Three Basic Ideas to Preserve Earnings and Prepare for the New Round of Bear Market
In our last article, we mainly focused on some basic thoughts and clarifications regarding the issue of switching positions in altcoins. Then a friend commented: "I finished reading the article, but I still don’t know what to do. A few months ago, I just entered the market and invested 100,000, buying a lot of altcoins and meme coins. Now I’m left with only about 10,000 and want to sell everything to switch to a few better altcoins to recover my losses. Can you directly recommend a few altcoins that can increase by 10 times?"
This kind of question is something many new followers of the crypto space like to ask. From the perspective of the questioner, what they need is a definitive answer on a single aspect, hoping that the respondent can recommend coins that will only go up (and not down). However, from the perspective of the respondent, no one can guarantee that a certain coin will definitely increase by 10 times in the future. Moreover, there is also a time consideration; if the respondent replies that a certain coin will 100% increase by 10 times within the next 10 years, even if this might be a definitive answer, it seems meaningless to the questioner at this stage.
A few days ago, another friend told me: "I re-read an article from last year (2023) on your platform and found that the RWA coins mentioned in the article have increased significantly, basically 10 to 20 times."
Even so, this varies from person to person. Just last year, I shared or mentioned hundreds of projects through my platform, which might seem a bit overwhelming for those who do not like to delve deeper into research. However, if you have a clear narrative (sector) choice, such as wanting to focus on projects in AI, RWA, or GameFi, then under a single narrative, the projects listed last year are not that many. You can definitely spend a little more time researching based on the articles, which might yield better results.
To be honest, when I was sorting through projects and writing articles last year, I couldn’t be certain about how much those projects would increase, and I couldn’t even be sure if some of them (some were newly born projects at the time) would survive to this year's bull market. The quality of a project does not always correlate with its coin price. Moreover, if I could accurately predict that a certain project would increase by 10 times or 20 times at a specific future point, I wouldn’t need you to tell me; I would definitely go all in myself. It is precisely because the market is unpredictable, and I cannot 100% accurately judge the trend of a specific project, that I chose to adopt a DCA strategy for long-term investment in Bitcoin.
From this perspective, many project shares provided in the past by my platform are not meant for everyone to trade directly, but rather to offer a reference range. From seeing a project to participating in trading, there are still many things you should think about and do yourself in between. At the same time, I also provided another idea: you could simply follow us to dollar-cost average into Bitcoin without doing any research, and it is highly likely that you would achieve returns of 3 to 5 times in this cycle.
However, it seems that most people entering this field (especially newcomers) are aiming for 100x or 1000x goals. A return of 3 to 5 times over a cycle (like 3 to 4 years) is generally not appealing, so most newcomers are chasing hot trends and gambling on meme coins with their principal. Regardless of what your target is, the goal of investing is to make money; we are not here to gamble. Therefore, our core approach is to protect our profits (at least to preserve our principal).
Here’s an example: Recently, as Biden's odds of exiting the presidential election have soared, as of the writing of this article, the price trend of the meme coin BODEN (Jeo Boden) has almost returned to its starting point, as shown in the figure below.
I remember a friend bought this BODEN coin quite early, and after making a profit, he never sold, thinking it would rise a lot more. Then a few days ago, he complained to me that all his efforts were in vain.
In fact, a few days ago (July 14), we also mentioned the PolitiFi sector in an article, stating that PolitiFi is still a short-term hot narrative, with the rise and fall of tokens mainly based on various events or hype. For example, if Trump gets shot, the TRUMP token could skyrocket; similarly, if Biden announces a presidential run one day, BODEN will definitely continue to plummet.
Additionally, yesterday I saw some friends in the group discussing a Twitter user who had rolled his assets from hundreds of thousands to over ten million, and then in a short time, his assets shrank back to about a million. This can be considered a rollercoaster investment experience. Although going from hundreds of thousands to a million is still a profit, the psychological changes involved are something only he or those who have experienced similar situations can truly understand.
We have seen many similar situations or events, and even worse cases, such as tokens going to zero or losing all principal… So, how can we avoid such situations as much as possible?
