a saying: “If you don’t know the source of the yield, you’re the yield.” High yields may seem attractive, but be cautious. Look at Anchor Protocol, which offered 20% APY on UST but eventually led to major losses. Avoid putting all your funds into high-yield schemes.
2. Locking Up Your Portfolio
Avoid staking your entire portfolio in a bull run. Many tokens crash significantly after a peak, and with lock-up periods of 3-4 weeks, you may miss your chance to sell. Keep part of your portfolio in a cold wallet for liquidity.
3. No Exit Strategy
Unrealistic expectations can lead to missed opportunities. Set a clear profit-taking target and stick to it. If you want, keep a “moonbag” of tokens, but don’t keep your entire portfolio in hopes of further gains.
4. Following Cult Leaders
Avoid basing your trades solely on influencers’ predictions. Past cycles saw people holding for unrealistic targets like $500K BTC or $20K ETH. Remember, influencers may have multiple wallets and may dump tokens despite telling followers to hold.
5. Chasing Every Narrative
The crypto market is fast-paced. One day it’s about memecoins, the next it’s AI tokens. Pick a few strong tokens in each popular narrative, but avoid chasing every new trend as it appears.
6. High Leverage Trading
High leverage can be a recipe for disaster, as a 20%-30% market dip can wipe out your position. In a bull market, spot trading can still offer substantial gains, so prioritize good projects over excessive leverage.
7. Holding Too Many Coins
Diversification is key, but holding too many coins can dilute returns. Focus on 2-3 solid narratives and select 3-4 tokens from each. Avoid overextending yourself across numerous tokens.
8. Keeping Funds on Centralized Exchanges (CEXes)
Events like the Mt. Gox and FTX collapses show that no exchange is “too big to fail.” Invest in a cold wallet for your long-term holdings to avoid being locked out of your funds if an exchange fails.
9. Not Verifying News
During bull markets, misinformation spreads quickly. Remember the fake Litecoin-Walmart partnership or rumored Apple BTC buys? Always verify news sources before making trading decisions.
10. Clicking on Scam Links
Scams are rampant in crypto. Before clicking on any links, double-check their legitimacy to protect your funds.
11. No Plan After the Exit
Many investors think holding stablecoins is enough post-exit. But remember, stablecoins aren’t immune to risk. Diversify among stablecoins, consider converting some funds to cash, and look into assets like real estate or precious metals.
With these strategies, you’ll be well-equipped to navigate this bull market and keep your portfolio intact.
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