Whether the market is bullish or bearish, you need to have a plan to assist you succeed. Bear markets receive all the attention, but bull markets may be just as dangerous if you let your greed get the best of you and don’t prepare. The cryptocurrency bull market is ripe for discussion, so let’s look at some tried-and-true tactics.
Use technical indicators to predict the start of a bull market.
You can use technical indicators to gauge the health of a market or an asset and make knowledgeable price predictions about the future market. Dozens of cryptocurrency technical indicators exist, but the following are some of the more widely used ones:
- BTC’s Dominance: Even though Bitcoin (BTC) is still the most valuable cryptocurrency, there are many other digital currencies to choose from. Bitcoin’s market share decreased over the previous bull market, while many altcoins had meteoric popularity and price increases. Consequently, a bull market may be indicated if the whole market capitalization increases but Bitcoin’s share of that capitalization decreases.
- Relative strength index (RSI): RSI can be used to determine if an asset is oversold or overbought, with extremes suggesting a general bearish or bullish trend. When RSI for cryptocurrency reaches 70, the asset is considered overbought, and when it falls below 30, it is considered under bought.
- Moving average (MA): The average price of a cryptocurrency for a certain time period (often 200, 50, or 20 days) is the statistic in question. A positive increasing trend is indicated if somehow the price exceeds the long-term MA.
Invest in the beginning of a bull market.
Crypto markets are notoriously volatile, making it hard to predict when they might see a bull run. The beginning of something like a bull run is generally signaled by a combination of positive market sentiment and strong technical indications. If you can time a bull run correctly, you can exit your stocks for much more than you paid.
Use sell limit orders to frequently cash in on your gains
Seeing BTC reach $100,000 is a goal shared by many, but no one can predict when that day will come. In a rising market, investors frequently worry that they will miss out on further gains if they pull the trigger on a sale too soon. Yet worse than arriving late is departing before reaching the summit.
Avoid feeling like you’re missing out and instead capture consistent earnings. Divide up your assets and put some money aside for later. Using sell limit orders is the simplest approach to accomplish this without having to constantly monitor your portfolio. If you use sell limit orders, you can have your cryptocurrency sold at a predetermined market price without having to do anything at that price.
Benefit from interest with HODL
The major advantage of HODLing is that it allows you to avoid paying Tax on your cryptocurrency gains. A large Tax bill is a direct result of a high sale price. Hodling your cryptocurrency is the most foolproof approach to avoid this. However, this does not preclude earning money from your possessions. Many other options exist for generating passive income through your cryptocurrency holdings, including staking, lending, and providing liquidity.
Leverage trading allows you to magnify your profits
In a rising market, leveraged tokens, margin trading, as well as other derivatives may seem like a good idea, but before you dive in, you should assess the rewards against the hazards. If the market moves in the right direction, you can potentially increase your exposure towards the underlying asset and hence your profit by a certain amount using any of these products.
Cash out your gains in stablecoins
In cases where it is, you may choose to put your money into stablecoin payout choices. Many products provide this service, such as stablecoin-interest paying vaults and countless DeFi choices.
Get some variety in your holding porftolio
Spreading your investments out among many categories will help you take on less danger while also exposing you to more options. When markets are up or down, it can be tough to tell which cryptocurrencies and tokens will gain traction. The following performance metrics can be used to guide your decision regarding the investments to make.
- Past performance.
- Previous historic high.
Have a strategy for exit.
It’s inevitable that bull markets will eventually crash. The bull market is no time to be overly aggressive with your exit strategy. The specifics of this will seem different for different investors. You should plan your departure such that you will have multiple assets in your portfolio and have at least doubled your money by the time the bull run ends.