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How To Play In A Brutal Market Cycle

10 Pro Tips To Survive This Crypto Winter

The market correction that swept across the crypto market in May has taught us one thing: no amount of emotions can stop market cycles from playing out.

Corrections are bound to happen at some point, even in a parabolic run. As an investor, its important that you always be prepared to play in the market during all cycles.

State of the market

Bitcoin seems to have found a floor around 30k, which makes sense because a lot of institutional buyers bought in within that range. The way I see it, this floor could hold out for a while longer.

On chain analysis (by Glassnode) which gives a more objective overview of market activity indicates a majority of new market entrants have sold most of their crypto to cut losses. Its clear these people bought the top.

In crypto, making wrong decisions is always part of the playbook.

However, you can change this. The most important thing is to know how to position yourself correctly in any market cycle so you can come out the other side with your portfolio intact. Here are some tips from the top traders to help you sail through the current market cycle.☟

➡Buy the dip

Hodlers never lose. To avoid confusion, we are referring to hodlers of Bitcoin and other large cap Altcoins such as Ethereum. So, again, buy the dip. but don’t be in any rush to do so. Bear Markets are long. Rather than try to buy the dip all the way down, take some time, wait until the despair has set in and then double your stack. If you feel like you’re “catching the knife” you’re buying too soon. Wait until things are nice and slow and depressing. If you hold your fire, you can be sure that the lower it goes, the more ammo you’ll have for next time.

The bear market is never a V-shape. It just bottoms out and sits, gradually getting lower or staying flat. Wait for the boredom, then stack up.

➡Don’t give your gains back

If you booked profit during the last pump, congratulations, but please don’t be anxious to get back in.

Just because the market treated you well last time doesn’t mean there are any guarantees now. Everyone is a genius during a bull market, remember?

A ton of people lost the gains they made during the monstrous liquidation event on May 19. If my guess is right, few will still keep the windfall by end of year. The thing here is to play smart in order to protect your capital.

Statistics show only the few traders who protect their capital manage to stay in the game longterm.

➡Don’t time the bottom

Don’t try to be Nostradamus of crypto. Anyone that tells you they can accurately call the bottom is relying on astrology. We would all want to have a way to sell the exact top and buy back at the actual bottom, but realistically that can’t happen without a crystal ball. Timing the bottom means you want to buy an asset at the lowest possible price. If you buy at what seems to be the bottom at any given time, the price could still drop. It would then mean you’d be forced to sell again so as to buy lower. Doing things this way will likely shrink your stack.

What you could do, instead, is to dollar cost average or DCA. This involves buying small amounts of any given asset at every dip. Investors use this strategy to reduce the influence of volatility over their investment and, therefore, reduce their risk exposure. Crypto is unpredictable, but the only thing we know for sure is that it will eventually trend higher as we move towards global adoption.

➡Get out of dead projects and identify zombie projects that have pumped

If a project is dead, the developers won’t just come out and tell you. They will still keep up appearances on social media, so you really have to dig to find out if anything is actually going on. A major telltale sign is announcing “partnerships” that are basically the devs self-dealing with their own projects or pooling their resources with other desperate crypto devs. They’re just trying to look active and stack partnerships on their website. Look for actual partnerships with established companies and real utility and synergy. Shitcoins on life support will often attempt publicity stunts by massively overstating news or baiting the crypto press with nothingburgers. Good projects don’t need to exaggerate or deceive you.

If you want to get through the bear cycle diversify into projects which have gained massive trust for being around long enough and still hitting all time highs.

There are several OG projects from back in the day that are on the way to real world adoption. If you ask around, this is where the most upward potential with the least risk is right now in crypto.

➡Always have cash on the side

As a trader, the easiest way to play in brutal market conditions is to have 25% portfolio in spot Altcoins, 25% in Bitcoin, and 50% in stable coins. So, if we dump you have money to buy more. If we pump you make good money. You should always be in a position where up or down makes you happy.

Never spend the nice stack of fiat💰 left on a single buy. For example, if you plan on spending $1,000 on a trade position, only spend $800 and always have that $200 available on the side for something unexpected.

