Welcome to the fourth quarter of 2024, the price of Bitcoin has exceeded $80,000, and the much-anticipated Altcoin season has finally arrived. But when should I sell my crypto? You might rely on your gut to tell when a bull market peak is, but is there a better way?
Remember: "Failing to prepare means preparing to fail."
The Pitfalls of Price Forecasting
Relying solely on price targets to manage your investments is a common mistake. Such goals are often subjective and easily driven by emotions or influenced by social media. It is extremely difficult to accurately predict prices and predict the timing of price changes.
As a portfolio grows, so does investor fear and greed. Each dip and rise escalates the struggle for rational thought. Price targets keep changing, cognitive biases keep growing, and investment discipline keeps weakening. It's you versus yourself, and as the stakes rise, so does the difficulty.
Extended reading: If you want to get rich in the bull market: Please consider the following six tips and two strategies
The power of investment ideas
Are there any reliable strategies besides price prediction? We have many options: sentiment, technical indicators or on-chain analysis. However, strategies centered around investment ideas often prove to be the most reliable.
Develop an investment philosophy
An investment thesis is a sound argument for a project's potential within a defined time frame . The factors that shape this argument are diverse and not always related to price. Good ideas should be testable, allowing for precise and flexible management.
Why concept investing is more reliable
Concept investing is reliable for several reasons:
- Scale with your growing portfolio
- Eliminate the impact of emotions and emotions
- Provide clear verification methods
- Eliminate short-term noise
Example 1
Suppose you are very optimistic about the prospects of a certain L1. Instead of looking at its past ATH (all-time high price), you can look at:
TVL, transaction volume or number of active wallets. Going a step further, you can look at related metrics like its market share or mind share.
Next, set up validation based on the key performance indicators (KPIs) of your choice. This helps to check whether L1 is following the path you predicted or deviating. For example, you can use the 30-day growth of a KPI as a benchmark.
Example 2
Consider a new project for an artificial intelligence agent. You can focus on KPIs such as the number of agent transactions instead of price. Based on your beliefs, you set a benchmark, such as reaching 1 million on-chain transactions.
Are you interested in lesser-known and more volatile coins?
Many companies have only a minimum viable product (MVP) or no active product at all. In this case, focus on roadmap nodes or milestones.
Also, if your investment philosophy focuses on event execution rather than metric growth. As they say, "Buy rumors, sell news." Sometimes it's wiser to quit immediately after confirming the date than to wait for the event to happen. Later, you can set new metrics and develop new ideas.
Other strategies
What if you feel that complex concept strategies are not for you? You can consider the following alternatives:
- time based strategy
- Fear and Greed Strategy
- relative performance
- time based strategy
Time-based strategies offer a simpler and more reliable approach. You can sell a small portion of your portfolio every week or every month. Adjust the timing and amount of sales based on macro factors, liquidity, and your goals.
Fear and Greed Strategy
Sentiment swings in the market, like the tides of the ocean, can exacerbate greed. The fear and greed strategy is to ride the rising tide and secure gains before the tide recedes. You can consider a weighted DCA-out strategy based on the fear and greed index.
relative performance
Imagine the market is a race and each token is like a speeding car. Now, the key point is to determine which car accelerates faster relative to the other cars. One way to realize a profit is to sell when it reaches a certain float market cap ranking.
final thoughts
Cryptocurrencies are highly speculative, and emotions often take over. A risk system that operates independently of price can provide peace of mind. Therefore, please prioritize forming your own investment philosophy rather than guessing. This is an essential quality for successful investors.
