Just a brief post from a seasoned crypto investor.
I saw a lot of people coming out of the last bull market (in the bear market of 2022) regretting they held onto all their coins. They saw huge gains in 2020/21 and didn't sell near the top. Naturally, they wished they took more profits in retrospect. The lesson learned was "Next time, I'll take profit".
Obviously, that would be a great play in hindsight. Selling ETH at $4800, BTC at $60K+, or ADA at $3. Most altcoins fell 95%+. BTC/ETH fell 80% from highs. We think to ourselves, "Damn, I was too greedy. I should have sold more coins."
Part of this is the benefit of hindsight. At the time some of these coins seemed clearly overpriced. Solana at $200+, doing more than 100X in the bull market. Plenty of 20X+ coins that really had no major usage yet (NEAR, DOT, ADA). Still, at the time, did you really think the prices were that crazy? Probably not, because if it was really that clear that the prices were going to crash soon, you absolutely would have sold them at the time.
Truth is, when you are buying a coin, it's a pretty easy process. Especially in a bear market. If you see a project you like, or even just a project you think will go way up in price in a bull market, you can use historic prices to see it's a good buy. Take ETH for example. ETH was trading as low as $900 in the bear market. Granted, that was during the LUNA collapse which was pretty scary. Still, you had multiple months where you could buy ETH under $1500.
You could also compare ETH to historic ATH's and see it's way down. I mean, it just came off $4800 in 2021. Most people would say ETH/BTC are the bluechips of crypto. That means, they will lead any bull market. Without ETH/BTC appreciating in price, there will not be a bull market. So you can buy them without worrying they will be left behind in the next cycle, something you do need to worry about with alts. Look at DOGE/XRP for example.
Anyways, by looking at historical data you can see ETH was trading way below its 2021 high, and even below its 2018 high. That should indicate that the price is decent. You can buy with confidence knowing you are absolutely not buying the top. Sure, it could go down, but it's already been beat up pretty bad. In every major cycle, the ATH of ETH/BTC have surpassed the previous cycle's ATHs. So the potential profit for ETH if it goes from 1500->4800+ is more than 3X. Meanwhile, the most you can lose without leverage is 1X, and that's if ETH goes to zero, which is extremely unlikely.
To sum up the above, you can use historical price data to make a smart entry on ETH. But how about selling? We just mentioned that each major cycle should be defined by new and higher ATH's. So how do you sell something trading at ATH? Well, historically it's very hard to say. ETH went from $10->$1500 in 2017. If you sold at $100, you missed out massively, even though that was 10X the ATH.
Meanwhile, in 2021 we only did ~3X the previous ATH. So, how could you know the price was right? The risk of being wrong is watching a coin you believe in doing another 2X, 3X, 5X, whatever. That is the worst situation possible. There is nothing more painful than watching other people make money on a coin you believe in, while you are sitting in cash. It is PAINFUL to seriously underperform in a bull market.
So people are naturally quite scared to sell. When you break into new ATH territory, it's very hard to know when the music will stop. You don't have much historical precedent. You just need to "feel" the market and try to make a guess when enough is enough. Perhaps that links up to your own financial goals. Maybe you set a hard rule that you sell X% at X price. Either way, the idea that you are going to easily time the top and sell with confidence in crypto is a bit absurd. You'll rarely feel good at the time when you sell a coin you believe in. Can you watch from the sidelines as it pumps up higher? If not, you're likely to jump back in at a bad time.
Happy to hear your advice / comments on selling your investments. How do you do it?
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