This coming week (Jan 8th 2024) will probably see the launch of a US spot Bitcoin ETF (Exchange Traded Fund)
There is a good chance that the launch of the ETF will trigger some pretty wild volatility in the crypto markets. With that in mind Raoul Pal (@raoulGMI on ) has tweeted out some important advice for crypto investors and degens alike.
1. "No leverage"
Don't use leverage when trading cryptocurrency. Leverage refers to borrowing money from a broker or exchange to make a trade, which can amplify gains but also increase potential losses. Trading with leverage can lead to large losses if the market moves against the trader, and it is generally not recommended for beginners. By avoiding leverage, you can minimize your risk and avoid getting into financial trouble. That said if you absolutely must succumb to your inner degen. Please, please have stop losses in place.
2. "No FOMO"
FOMO stands for "fear of missing out," and it is a common phenomenon in the cryptocurrency market where investors feel pressure to buy into a rapidly rising asset for fear of missing out on potential gains. Don't give in to FOMO. If you aren't already positioned for what's coming be patient. Don't feel pressured to invest because the price has pumped 10% over night, but rather focus on a few high-quality assets and strategies that align with your investment goals and risk tolerance.
3. "Top 3 to 5 assets as main bag"
Try to focus on a small number of high-quality assets, rather than diversifying across a large number of assets. By focusing on a few assets, you can gain a deeper understanding of their underlying fundamentals and be better positioned to make informed investment decisions. Additionally, having a smaller number of assets in your portfolio can help to reduce complexity and make it easier to manage risk. You better believe that things are going to get risky in the short term!
4. "Self-custody (or multi-sig) with good wallet hygiene"
Securely storing your cryptocurrency assets is vital. Self-custody refers to holding your assets in a wallet that you control, rather than relying on a third-party exchange or custodian. Multi-sig refers to a type of wallet that requires multiple signatures (or keys) to authorize a transaction, providing an additional layer of security. Good wallet hygiene practices include using strong passwords, keeping your software and firmware up to date, and being cautious when interacting with unfamiliar websites or applications.
5. "Only trade a small Degen bag (<10%)"
I'm sure you love your dog tokens, but lets be real. If you are serious about getting ahead in the crypto game you have to keep your exposure to the long tail of crypto assets small.
6. "HODL over a longer time horizon"
Hold onto your top assets for the long term, rather than trying to trade frequently or follow short-term market trends. HODL is a term that stands for "hold on for dear life," and it refers to the strategy of holding onto your assets through periods of volatility and price fluctuations. By adopting a long-term perspective, you can avoid getting caught up in short-term market movements and instead focus on the underlying fundamentals of your assets.
7. "Zoom out and remove the noise"
Take a step back and look at the bigger picture when evaluating your investments. It can be easy to get caught up in short-term market fluctuations and news headlines (like bitcoin ETF's), but it's important to remember that these movements are often just noise in the grand scheme of things. By zooming out and looking at long-term trends, you can get a better sense of the underlying value of your assets and make more informed investment decisions. 2024 is going to be wild so make sure you keep an eye on the big picture.
8. "Expect 35% pullbacks frequently"
Pullbacks are a normal part of investing in cryptocurrency. A pullback refers to a temporary decline in the value of an asset, and they can be unsettling if you are not prepared for them. By expecting pullbacks and being prepared for them, you can avoid making emotional decisions based on short-term market movements. I will also add that far larger pullbacks are common too. Don't be surprised to see the odd 50% plus pullback here and there.
9. "BTFD (buy the fucking dip)"
Take advantage of pullbacks and buy assets when their value dips. The phrase "buy the dip" is a common one in investing, and it refers to the practice of buying an asset when its price falls, with the expectation that it will eventually rise again. Dips happen all the time in crypto and if you are an active trader they are vitally important to you. Just make sure you are buying an asset that you've properly researched.
10. "DFTU (Don't Fuck This Up)"
Avoid getting caught up in the hype and FOMO (fear of missing out) that can accompany investing in cryptocurrency. Stay level-headed and make informed decisions, rather than getting swept up in the emotional highs and lows of the market.
Thank you for reading this far. Here is a picture of a cute kitten as a reward.
