Author: Chris Burniske, Placeholder Partner
Compiled by Yuliya, PANews
If you are in the crypto community, you may have recently received inquiries from friends about investment advice. In the current market environment where the Bitcoin price is approaching $100,000, it is indeed challenging to provide guidance for new investors. The following are some experiences shared by the author based on more than a decade of market observation.
Basic Principles
Personal Responsibility Awareness
Clearly inform each investor that every investment decision is the responsibility of the investor themselves. Even if you have rich experience, it does not mean that your judgment is always correct. The market has no absolute certainty, and those who claim "absolute certainty" are often lying.
Market Cycle Awareness
Try to inform your friends which stage the crypto market is currently in. For the author, the market is currently in the second year of a bull market (starting from the bottom in November/December 2022). Bitcoin has risen more than 6 times, Ethereum more than 4 times, and Solana more than 30 times. There is a cruel reality in this stage: the rising prices of crypto assets will attract more attention, and this attention will be converted into buying demand. However, the later in the "attention cycle", the less ideal the entry timing tends to be.
Investment Strategy Recommendations
Asset Allocation
For new investors, it is wise to keep the investment portfolio simple. The recommended allocation for beginners is as follows:
Bitcoin (BTC) 50%
Ethereum (ETH) 25%
Solana (SOL) 25%
Even if there may be deviations in the choice of entry timing, at least the assets held are of high quality. If you are interested in other tokens, it is recommended to limit them to within 10% of the total position to limit the risk.
Profit-Taking Strategy
Profit management is equally important. When the investment doubles (2x), it is recommended to withdraw half of the earnings and keep the original investment cost. When it reaches 3 times, you can withdraw the entire amount, or keep the cost part after realizing 2 times the earnings.
It is worth noting that if you encounter a Bitcoin holder, they may never want to sell, which is understandable, but you need to be psychologically prepared to withstand deep corrections.
Risk Management and Tax Considerations
In crypto currency investment, each transaction is a taxable event, including token-to-token trades. It is recommended to transfer the funds to a high-yield account at a traditional financial institution and hold them for 12-18 months after obtaining significant gains. First, you need to deal with the tax issue, and then consider re-entering the market, preferably when the market is in panic or generally losing interest.
In terms of market cycles, although the launch of ETFs and possible sovereign purchases may dampen the depth of future bear markets, the concept of "super cycles" is often a collective illusion of the market. The cycle peak may come in the fourth quarter of 2025, and any asset that achieves 100x growth quickly is structurally inclined to experience an 80-90% correction, as too many investors hold massive profits.
Investment Mindset and Cognition
New investors often focus more on the absolute price rather than the multiple of the increase. For example, Solana went from $8 to $240, an increase of $232, which is actually a 30-fold increase; while from $240 to $1,000, although the increase is $760, it is only a 4-fold increase. Understanding this is crucial to forming the right investment mindset.
Maintaining clarity in a bull market is more challenging than maintaining courage in a bear market. Chasing highs after profits is often very dangerous, because if the market suddenly collapses, investors may face the dilemma of having to pay taxes on realized gains that exceed the remaining asset value.
The current market may continue to peak in the fourth quarter of 2025, or it may break the four-year cycle pattern. Although it may not be possible to achieve crazy multiples of returns starting from the current price, it is still possible to participate in the market through reasonable strategy planning and risk control. The key is to stay clear-headed, control risks, and manage expectations reasonably.
