It's easy to buy but hard to sell; how to become a skilled seller?
Increase your "luck surface area" through various channels.Author: Crypto, Distilled
Compiled by: Shenchao TechFlow
How to Sell at the Peak (Without Relying on Luck):
1. Understand the Market
The cryptocurrency cycle is driven by three key factors:
(A) Global liquidity cycle (since 2008)
(B) Bitcoin halving (since 2012)
(C) U.S. elections/regulation
Notice the 4-year cycle? (Thanks to @TechDev_52)
Identify Patterns
Within the 4-year cycle, the cryptocurrency market resembles traditional seasons:
Winter = Bear market (like in 2022)
Summer = Bull market (like in 2023)
Spring and Autumn = Transition periods
(Thanks to @RaoulGMI)
2. Determine the Current Season
Assuming the end of 2022 marked the beginning of a bull market, we might currently be in summer.
Prices have surged, but there may still be room for growth.
Summer typically cools off after a strong spring (as seen in 2021 and 2024).
Identify the "Best" Season
Autumn is usually a time of market euphoria and cycle peaks.
The goal is to sell during this time (and then buy back in winter).
Timing the "Euphoria Moment"
This is the hardest part, as market noise is loud and greed is high.
You may be reluctant to sell.
3. To Combat Greed, Look for Indicators That May Signal a Top
The most important factor is global liquidity.
Specifically, the year-on-year (YoY) percentage change in global liquidity.
Navigating Liquidity is Like Surfing.
If the trend of global liquidity YoY change is upward, keep riding the wave; if downward, exit in time.
Make sure to leave before the wave crashes.
"Euphoria Zone"
The "Euphoria Zone" is the period when the market is easiest to manipulate (prices are soaring).
During the "Euphoria Zone," the YoY change in global liquidity typically reaches 4.5%.
Currently, we are at 1.5%. History does not repeat itself simply, so be flexible in setting targets.
(Thanks to @TomasOnMarkets)
Liquidity as a Leading Indicator.
Changes in liquidity can predict price movements 6-12 months in advance.
Cryptocurrencies are a high-risk asset class, and the transmission effect of capital may take time.
Warning: This also applies during liquidity exhaustion.
Monitor Stablecoin Supply.
To understand cryptocurrency liquidity specifically, pay attention to stablecoin supply.
Ideally, stablecoin supply should accelerate to sustain market rebounds.
Think of global liquidity as a global map and stablecoin liquidity as a local map.
(Thanks to @glassnode)
The Significance of Stablecoin Liquidity
It represents potential buying pressure for altcoins. New capital drives market rebounds.
Bitcoin is important, but with the introduction of ETFs, the transmission effect through centralized exchanges (CEXs) may no longer be significant.
4. Narrow the Time Window
Based solely on liquidity, assume we can predict the market top within 2-3 months.
How to further narrow the time window? Try to identify the convergence of multiple top signals.
Lollapalooza Effect
The more signals there are, the clearer the overall picture.
The core of this strategy is the Lollapalooza effect (Charlie Munger).
It refers to the massive impact when multiple forces come together.
Example Forces (You Can Create Your Own).
Bitcoin nearing $100,000 (reaching a hype peak)
Sovereign wealth funds chasing Bitcoin
Liquidity peaking, with overheated rumors
Cryptocurrency search trends hitting all-time highs
Sports teams adopting NFT tickets
5. What If the Signals Don't Appear?
This is where backup plans come into play.
A backup plan is a measure that provides final support for your strategy.
Time Signal Backup Plan.
If your top signal is time-based, a good backup option is events.
Assume you predict the top will occur in the first half of 2025.
Before the first half of 2025, prepare 5-10 event-based signals to hedge your risk.
Event Signal Backup Plan:
For event-based signals, use a fixed time frame as a backup plan.
For example, regardless of whether a top signal appears, exit a certain percentage of your holdings by the end of 2024.
This can protect you from unforeseen black swan events or systemic risks.
Reality Check.
Selling all assets at the top requires immense luck—stay realistic.
Instead, the goal is to get your average exit price as close to the top as possible.
Realistic Goals:
Operate around the top (sell some before the top, some at the top, and some after the top).
If you are not full-time in cryptocurrency, exiting the market's first third is a solid target.
Altcoin Dynamics:
If you are heavily invested in altcoins, you should outperform Bitcoin throughout the process.
This hedges against the fact that altcoins tend to drop much faster than Bitcoin.
Due to echo bubbles and other risk factors, determining the top for altcoins is challenging.
6. Increase Your "Luck Surface Area" by Diversifying Channels (to Gather More Information and Resources)
The more backup plans, signals, and overall research you have, the better your exit strategy will be.
Build networks, be active on Twitter, and keep learning and growing.
(Thanks to Network Capital)
Strategy Review
Study the nature of cycles
Identify the current season
Predict and follow liquidity
Narrow the exit window through signals
Hedge your strategy with backup plans
Increase your "luck surface area" through networking
(Inspired by the post: @Naval)
