It's easy to forget, but there was once a time in crypto. A wonderful time. April 2017 - January 2018 to be precise: shimmering, gilded, irrepressible days where new money was entering the market in exponential droves, YouTubers didn't feel the need to shill and - I promise you this is true - Verge had real potential.
And as the days grew shorter in the northern hemisphere the gains grew larger; Bitcoin hit $10,000, smashed past the $15,000 mark and then, five days before the Winter Solstice, $20,089.
And then people took profits, the seemingly-unstoppable rise ended and reality hit. Hard. However, whilst 'bear' and 'bull' markets are ephemeral, the lessons to be learnt are both timeless and consistent. Here are the few that I learnt:
There are two types of trades: buying to hold long-term, and buying with intent to sell. Don’t muddle the two up in a quasi-sell, quasi-long hold murky mess. Only buy coins for the long term that you truly believe in. The market is speculative and most of the projects out there will fail. It’s safer to make short term trades and cash out into one of the more stable coins. Or, buy your long term holds at good entry points.
Don’t get blinded by greed: If a coin is running parabolic, SELL it at some point. Assuming it’s going to go to $100 and beyond is naive. This happened to me with NEO. I caught the Antshares train and rode it all the way to the very top. I was refreshing my Blockfolio, leaping up almost a thousand dollars a minute. I was 1000% sure this was the coin that was going to break all the rules. It was going to run parabolic and then run even more so— all the way until it made me millions. I was blinded by the potential and the money I could make. I saw the exit. I knew it was there. I didn’t take it. I watched the bounce happen and saw my exit again. I didn’t take it. I stubbornly held it. I rode a slow, painful, bleeding grind all the way to the bottom. Never again.
If you want to buy for long term holding, do your own research. When I first got into crypto I made all the mistakes. I was throwing money around, buying coins I knew nothing about, and going off of word of mouth. I got lucky on some of the coins, but I also got absolutely wrecked on others. All credible projects have a whitepaper outlining their mission and the specifics of the technology. Read it. One really important detail to check for is the token distribution. ICOs that offer massive discounts on pre-sale I tend to avoid as that just reads big money getting in cheap looking to pump and dump.
Technical analysis (‘TA’)
If you are interested in buying with the intent to sell then learn, at the very least, basic TA. Fibonacci retracement is a really strong indicator that plays out time and time again. Beyond that there are literally hundreds of different indicators. Different traders swear by different sets of indicators. Find what works for you. MACD, RSI, and Stochastic RSI are a few I like to keep up with. If you are buying on a post that was made on Facebook or Twitter, you’re probably already too late to the trade.
Don’t margin trade unless you know what you’re doing. Trading with leverage is a really quick way to make a ton of money...and if you don’t know what you’re doing, an even quicker way to lose money. Sites like Bitmex are great but rife with manipulation. Whales know all the tricks. They know how to lay traps. They know what you’re looking for. They know exactly when you’ll hit the panic button and sell. They will wreck you. Start really small and watch and learn how they play. Learn their games and don’t be the sucker. I’ve been slapped so many times entering what I think is a good trade only to fall off a cliff.
Take time off. Crypto doesn’t sleep. It runs 24/7/365. That doesn’t mean you can also. If you smash it and catch some good gains. Take some time off. Don’t forget about your friends, significant others, and pets! I’m not in this game to make my life more stressful. I’m here to make gains and enjoy my free time.
Give Blockfolio a rest. If you’re not actively trading, then there’s no reason to be compulsively checking your folio. Crypto is incredibly volatile. I’ve seen my entire portfolio swing 30% in both directions in a single day. What did I do with this information? I stressed and jumped for joy all in the same day. It’s important to remember none of these swings are actualized until you make the move to cash them out. So if you aren’t trading, then why are you checking? It just causes swings in your emotions.
Learn what market cap is; not just the market, but a single cryptocurrency’s market cap. This is such a crucial element of cryptocurrency markets and in my experience is the one most commonly overlooked. I remember in January when Verge was pumping to the moon: someone in my Slack channel was talking about how it could hit $1 a token. $1 a token! Verge has over 14bn (billion!) coins in circulation. Back in January that would have been a bigger token than Litecoin and, at today (9 Aug 2018)’s prices, $1 a token Verge would be worth $14bn and be the 3rd biggest token on the market, ahead of everything except Ethereum and Bitcoin. Ridiculous? Yes. In seeing this, you can quickly learn that a price target like $1 for a token with a 14bn supply and a dev team like Verge’s just isn’t feasible. I learned my lesson after getting smacked with NEO. Learn from mine. Don’t make your own.
Get involved with the community. There are many, many great groups on Facebook that share tips and insight. Beyond that, many projects have Slack, Discord, or Telegram (couldn’t resist) to keep you posted on their developments. If you like a project, join their community. It’s a great way to keep up with what’s going on, get to know the team, and even catch little bits of trade tips. At the end of the day the market is built on confidence: if you know the team and have spoken to them and understand their desire and ability, you are far more likely to stick with the project through the lean times and not sell at a a loss. You would also be amazed at what you can learn.
Make sure you are 100% focused when sending your tokens. Should you mistype a digit or delete one by accident your money is GONE. FOREVER. If it is difficult to overstate that. There is no insurance or recourse to action. If you put the wrong address in your tokens will disappear, leaving nothing but shadows, dust, a tx hash and a heavy feeling in your chest.
If in doubt, test each new transaction. It might be hard to swallow double transaction fees, but it’s the only true way to know everything is running as expected. Alternatively, copy and paste and then check both the first four and the last four digits of the address you’re sending to. Be careful.
Phishing scams. They’re everywhere. The crypto space is unregulated and there is no insurance. If you get conned then there is no recourse to action. Your money will disappear and so, again, be careful. Use strong, unique passwords for each different website you exchange on and never click any unsolicited links sent to your email. Bookmark your websites, making sure that you have bookmarked them correctly and only use those links. If you get hacked then your money is gone. Forever.
2FA (‘Two Factor Authentication’) is a great way to secure your money on exchanges. All major exchanges support it. Use it. If an exchange doesn’t use i2FA, then be wary of it. The rule does change slightly with online wallets: for example the most reputable online wallet, My Ether Wallet does not have 2FA. Any emails you receive regarding their 2FA policy are a phishing scam. In fact, every unsolicited email you will ever, ever receive regarding cryptocurrency is 99% a scam. Avoid them. Do not get hacked. The best to avoid getting hacked is to have an offline wallet.
Get an offline wallet. When you’re done trading, move your money to an offline wallet. Exchanges like Bittrex and Binance don’t actually hold your tokens. They have an internal system that allows for instantaneous trading. So in essence, you don’t actually hold your tokens when you leave money on the exchange. This setup also prevents you from receiving airdrops and forked coins (in some but not all exchanges).