To read Part 1 of “How to prepare for the end of the bull run,” click here.
So, you’ve made a million dollars this cycle, and you’re trying to figure out how to turn that money into money in the real world before the crash comes. Then, at the same time, you don’t want to sell now and miss out on possible gains.
So what should you do next?
Mati Greenspan, the founder of Quantum Economics, says the answer is simple:
Be happy.
He doesn’t think it’s a good idea to try to time the market.
In the long run, it’s always better to be optimistic and not pull your money out of the market. I’ve been trading for a long time, even before there were cryptocurrencies.
Not for any market or any time frame.
Many of the people who bought Bitcoin at the top of its rise in 2017 are still making money three and a half years later.
“Anybody who was wise enough to foresee the crypto winter and took all of their money out, when do you get back in? Nobody can time the markets to a T. The best we can do is to kind of figure out, given the information that we have, what are the best investments to make over time.“
No one can predict the top
He doesn’t think it’s possible to use on-chain indicators to predict when a bull run will end, like Filbfilb and Philip Swift did in Part 1.
He says that things like bad news from China or a tweet from Elon Musk can happen at any time and send the markets into bear mode.
Filbfilb says that this is why good traders don’t just look at one type of data. They look at on-chain analysis, sentiment, cyclical data, technical analysis, and more to figure out where the market is going.
„If you’re waiting for some on-chain analysis to tell you the answer, and we have a black swan event, you won’t be able to do anything about it in time.“
He says that even black swan events don’t bother sophisticated traders because the March 2020 „Black Thursday“ crash had been foreshadowed for a long time.
“If that kind of thing were to happen again, as a trader myself, I would have enough time to take action. I’m in and out of the market all the time.”
When it comes to me, it’s a lot more fluid.“
Another thing I can do is hedge.
I have other ways to deal with risk, which means I don’t have to sell my Bitcoin to be able to cover any losses.
There is no doubt that it takes a lot of hard work, time, and practice to be able to play the market like Filbfilb.
What about us?
Filbfilb says that you should take enough money in the downturn to keep you happy.
If you’ve made money that could change your life, think about changing your life a little now.
For myself, I’ve done that. I’ve taken some money off the table.
As a result of that, I may be able to hold on for a long time in the future, and at a much better price.
Profit from profit-taking
He is known as „The Wolf of All Streets,“ and Scott Melker agrees that taking profits on your trades all the way up is the best way to make money.
When things are going up, „people should be taking profits, just like you should be dollar-cost averaging into an asset when things are going down,“ says the man.
You should always take your original investment off the table as soon as it has doubled in value.
So, if it was $100,000, now you have $100,000 to play with and there’s no risk.
This also makes it less likely that you’ll make a big mistake by selling too soon, too late, or too much when you think the top has come.
“You know, when you’re taking profits, every time you sell something you’re taking the pressure off your future decisions. Which is mentally a very good place to be.”
However, he says that you can have diamond hands with your high-risk, long-term holds.
he says, „I buy Bitcoin for my kids, and I don’t care about cycles at all.“
The constant process of adjustment
Greenspan takes profits when he needs the money, and he moves his money away from coins that have had a big rise in value to newer projects that he thinks will do better in the future.
He likes to take 10% of his profits at different points in the process, either back into Bitcoin or into new investments.
„You can keep your portfolio’s downside in check while still having a lot of room for growth through diversification,“ he says.
While he doesn’t think it’s possible to know when the market’s top is, he says that it’s usually pretty clear when you’re in a bear market or a bull market, so you should act accordingly.
When prices are going down, and they’re expected to go down, it’s time to cut back on your risk.
He doesn’t think there’s a good reason to try and find the top.
„We can tell when we’re in a bear market. That’s when we should stay put.“
In other words, „Take everything you own and put it together,“ he says. „Get rid of the leveraged bets.“
this JPEG of a tulip is selling for $3.2 million pic.twitter.com/7ppboKsBwO
— Turner Novak ?? (@TurnerNovak) August 29, 2021
When the 2017 bull market came to an end, Melker said that peak euphoria and overly positive sentiment from new retail customers are the best indicators of when the market is about to turn down, because he had been there.
