How to Trade in This Crypto Bull Market

The crypto bull market is here and traders are adjusting their strategies to this market phase. Here’s how.

Apr 03, 2024
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How To Win This Bull Market

Key Takeaways:

  • Do Your Own Research (DYOR): It’s crucial to conduct thorough research. While influencers may shill tempting opportunities, DYOR is essential to avoid falling for potential scams or inflated token prices.
  • Pick a Narrative: With various narratives gaining traction in the market, focusing on two to three categories can help streamline research and portfolio management. Keeping up with the latest trending narratives like AI tokens, meme coins, DePIN, and infrastructure can guide trading decisions.
  • Create a Strategy: Establishing a clear trading strategy involves assessing exposure to preferred narratives, determining risk tolerance, selecting specific coins and tokens, and deciding on a buying approach (e.g., lump sum vs Dollar Cost Averaging). Sticking to the strategy helps mitigate emotional trading influenced by FOMO or FUD.
  • Accept Higher Prices: Acknowledging the current crypto bull market, traders need to adapt to higher prices. While timing the market is challenging, recognising the cyclical nature of bull and bear markets is crucial for long-term trading success.
  • Secure Your Gains: Volatility is inherent in the crypto market, emphasising the importance of securing profits along the way. Despite the temptation to hold onto assets for potential further gains, taking profit consistently can help safeguard initial investments and manage risk.

Introduction

In 2022, we put together a guide on how to survive a crypto bear market. Now, the 2024 crypto bull market has arrived after the Bitcoin spot ETF approval pushed BTC to a new all-time high (ATH) above $70,000. So, without further ado, here is our guide to how traders are making the most of this exciting market phase.

Do Your Own Research

As the cryptocurrency space is taking off again, crypto influencers are starting to re-emerge on social media. Many YouTube live streams, X threads, and Discord and Telegram groups all promise one thing: crypto alpha — insider knowledge that will help traders buy into a hot new crypto project early before everyone else and make 50 to 100 times, or more, in gains. 

While it sounds like the perfect opportunity — watch one YouTube video, buy a new token, and then become rich — it is usually not that easy to become a crypto millionaire. This is why the number 1 unspoken rule of the crypto community is to do your own research — DYOR

While many crypto influencers are trustworthy, others might be shilling crypto projects that they bought into early to attract more buyers in order to inflate the token price

If you decide to follow influencers, reputable crypto influencers usually share the following characteristics: 

  • They have been in the space for several years.
  • They have garnered a large following.
  • They are transparent on which crypto projects they are invested in.
  • They give prudent advice, urging their followers to trade carefully and with realistic expectations.

Also read our in-depth guide on how to research and find successful crypto projects.

Pick a Narrative

As the crypto bull market is heating up, different narratives are gaining traction. Since the beginning of the year, AI tokens and meme coins have crystallised as leading narratives — categories of tokens that are favoured by the market. In the past, non-fungible tokens (NFTs), decentralised finance (DeFi), and GameFi have been successful narratives. As blockchain technology advances, new narratives also emerge: Currently, DePIN and infrastructure are two other token categories garnering a lot of attention.

Decentralised Physical Infrastructure Networks (DePINs) provide a novel approach to develop and maintain real-world infrastructure through the use of blockchain technology and tokenised economic incentives. Infrastructure cryptocurrencies are crypto projects focused on improving the underlying technology that other cryptocurrencies use to operate. Infrastructure tokens are most often associated with Layer-1 blockchain networks.

With so many different categories, it can be overwhelming to learn about all of them and research individual projects, as well as track price movements. For this reason, many seasoned traders recommend limiting their portfolio to two to three narratives, which then gives them the chance to research these in depth and track the coins and tokens they bought consistently.

Learn more about the latest crypto trends from our Research reports.

Create a Trading Strategy

Once you have picked the narratives you believe in and researched crypto projects for your portfolio, it is time to create a trading strategy.

  • Which narratives do you want exposure to? AI, meme coins, infrastructure, and gaming are examples of the narratives that are currently trending in the space.
  • What is your risk tolerance? Are you more comfortable to only hold positions in Bitcoin and potentially established big market cap tokens like Ethereum and Solana? Or are you willing to take more risk and buy into projects that have the potential for higher returns? Meme coins and small market cap altcoins usually fall into this category.
  • Which coins and tokens do you want to buy? Once you have identified your favoured narratives and risk tolerance, it is time to pick individual crypto projects that fit into your categories. Most experienced traders recommend that beginners limit their portfolio to not more than 15-20 coins and tokens to remain in control of how their individual positions are developing.
  • How will you buy it? While some traders buy the positions they are interested in with one lump sum, many traders prefer the Dollar Cost Averaging (DCA) approach. Over the course of several weeks or months, DCAers slowly buy positions in the coins and tokens they have selected. The advantage of this approach is that you avoid buying your whole portfolio at too high of a price. Research has shown that DCA-ing generally beats trying to time the market.

Finally, many traders recommend that once you create a strategy, you stick to it. This prevents you from letting emotions like FOMO or FUD influence your trading decisions.

Learn more about how behavioural psychology influences financial markets.

Accept Higher Prices

While the crypto market comes in cycles of bull markets consistently following bear markets, the market as a whole has grown and prices of many crypto assets are higher than they were in the past. The last bear market lasted from May 2022 until Q3 2023, and many traders have looked to market signals like the upcoming April 2024 Bitcoin halving, which has led to bullish prices in the past. 

However, the early 2024 Bitcoin ETF approvals saw crypto prices soar before many expected it. This can lead to traders feeling underweighted (i.e., feeling they did not buy enough before prices went up). The lowest Bitcoin price during this cycle was $18,490 — a similar price range to Bitcoin’s 2017 all-time-high (ATH) of $19,892, and higher than both 2018 and 2019 annual highs.

Here is a short history of Bitcoin price.

Secure Your Gains

The crypto market is known for its volatility — in other words, for its large price swings. On the one hand, this allows traders to earn profits that often outperform those possible in the stock market. 

On the other hand, this means that prices can also suddenly drop. Because of this, many veteran traders say that they ‘take profit along the way’. This means that, as they realised gains on the coins and tokens they bought, they secured some of these gains by swapping them into Bitcoin, a stablecoin, or transferring it to their bank account.

Conclusion

Bull markets are a time of euphoria and adrenaline in the crypto space — but this can lead to traders making rash decisions without much thought and research. Ensure to do your own research, pick and select narratives you believe in, create a strategy for your portfolio, be willing to accept higher prices during the bull market, and consider taking profit along the way. 

These are the standards many crypto traders follow.

Due Diligence and Do Your Own Research

All examples listed in this article are for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, cybersecurity, or other advice. Nothing contained herein shall constitute a solicitation, recommendation, endorsement, or offer by Crypto.com to invest, buy, or sell any coins, tokens, or other crypto assets. Returns on the buying and selling of crypto assets may be subject to tax, including capital gains tax, in your jurisdiction. Any descriptions of Crypto.com products or features are merely for illustrative purposes and do not constitute an endorsement, invitation, or solicitation. 

Past performance is not a guarantee or predictor of future performance. The value of crypto assets can increase or decrease, and you could lose all or a substantial amount of your purchase price. When assessing a crypto asset, it’s essential for you to do your research and due diligence to make the best possible judgement, as any purchases shall be your sole responsibility.

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