How Not To Lose Everything During the Bull Run

Investors can HODL or trade during a Bitcoin bull run, but experts urge them to be skeptical above all else. With sentiment suggesting Bitcoin and the crypto markets are about to go on a bull run, seasoned old timers are warning about the lessons learned from previous rallies. 

With Bitcoin correcting 5% in the past day, the Crypto Fear & Greed Index is back to 75. A measure of sentiment that looks at the volatility, market volume and social media activity of digital currencies, a reading of 75 equates to “greed”, down slightly from 84 — or “extreme greed” — that was recorded on Aug. 10. But both readings suggest expectations are sky high of boom times ahead.

In a Twitter thread on Aug. 11, MyCryptoWallet and MyEtherWallet co-founder Taylor Monahan laid out some good old fashioned advice learned during the 2017 bull run. She pointed out the irrational exuberance of bull markets invariably attracts bad actors preying on the vulnerable.

Like moths to a flame

"They will make a lot of money and people will lose because the exuberance and FOMO and greed and hype are the most powerful things on earth," she wrote. Monahan believes the time for accumulation has now passed and pushed for users to put 90-95% of their crypto assets into cold storage. She suggests that you don’t go chasing shiny new coins:  “Pick a few long-term legit coins that you like. Be invested in them. Do research. Do not follow the shills [...] You will win if you take profits consistently, not if you try to call top.”

Monahan also stressed restraint and pointed out that people who “take on huge debt to get crypto” will not win, but will “ lose their house, their kids’ savings. Do not be those losers.”

Like many experts, Monahan believes investors should risk just 5% of their net worth, and once it’s been lost, don’t try and recoup those losses.

"Have fun with it but once it's gone, it's gone. Don't double down. Don't take from your savings account or your cold storage." 

Easy to say, hard to do

Crypto researcher Chris Burniske said in an Aug. 7 tweet it was “hard to be adequately prepared” for a bull run. He expects that enthusiasm from “crypto diehards” will be ten times what it was in 2017, implying there may be reckless buying and selling of assets in the face of wild predictions.

“Speculation cycles have accompanied promising new technologies for hundreds of years, said Burniske. “While no one can quite control them, we can control how we react, present, educate, communicate and steward the space.”

And if you’re a fan of podcaster Anthony Pompliano, you will be familiar with his frequently reposted advice for what to do in a bull run. Some users believe the advice is a jinx, as every time he posts it the market appears to turn bearish.

Gathering information

Market manipulation is harder than it used to be, but certainly still happens in 2020. Cointelegraph reported in June that crypto whales have the ability to alter the price of certain digital assets using a variety of techniques.

And remember, sometimes those whales can be influencers paid with millions of tokens to shill coins. Even those who aren’t paid to promote a project are biased in favour of their own investments. Monahan’s advice is to “Trust no one.”

“Even good people are motivated by the coins they hold and the relationships they have. You may eventually see the edge but you will never know fullness. Make decisions based on multiple sources and your knowledge and your gut.”

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