If your friends contact you and ask questions about Bitcoin, Ethereum, and other cryptocurrencies, it is not easy to guide them given the current market situation (BTC is close to $100,000). This is especially true when they are inexperienced rookie investors.
Here are some lessons I've learned from over a decade of observation. Ensure that the actions they take are their own responsibility. You may have more experience and knowledge, but that doesn't mean you're absolutely right. No one understands everything that's happening in this market. If someone claims to be an expert, they are definitely lying.
You can try to explain to them what stage of the market cycle we are currently in.
In my view, we have been in the current bull market cycle for 2 years. Calculated from the bottom 2 years ago, BTC has risen over 6 times, ETH over 4 times, and SOL over 30 times. The painful truth is that as token prices rise, people's attention will focus more and more, and this attention will eventually translate into purchasing power. Therefore, the more the prices rise, the more people's attention will focus on the potential for further gains, but generally, the later we enter the "attention cycle", the less favorable our position. So the best entry point is often when almost no one is interested, but that was 2 years ago. What if they are eager to buy tokens even though the current entry point is not the best? Keep it simple: Personally, if they are rookies, I would tend to recommend holding a certain percentage of BTC, ETH and SOL (50/25/25%), with the other risks borne by them. At least, if they mess up the "entry/exit", they can still maintain a certain amount of capital.
If they choose small-cap coins, encourage them to learn and keep it under 10% of their total allocation to reduce risk. Given the current entry prices, if they double their money, encourage them to take out the principal, which also ensures profits. Thereafter, if their capital has tripled, they can cash out everything, or if they are willing to take more risk, they can cash out the 2x profits and maintain the remaining 1x (cost), but try to make them understand the possibility of crazy crashes in a bear market. (If they are die-hard Bitcoin supporters, they may never want to sell, which is fine, but they must be prepared to face difficulties at some point) Selling in a bear market is due to panic and fear, but it becomes relatively difficult to exit in a bull market, and sometimes if they feel they sold too early, they may hate you, but they will eventually thank you.
They also need to be careful, if they choose to realize their profits and then can't resist re-entering, reinvesting those profits, if the market continues to rise, it will become FOMO - this idea usually leads to adverse consequences. Because if the market suddenly crashes, they may ultimately find that they need to pay taxes on the realized gains, which could be more than the final assets they have left (this often happens). Every sale of crypto assets is a taxable event, even if it's just exchanging one crypto asset for another. Once I start to actually cash out funds, I plan to park them in traditional finance (TradFi) principal-protected yield accounts for 12 to 18 months - high-yield crypto stablecoin accounts do not count as cash custody, as there is still crypto market risk, and the leverage accumulated in a bull market may leave you penniless. First, I will settle my tax liabilities, and then I will start looking for new investment opportunities again, which usually happens when people lose their minds due to panic, or ideally when market enthusiasm wanes and people become apathetic (this often happens more than 12 months after the market peaks). Although ETFs and potential sovereign nation purchases may mean that Bitcoin (BTC) will not experience an overly severe bear market in the future, each time a bull market arrives, people will find various reasons to justify the market reaching absurd heights, or claim that a bear market will not occur.
"Supercycles" are without exception collective delusions.
I can see the reasons for the cycle repeating (peaking in Q4 2025) and the reasons for the cycle being extended and breaking the four-year pattern. Although we may see some consolidation after the new US president takes office, I don't believe in the notion of a shortened cycle. This is just PTSD from the bear market. That said, structurally, anything that grows at 100x speed is likely to experience at least an 80-90% retracement at some point - mainly because there are too many profit-takers. If SOL reaches $800 in this cycle, it may drop to $80-160 in the future (e.g., 2027). So if someone buys in at $240 and holds firm, they will lose money in the next bear market. It's hard for people to realize this in the frenzy of a bull market, but since you've been through it, you can now teach them. From current prices (SOL has already risen over 30x from the lows), no one can get rich or achieve crazy multiplier returns, but they will see others making big money, so it's hard to resist the temptation - if you tell them not to buy and to wait because the "ultimate crash" will bring prices below current levels, they will feel pain, because depending on the asset, prices still have 2-5x or even higher upside potential before reaching the peak, so everything is very unstable. Finally, I want to further explain that many inexperienced investors think more in terms of dollars ($) rather than multiples (X) or percentages (%). For example, if you say SOL could reach $1,000, they'll think, wow! That means each SOL will increase in value by $760! However, from $8 to $240, the value per SOL has only increased by $232. But what they don't realize is that the 30x increase from $8 to $240 is much more significant than the 4x increase from here to $1,000. For investors, truly understanding this is very important.
