CoinWorld reports:
Profiting in cryptocurrency investments is an exhilarating experience that everyone loves to discuss. It not only captivates but also enhances engagement. However, losses are rarely discussed when the market turns sour.
Nevertheless, everyone experiences losses in the cryptocurrency market at some point. How you overcome them will determine if you ultimately emerge a winner. Here are some top tips I will share:
### How to Protect Profits
Just making a profit and selling is not enough; you need to protect those profits! Without a clear system, the cryptocurrency market can quickly take away your gains.
Recently, there was an example of someone who lost $400,000 in a single trade. They didn’t start with $400,000; they began with $500 and lost all their profits in one trade.
Aside from greed, everyone’s luck runs out eventually, inevitably leading to losses. You can lose everything.
To avoid this scenario, follow these steps:
If you’re fortunate enough to turn $500 into $400,000, your primary task is to protect those profits. This means not trading with those profits but withdrawing them. You can either keep them as cash (details to follow) or invest in gold or Bitcoin (BTC). It’s that simple!
After securing your profits, continue trading with your principal. In this case, the individual could continue trading with $500 or slightly more, as they can afford to. In any case, these profits should not be exposed to the market again.
By doing this, even if the market turns against you and you lose your principal ($500), you still have $400,000 in hand, which will make you a better trader/investor over time and allow you to refocus more quickly after a loss.
Only consider adding a small portion of profits to your trading or investment portfolio when your strategy consistently produces good results over the long term. It’s that simple.
### Buy When No One Cares, Sell When Everyone’s Talking
You should deploy in a bear market, ideally when people start tweeting “Bitcoin is dead,” that’s the best time to start buying and taking risks. Always aim to maximize your risk/reward ratio, finding asymmetrical bets!
Given current market conditions, with Bitcoin showing weakness, I would keep that $400,000 in USDC and earn returns (e.g., staking).
At a current annual yield of 29%, that $400,000 could generate about $10,000 per month without doing anything. This is real profit from transaction fees and settlements. If the market continues to decline, their returns would be even higher.
I wouldn’t buy Bitcoin or any other coin now. I would wait for discounts as the market continues to fall. Remember, not buying means you don’t lose anything, and you still retain the $400,000 profit! Protect it at all costs.
Once signs of a bottom appear in the market, such as in a bear market, you can use these profits to dollar-cost average (DCA) into Bitcoin. This way, even if Bitcoin’s price continues to decline or stagnate, you reduce risk and have a great chance to profit when the price eventually rebounds to new highs. With patience, a good entry point can easily double that $400,000 or any amount you invest.
Look at the current cycle. If you bought Bitcoin for less than $20,000 in the previous bear market, you would have outperformed most investors. The larger your investment portfolio, the more Bitcoin you should own.
For example, I bought Bitcoin below $20,000 in the last bear market with profits. I didn’t perfectly time the $15,500 bottom, but in hindsight, any purchase below $20,000 was an excellent entry point.
You can certainly play with meme coins, but they should only constitute a small part of your overall investment portfolio. Over-exposure is irresponsible and can lead to significant losses. In any case, when you notice frenzy in the market, start selling and refrain from buying more to protect your profits!
### Don’t Trust Meme Coins
Meme coins are not reliable currencies! At best, they’re good tech projects. Most meme coins don’t even need tokens and are very poor stores of value over time. You wouldn’t buy $10,000 worth of tomatoes to store your wealth, would you? Meme coins are more like tomatoes, quick to rot.
A good way to lose money in the cryptocurrency market is to buy the latest meme coins and hold them long term. Don’t do this. It’s like buying tulips and hoping to get rich.
It doesn’t work that way.
Meme coins are suitable for speculation in the short to medium term. That’s it. Beyond a year timeframe, you’re likely to lose heavily. There are some exceptions, but overall, buying meme coins is not a path to long-term success for you.
They can make you rich overnight, but if you don’t follow the first point in this article, that wealth won’t last. Most meme coins collapse by 90% to 99% in a bear market because buyers disappear. The reason meme coins fluctuate rapidly is their poor liquidity.
This means insiders can easily pump them. Once they make a profit, nothing stops the price from collapsing. Bitcoin doesn’t have this problem because it has the highest liquidity of any cryptocurrency.
Fundamentally, only Bitcoin is a reliable currency and is somewhat akin to gold in some respects. Ethereum doesn’t meet this standard either, despite being called “ultrasound money.” In reality, Ethereum is more like oil, with its price fluctuating with network usage.
### Don’t Quit Your Job to Trade Cryptocurrencies Full-Time
95% of traders lose money, with only 5% being winners. Trading cryptocurrencies is harder than your job and is 24/7, which might be a bad choice. Instead, keep your job or find one you enjoy and invest in cryptocurrencies (primarily Bitcoin).
A good way to avoid large losses is not to trade cryptocurrencies. Instead, invest in this emerging field. When you invest, buy the casino, investing in its infrastructure with a long-term perspective rather than trading it.
In this regard, Ethereum and its decentralized finance (DeFi) derivatives are a good example. While unpredictable, DeFi has shaped Ethereum into what it is today (the “oil” of DeFi). Similarly, Bitcoin is and will continue to be a reliable currency.
If you want to protect your wealth, buying Bitcoin at a low price is never a bad choice. When you buy it, it’s not to sell it tomorrow. You buy it to hold it long-term and retire with it.
How do you do that?
You can borrow against it or earn returns with your Bitcoin (see details), and when Bitcoin reaches $1 million in the next 10 years, that’s when you retire.
As for meme coins, try to buy into the infrastructure of cryptocurrencies rather than their meme. That’s where the opportunity lies. Don’t invest too much in meme coins, but a good bet can bring returns of 10 to 100 times.
I can’t tell you which coin will be the next Ethereum, but you can take some risks appropriate to your age. As you age and accumulate wealth, reduce purchases of meme coins, focus on Bitcoin for peace of mind—it’s worth it.
### Avoid Quick Gains, They Lead to Destruction
Quickly earning 10 times returns on a meme can lead to frenzy and greed, likely resulting in a bad trade afterward. Don’t go all-in on this play. Never go all-in on a meme coin. Speculation can be done but within a small range of your total investment portfolio.
Making your annual salary in one trade can change your life, but losing everything in one trade can also change your life. Meme coins attract because they can either make you rich or poor. They’re highly risky and only worth trying when your investment portfolio is small.
In such cases, taking more risks makes sense. If you already have a fairly large cryptocurrency investment portfolio (primarily Bitcoin), only speculate with a small portion of your total investment portfolio in meme or similar high-risk coins, that’s it.
If you make a big profit, sell it and never look back, following the first point of this article. Never sell Bitcoin for meme coins. If you find yourself doing this, there’s only one reason: greed. It never ends well.
### Accept Failure and Loss
In this field, failure and loss are inevitable, but you can definitely minimize and reduce their impact—that’s where you come in. The market has its own rules, and your job is to manage risk.
Making money shouldn’t be your ultimate goal. Instead, you should maximize your time and freedom. Bitcoin is part of the answer. Most people need to lose heavily playing with other coins before realizing this.
By accepting losses, you’ll focus on the important things faster and improve your risk management. The top 5% of traders who win in this game do so because they manage risk correctly. This means they often lose, but losses are smaller, and they make big profits a few times a year.
That’s what you really need. Accepting losses is part of this process, but make them small enough so they don’t throw you off balance. This takes time and discipline.
Be patient with yourself, find your comfort zone—it may not even be related to cryptocurrencies!