1. Create and Execute an Exit Plan
Most of the time, many people think about what to buy and how to buy, but rarely consider when to sell and how to sell.
In previous articles on my platform, we have mentioned multiple times that whether it’s a long-term investment plan or a short-term investment plan, it is essential to reasonably customize a profit-taking/loss-cutting plan based on your position and risk tolerance. Because if you don’t do this, you might miss the best timing, and the end result could be similar to the situations mentioned at the beginning of this article.
Typically, when the market experiences rapid growth or a clear trend, people’s greed often takes over. Coupled with various news events and stories of sudden wealth, it’s easy to fall into FOMO. Even if some people are lucky (with the right timing and circumstances) and make ten million in a short time, they may continue to firmly believe they will make a billion next, completely ignoring the plan they initially set (perhaps they had no plan or an unreasonable one).
At this point, they will only think about how to use their existing strategies or ideas to make more money, without realizing that when they reach their initially set goals, they should consider exiting at that stage and appropriately readjusting their new strategies. In other words, when an investment reaches its goal, one can consider liquidating (selling) part of it to improve their life and then customize a new, more stable investment strategy based on the new capital size (the larger the capital size, the lower the risk appetite).
Money only becomes yours when it is secured; otherwise, it is just a string of numbers that can change at any time. Don’t let greed turn into regret.
Of course, the concept of securing profits mentioned here may need further elaboration. In my understanding, it mainly falls into two categories:
You convert your crypto assets into corresponding fiat currency (like USD/HKD), which you can then use for any necessary consumption, separating it from the crypto market.
You store a portion of your core assets (BTC) directly in a cold wallet, and this portion will absolutely not be touched unless absolutely necessary, serving as your (and your descendants') final safeguard on this planet.
So when should you exit (either fully or partially take profits)? This topic has been discussed in previous articles on my platform, so I won’t elaborate further. Interested friends can refer to the earlier articles, as shown in the figure below.
In summary, creating and executing an exit plan is very helpful for investing; it allows you to face reality. Otherwise, your fantasies may dominate, causing you to forget about reality and rationality.
2. Rationally View and Treat Your Altcoin Holdings
I remember in previous articles on my platform, we also mentioned that in terms of investment, regardless of how much principal you have, my advice remains unchanged: the crypto space is a very high-risk field, and you need to have a risk awareness. If you cannot manage this risk well, then just choose BTC/ETH; this is the simplest and least error-prone investment path.
Specifically, as long as you can stick to a certain strategy (like using the AHR999 or FGI index) for long-term operations, you should see decent returns over a complete cycle, even leading the majority of ordinary traders in terms of returns. I noticed that some friends in the group have been discussing this recently, and it seems some have been operating according to this strategy.
If we look at a complete cycle, it’s easy to find that many altcoins often plummet by 90% to 99% during bear markets. For example, although I allocate about 10% of my portfolio to individual altcoin investments, the ultimate goal of investing in these altcoins is still to convert the profits back into Bitcoin.
In previous articles on my platform discussing altcoins, we have analyzed that although due to the uniqueness of this bull market (liquidity issues, a massive number of new altcoins, high FDV VC coins, etc.), most altcoins may not have the opportunity to create new ATHs, we believe that this bull market will still welcome another altcoin season.
In the medium to long term, for ordinary people, large coins like BTC, ETH, and SOL are more suitable for investment. Of course, at this stage, you shouldn’t expect these large coins to generate returns of over 10 times. I remember when I resumed monthly dollar-cost averaging into Bitcoin in 2022, the target for Bitcoin was a return of 3 to 5 times in this bull market. As of now, the returns realized are 2.64 times, still a bit short of the 3 times target. However, if you are just starting to buy Bitcoin now and want to achieve a 3 times return, Bitcoin would need to reach over $200,000, and while I believe Bitcoin will reach $200,000, it is unlikely to happen in this bull market.
In the short term, the new narratives born in this bull market (but only recommended to focus on corresponding leading projects), the so-called value coins in popular sectors (compared to those air coins with no ecological use value), and meme coins (tokens influenced by people’s FOMO emotions) still have certain opportunities. However, at this stage, seizing these opportunities is relatively difficult for ordinary people, and it is not advisable to speculate with heavy positions; small and diversified investments are sufficient unless you already have your own strategy or method and are mentally prepared for potential losses.
