It’s Never Too Early
Planning your strategic approach to the next bull market is something that should begin now, while your emotions are safe. It’s actually the best time to begin considering how you are going to navigate your way through the next euphoric phase. It is extremely difficult to remain level-headed and objective when prices are skyrocketing. Unless you have a predefined plan, chances are you will not act. Yes, you can always adjust and reorganize your strategy prior to the actual bull run but you still require a “core plan”. Getting this in place now will allow you to enter the next bull run with a greater level of confidence, as well as a greater chance of success.
One of the most fundamental aspects of preparing for a bull market is distinguishing between the assets that you plan to offload and those you will hold indefinitely. Holding onto certain coins and tokens can be done for multiple reasons. Future income generation is one, as in the case of HIVE. Avoiding an extremely large tax bill can also be a strong motivation. Whatever the reason, once there is a clear distinction it becomes a lot more “clinical” and easier to execute at the appropriate time. Many become emotionally connected to their holdings, which can be a very disastrous move. Having a clear-cut, predefined plan of action is imperative.
When To Lock In Gains
I don’t think that one can make this decision based on price alone. What if your expected price target is not realized? That is unfortunately what happened to the majority in 2021. Many were expecting $100K, myself included. Had the China ban not been an incident, I believe that we would have actually surpassed $100K, to be honest. This was very well-timed, quite similar to the ban in 2017, I think it was. However, this was of a much greater magnitude. The fact that BTC surged back stronger to surpass the previous high of $65K was extremely bullish. Especially, as it bounced from an extremely low level of $29K. I did address this idea in an earlier post some months ago. Anyway, back to the matter at hand. A formula that incorporates price, timeframe, and technical analysis is the safest approach in my opinion. To simply isolate a single indicator or metric is not recommended.
Hedge Your Viewpoint
Even though I expected BTC to move higher, I began locking in profits during May of 2021. This was approximately 40% of my portfolio at the time. I then continued unpacking during the first half of 2022. In a similar way that I expect prices to move lower, I am hedging my own viewpoint by very modest allocation. A bear market is different from a bull market in that you cannot lose money by waiting too long. The only thing that you lose out on is potential gain. This means that you can adjust your “relativity ratio”. Preservation of capital is the core focus behind this idea. Solid risk management is extremely powerful and should supersede your desire of increasing your portfolio. If that doesn’t make sense to you, then you have a few painful lessons ahead. Those who understand this choose to position themselves uniquely, compared to the average Crypto investor.
A good plan will incorporate many of the aspects that I have just mentioned. However, there are many other ways to wisely position yourself for the road ahead. A worst-case scenario doesn’t necessarily need to unfold. However, what is important is, have you made provision for it?