When you start doing it this way, you will not care about the huge swings that may occur or even the bear market itself.

➡Take profit while you can

If you are a longterm investor, this advice may not align with your goals. But if you consider yourself a trader, you have a duty to utilize every window of opportunity that presents itself to take profit. There will always be people talking about paperhands selling too soon. But at the end of the day, the coins are yours and taking profit is not a bad thing. If you take profits after a certain gain and the project moons, consider it a win that you came out on top. Pay no attention to the YOLO or mooning posts because the market is cyclical and what goes up inevitable comes down. On top of that, you can’t time the market and even the bests investors get hit with losses from time to time.

➡Its okay to cut your losses and invest in something better

As a trader or investor, you will always lose a certain amount. Its inevitable and there is no game where 100% winrate is possible.

If a book can help you manage emotions, got for it. Emotions always play a huge role in the decision you make about your underwater stack. Given that your mission is to make more money, sometimes it doesn’t matter if you bought the best coins because even the best coin might be a constant non performer. If its not making you money, look for an alternative that has potential, even if it’s just small wins. If you make money, you’re doing fine.

This especially holds true for the new entrants who bought different Alts and meme coins during the massive pump. Some of these coins may never pump again. This has happened after every major correction from a market top during a bull cycle. This time is not different.

It would be a bad idea to continue holding those bags all the whole way down and lose all your money instead of admitting your mistake, selling at a small loss, and buy something better.

➡Set price targets and stop losses and commit to them

Even if you are wrong, the stop-loss is right. Trading crypto without a stop loss is like driving a car without brakes. You may get away with it for a while, but eventually you wreck. Those who fail to take small losses will eventually take large losses.

When you implement your stop loss strategy, the area where you set your stop loss should never be adjusted to accommodate more losses. But if there is a breakout and the trade moves to profit you can adjust your stop loss by moving it up into the green area. This not only protects your gains but also ensures that you won’t have to take the originally planned loss if the trend is broken.

When you get your entry, you should set a stop loss of about 20% your position size. If you’d like more wiggle room, set the stop loss at 25% but not higher. Anything that risks only about 1% of the position size is okay. And this should provide enough support area before the breakout.

➡Take the chance to improve strategy

As you may have noticed, when the market is oscillating within tight ranges, trading becomes very difficult. Even so, this is an opportunity for you to develop a rationale for entering and exiting trades. You have to be brutally honest with yourself.

If you FOMO in, write how you felt. You will see after some time that your initial ‘strategies’ were basically 70% emotional and 30% listening to strangers and your gains and losses will reflect this. Over time, emotional trades will lessen and you will gain confidence in the fact that your winrate increased because you did some due diligence, at the very least.

None of this is guaranteed to make you money but it will increase the odds that you don’t make stupid mistakes.

➡Stake your crypto so it accumulates during the bear period

This is one of the reasons that I love staking. Even in a bear market, staking increases the size of your wallet. When the bulls come back, you’ve got more than you started with. Locked staking also reduces the likelihood of panic selling. I stake everything I can on Binance Earn and it helps psychologically knowing there is a barrier to withdraw.

You’d be making a smart move by staking your cryptocurrencies, given that you’re not trading them much anyway in the current market conditions.

To use Binance Earn, you need to register an account on Binance if you haven’t done so already. If you have a Binance account, log in and start staking on Binance Earn here.

Disclosure: We only recommend products we use ourself. The links above are affiliate links. If you use them to stake or to buy crypto assets, you will get a discount and we may earn a commission.🙏

Learn more about staking here.

➡Don’t copy trade crypto influencers blindly❎

If you consider your influencer a hero because they regularly offer cash giveaways and post pictures of their luxurios watch collection, that’s okay. But when it comes to trading advice, that’s where you should draw the line. Most of them will mislead you because, after all, everyone is trying to advance their own interests in the market.

That’s all for now.

Cheers!✌

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Credits

Credits for some pointers in this post go to: Meme_Pope, @incomesharks, Tradeciety.

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Crypto Education. Trading. News𝗟𝗲𝘁𝘁𝗲𝗿: lasereyes.substack.com