The crypto market has gone through 3 bull runs. Each season ended with a new generation of millionaires being born as Bitcoin increased by 50,162%, 9,000% and 650% respectively after each Halving.
A $5,000 investment in Bitcoin in 2017 would have turned into $350,000 by 2024. And if invested in Ethereum, the profit would have been $1.17 million.
Of course, Bitcoin and Ethereum prices have gone through many corrections and big fluctuations before reaching this growth level. But if you really understand the market and plan your investment, you can very well make a profit.
This sounds simple, but in reality, not everyone can do it. Most people do not want to get rich sustainably, get rich slowly, but often want to “go to the clouds in one step”. They try to take shortcuts, help their investment portfolio grow faster in many different forms: High leverage trading, all-in on memecoin, constantly chasing the latest trends, buying coins that have grown strongly without a prior plan…
As a result, the bull run ended and not everyone walked away from the market with a smile on their face. Many investors not only did not make a profit, but also lost a large part of their capital, even suffered heavy losses.
To help readers reduce risks and increase potential profits in the upcoming bull run season, here are 5 lessons I learned after 3 years in the market.
Absolutely say NO to FOMO
When I first entered the market, I was overwhelmed by the huge profits of my colleagues, KOLS… thanks to a token, a memecoin. I thought this market was easy to make money and immediately FOMOed and bought a lot of these tokens.
As a result, I suffered a heavy loss. After purchasing, the token price only increased slightly before falling sharply.
Maybe those investors bought this token a long time ago at a very low price, not at the high price like now. Or the profit is just a product of photoshop. I did not consider carefully and made a mistake.
To avoid similar situations, I always trade with a plan and implement a pre-determined trading strategy instead of letting emotions dominate when investing.
Must identify the mindset as investment, not gambling
The crypto market is one of the crazy, fast-moving financial markets, with new products popping up every day. It is common for what is hot today to become an old trend tomorrow.
One of the fastest-changing trends and products is memecoin. Stories like Investor pocketed $100,000 after dozens of attempts to ‘ride’ the memecoin wave urged me to spend thousands of dollars buying emerging memecoins, continuously chasing when the price of these memecoins reached new highs every day. Then, I sadly looked at my account when these memecoins performed rug pulls or were sold off.
Stories like investors losing thousands of dollars because of chasing the new meme coin craze, Squid Game causing investors to lose 2,800 USD in 5 minutes… appearing continuously in the news also made me realize how dangerous investing in memecoin is.
FOMO, or gambling, probably mean the same thing. Both are investing based on emotions and luck, completely without any specific research or strategy. I invested in the hope of getting lucky and buying a potential memecoin/token without doing proper research and risk management. This is extremely dangerous in a market full of scams like crypto.
Don’t try to optimize your account by jumping back and forth.
In the crypto market, one narrative’s token group tends to increase at the same time, before another narrative’s token group continues to increase… Seeing my friends’ and colleagues’ accounts continuously increase, while my account remained stagnant, I continuously re-changed my investment portfolio to chase these waves.
Most of the time, I either buy too late (buy at the top, when things are at their peak) or panic sell too early (lose money, because I don’t understand the potential of the project). Either way, it’s clearly not good for my account.
In addition, the tokens I bought in advance and sold earlier than planned to catch up with the latest narratives also had strong growth momentum. Unfortunately, at this time, I no longer own many of these tokens.
In this crazy market, just one tweet (like Elon Musk tweeting about DOGE coin, a new product launch project…), one wallet address going viral, or one piece of information being published, hundreds of millions of dollars are waiting to flow into a crypto. It is very difficult to catch every wave. Therefore, sometimes doing nothing is the right thing to do.
Research, planning, believing in your decisions, and being patient are the keys to success in the crypto market. However, if you still want to FOMO into the latest memecoins and narratives, make sure they don’t overwhelm your original investment plan.
Leverage is a double-edged sword
Leverage is the act of investing with more capital than you have. If used correctly, it can help investors make large profits quickly. On the contrary, it can also cause investors to suffer serious losses.
When I first entered the market, looking at margin transactions with profits of hundreds of thousands of USD from a capital of a few thousand USD, I thought that I could also get that profit.
I started using x20, even x50 leverage, hoping to get huge profits. As a result, the crypto market moved too fast, most of my trades were liquidated.
Not only myself, but even the most experienced investors have lost a lot of money because of using leverage. For example, an investor with experience in portfolio management and venture capital made $ 1.2 million but quickly lost half of it because of using leverage in trading.
Another friend of mine bought millions of Solana (SOL) at $1-2. Then, you traded at a loss on leverage and kept selling SOL to continue margining these trades. As a result, SOL surged to $250, and you lost most of your SOL tokens through losing leverage trades.
In general, in 3 years of participating in the crypto market, I have not seen anyone get rich by using leverage. Most people make big profits from investing early in good, potential projects. Looking at those who have made huge profits from using leverage, margin trading and futures, I know that they have also had much bigger losses, they just do not share these losses with everyone.
Remember, in the crypto market, people who get rich from leverage are not unheard of, but they are extremely rare. Leverage is not for the masses, nor is it for those who are ignorant or act on emotions.
Don’t overtrade
Some of my new crypto friends tend to overtrade in short periods of time, hoping to get rich quick by buying low and selling high, even trading on hourly, minutely or secondly time frames. This is the most common mistake and also the fastest way to get your account to zero.
This trading action is mainly driven by emotions of anxiety/fear, lack of investment planning, lack of knowledge and poor money management. Therefore, to avoid overtrading, you should:
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Make a clear investment plan.
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Control your emotions through meditation or deep breathing.
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Record trades to review and learn from past decisions.
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Focus on quality trades with good entries, rather than quantity of trades.
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Limit the number of daily/weekly transactions. More than 10 transactions per day may be too high.
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Continuously improve your knowledge and skills through courses, friends, successful investors.
Summary
There is no one investment method that suits everyone. Each person will have different risk appetite, preferences, knowledge and experience. Therefore, to succeed in the crypto market, always learn more knowledge and experience from those who have gone before, do not let emotions dominate, and avoid taking advantage of leverage in trading.
