The ever-evolving and fluid crypto market has been in a largely bullish phase for the past six months. This is the time when assets of all moorings (the more traditional ones like Bitcoin and Ethereum; the memecoins; and other altcoins) enter price discovery mode and reach newer highs.
For investors and traders, it is extremely important to time such a surging market. This is akin to a skilled surfer catching the perfect wave. It is about understanding the rhythmic ebb and flow of the market and recognising patterns that signal the best times to ride the highs and paddle out when it turns bad. Here is your essential guide to making the most of the ongoing bull run while staying vigilant against potential setbacks.
Understanding Market Phases
Asset prices in a crypto bull market do not increase monotonically. It progresses through distinct phases, starting with vigorous price discovery where values climb and set new benchmarks. This phase typically includes corrections — natural market breaths that prepare for the next upward surge. Rather than panic during these dips, savvy investors stay composed. They take in these phases as part of the market’s inherent volatility and not as a signal to abandon ship.
Analysing Bitcoin’s performance through recent months provides a valuable perspective on timing the phases of the bull market. For example, if someone held Bitcoin in December 2023, they would have observed a significant drop in price in January 2024.
However, Bitcoin has been riding to a new high post that dip. Specifically, from December 2023 to June 2024, Bitcoin's price increased by approximately 80 per cent. This statistic is a stark reminder of the volatile nature of the crypto market and underscores the importance of strategic timing and patience. Investors who might have sold during the dip in January would have missed out on substantial gains by mid-year.
Leverage Historical Cycles
Key historical patterns, like Bitcoin halving events, provide a strategic roadmap for timing the market. About six months post-halving, Bitcoin generally leads a market upswing, followed by altcoins and eventually, memecoins, which often herald the cycle’s peak.
It is notable that we are two months into Bitcoin’s latest halving.
Any consolidation in the market over the next few months may be the ideal opportunity to strengthen one’s crypto portfolio and then let it ride over the upcoming year for maximising gains.
Capitalising on these phases means securing gains while preparing for potential downturns. Building your positions via a cost-average approach can help reduce anxiety and not react to market movements.
Navigate Through Strategic Investment
Long-term vision is crucial in crypto investing. Aligning with the market’s cyclicality ensures participation in successive bull runs, enabling a systematic securing of profits and judicious reinvestment.
It is noteworthy that a local low of an asset in a bull run will always be higher than the high of the previous cycle. So, a timed and patient approach will not only build wealth over time but also sustain it. The core idea is to let your investment leverage each phase effectively for continuous growth.
Curb Overtrading
Overtrading in the crypto world can be detrimental. It exposes investors to heightened market volatility and can erode potential profits through taxation and other fees. More importantly, it often results from emotional decision-making — fear or greed — rather than strategic planning.
Maintaining focus on long-term investment goals rather than reacting to short-term fluctuations is essential for sustained success.
Cut Losses, Let Profits Run
Adhering to the axiom ‘cut your losses and let your profits run’ is foundational in investing. This approach entails setting predetermined stop-loss levels to prevent emotional decisions and cap potential losses.
It also allows ‘successful positions’ the room to grow and capitalise on market momentum. This method ensures that investments have room to breathe and mature, ideally leading to compound growth.
Every investor dreams of mastering the art of market timing — buying low and selling high. Yet, the unpredictable nature of the crypto market often turns this dream into an investor’s greatest challenge. The key is to understand the patterns and indicators. Such cues are reflections of collective investor behaviour — waves of optimism and pessimism. In short, the prudent and discerning investor should be patient and wait for the market to stabilise after a dip; book regular profits; stay informed; and adhere to a clear investment strategy to manage risks and enhance potential returns.
(The author is the CEO of Giottus Crypto Platform)
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.