As he says, „Sentiment will be a better way to see how things are going.“
The first time we saw this was in 2017, when people who had never heard of crypto before and didn’t understand it were telling us how we should buy it.
She bought „shares“ of „Ripples“ after seeing it on CNBC in 2017.
„Those are some pretty big signs,“ he says.
“If you’re looking at a chart, maybe it’s a shooting star candle on the monthly where the price went way up and comes all the way back down and had this long wick up on massive volume bigger than anything you’ve seen previously. Those are the kinds of things you look for. There’s peak euphoria and then the price not being able to advance on that euphoria.”
Earlier this year, a lot of people were excited about Shiba Inu and memecoins on Binance Smart Chain, but now Melker thinks crypto is big enough that bubbles can grow and pop in different parts of the market without causing the whole thing to crash down to the ground.
He points to DeFi Summer and this year’s rise and fall – and rise again – of NFTs as examples of how things have changed.
People say things like DOGE and Safemoon are their own bubbles in my opinion, but I don’t think that they’re a sign of a bigger bubble in the whole market.
Then, if we see that kind of behavior on Ethereum or Bitcoin, it will be time to pay attention.
Zoom out
A lot of people are focused on trying to figure out when the cycle will end, which Greenspan says makes them miss the bigger picture.
People have been having a lot of money since the global financial crisis. The market has been going up for a long time now.
Price sometimes gets a little too high and stops for a while, but the overall trend is up.
There was a lot of talk about Bitcoin in 2014, but in 2018, it got ahead of itself, he says.
In my opinion, there will not be another crypto winter like there were in those two times.
In fact, this is something that all of the people who talked to this piece agreed on:
Neither one of them sees an 80 percent drop with a long, slow grind to the bottom like in 2018/2019.
Melker: „I think we’ll have some healthy corrections, but we’re going to keep going up,“ he says.
During this cycle, I’ll be surprised if Bitcoin doesn’t reach well into the six figure range.
People like Bobby Lee, the CEO of Ballet, believe that bitcoin is on its way to becoming a global reserve asset, like gold and silver. This means that it will be worth a lot of money and be held by countries.
he says: „Bitcoin is worth at least one, two, or even a lot of money to me.“
If you agree with this, if you hold on long enough, you’ll become a winner.
Even if you don’t, Lee tells you not to try to sell at the top so that you can buy more at the bottom.
When Charlie Lee sold all of his Litecoin in 2017, he didn’t pick the exact top. „It’s not possible for anyone to catch the top,“ he says.
I don’t think he caught the top. If you ask my brother, I don’t know.“
[…]
He sold his Litecoin, but he didn’t sell all of his crypto, he says.
“The way to profit is to hodl all the way up to $100 trillion. But most people want to take some money off the table as it goes up. So, the prudent method is to set aside small amounts you must sell at fixed price intervals going all the way up to a million dollars.”
This time, it’s different?
Starting to think that four-year market cycles may be coming to an end. Instead, crypto’s best and brightest are predicting a „supercycle“ as more people start to use it.
There are a lot of new things going on in the industry right now, like when institutions start adding Bitcoin to their balance sheets and when central banks start adopting modern monetary theory and printing unlimited dollars.
The question is whether we’re going into a supercycle, which means that Bitcoin will become the store of value.
if that happens, we might be stuck in a much longer cycle than we thought.
“If the dollar continues to be debased, etc., then there’s no reason why anybody would really start dumping their Bitcoin because there’s nowhere for the value to go.”
In a macro cycle context, long term investors are still climbing towards their peak accumulation, which marks bottoms. Early signs to me that the bull market may continue into 2022 and BTC is in the process of breaking free from the 4 year internal cycle from the halvenings.
— Willy Woo (@woonomic) August 18, 2021
Melker also thinks that Bitcoin could be in a supercycle, and he says that being in the market for a long time is better than trying to time the market.
When he says, „If you believe that Bitcoin will be worth six figures one day, or that it will be worth a million dollars one day, you just start buying.“
You don’t even have to worry about the top if you invest money that you can afford to lose and do it for a long time.
“Like any other market in history, the best way to approach it is to slowly put money in that you will never need to touch and let it go to work for you for a long period of time. Thats how people have acquired generational wealth in the stock market since the beginning, and it should be no different with Bitcoin — except it’s accelerated.”