Therefore, our current advice is: after Bitcoin breaks new highs again by the end of this year or in 2025 (which I believe is highly probable), if there is an opportunity for another round of altcoin market, then during the market's rise, when most people re-enter a FOMO state, you can start to sell your altcoins in batches (note: in batches). However, due to the unpredictability of the market, if you sell all your altcoin positions in batches and find that the market continues to rise, remember not to chase the highs.
Then, keep the necessary funds and prepare for the new bear market. As long as you patiently wait for the bear market in 2 years (maybe 3 years), you will still have plenty of opportunities to re-strategize and bottom-fish those so-called valuable projects. Of course, with the continued involvement of traditional large institutions and gradual regulatory follow-up, the opportunities for ordinary people in the crypto market will become fewer in the later cycles. However, at this stage, we are still in the early stages of this field, so just seize the opportunities well.
3. Prepare for the New Bear Market
So, before the new bear market arrives, how should we think about our layout?
First, you need to clarify how much of your portfolio is allocated to Bitcoin and how much is allocated to altcoins. This needs to be set according to your own risk preference. Our consistent advice is that at least 50% of your portfolio can be allocated to Bitcoin (for dollar-cost averaging). Of course, if you are very optimistic about the long-term development of large coins like ETH, SOL, or BNB (which have capital backgrounds), you can reduce the proportion of Bitcoin based on your risk tolerance and allocate a certain percentage of your portfolio to these coins.
Next, consider when to re-enter the market and start dollar-cost averaging. Historically, Bitcoin may drop about 60% from its ATH during bear markets, while ETH may drop about 70%. As for other altcoins, as mentioned earlier, many altcoins may drop over 90% during bear markets, and that’s when you can consider re-positioning.
Of course, this is just a simple historical experience. In actual operations, it is still necessary to refer to some on-chain data or indicators for assistance. Additionally, the ETFs approved this year may also lead to some new changes in the prices of BTC and ETH in the next bear market. In other words, if Bitcoin can reach $100,000 in this bull market, then theoretically, the chances of seeing Bitcoin below $40,000 in the future will be very slim.
Based on this thinking, here’s an additional small suggestion: If you have just entered the crypto space and are still somewhat unfamiliar with blockchain and crypto, our advice is to avoid unnecessary turmoil in the remaining less than a year of bull market time. If you want to participate in trading, simply make necessary investments in BTC/ETH to experience the trading process, and in the long run, it at least won’t let you lose your principal. Use the remaining time and energy to increase your understanding of this field or to pay attention to projects you are interested in.
I have always said that if you can become a professional trader (with a mature investment theory system and technical skills), then with your research skills and analysis strategies that are ahead of most people, you can participate in any project and find the key to wealth, without worrying about market fluctuations. Because whether the market rises or falls, you have opportunities to make money. But if you are just an ordinary investor (including myself), then you should be more rational about making money. The safest approach is to grasp the cyclical patterns; you need to shift your mindset from directly creating wealth to preserving and growing wealth.
However, if you have heard a lot of reasoning and still believe you are the chosen one in this field, or if you blindly trust those strangers (XX analysts/XX teachers, etc.) to lead you to wealth, and you enter this field with the goal of getting rich overnight, then I won’t stop you; you can go ahead and engage in leveraged contracts and such.
As an old investor and a staunch Bitcoin supporter, I can also see that more and more seasoned investors (who have experienced 2 to 3 complete cycles) tend to go through a process of moving from many investments to fewer, and from complexity to simplicity. After accumulating a certain financial foundation, they ultimately consider Bitcoin as the ultimate tool for wealth. Of course, some seasoned investors may also choose Ethereum and others simultaneously.
In simple terms, if we extend the time dimension a bit, during a bull market, we can focus solely on "selling," while in a bear market, we should only consider "buying." As long as we seize those few opportunities in each cycle, that’s enough. Investing is a long-term comprehensive practice.
