For those of you who are not very familiar with MARKET CIRCLES and do not want to get burn during a bull run, I’ll try to explain in this post very quickly few interesting concepts I found.
Knowing the market circles can help you to understand the best moment when is time to buy and when to sell and how you can manage your risk using portfolio management strategies.
I'm actually using three different portfolios for three different market conditions and i will show you all of that in this post.
So first let's take a look at the market cycles because these happen almost every time with crypto so you always have the same market cycle going on so first you have optimism and then the feelings go higher and at the very peak of the market cycle when the price is high this is the highest possible level of financial risk and this is when everybody else is thinking like this is gonna go on forever.
Then we start to have anxiety and denial like this is only a temporary downturn and now it's gonna continue to the upside but then, you will see something very very bad and this is when people
loose their lose their money and then they get discouraged and lose their hope, they are very afraid and they just want to get out of that asset and that is actually the best time for investing because the downside risk is very low because it has already bottomed and the upside is actually very high.
So when everybody else is bullish that's when you should be bearish!
This is what i was doing in March 2020 when the market took a deep deep dive into the 3.5 k area with bitcoin and all the other cryptos followed, that's when i went to super bullish mode so I went basically all in and i have been enjoying this time very very much. Now I am becoming a little bit more neutral over time as as the time goes on so now
I'm converting into neutral zone again until I see this euphoric situation with crypto as a whole but this also applies to different crypto sectors.
So lets see how I’m planning to diversify and manage the portfolio at the moment:
About 50% in cash or reserves, 35% is in low risk assets, 10% is in a medium risk and 5% is very risky.
I'm still exposed to crypto in case it goes keeps going up so that's why I don't want to sell everything.
The neutral situation / set up:
35-30% in cash reserves , 35% in low risk assets , around 20% medium risk and 10% in very risky assets.
Bullish situation / set up:
Only about 10% in cash reserves, or cash bearing interest accounts or stable coin investment yield
opportunities , 35 in medium risk assets and 10 in very risky assets.
Have your tough ! :D
