Cards on the table, I fucked up in many ways in the last 2 bear markets. Not saying I’m living hand to mouth, but in retrospect, I could have done 10x better if I played the bear markets as I play the bull markets. It’s fun to share success stories and help people in a bull market make money by pointing out the right moves. But today, I’m here to share my fuck ups, the times I’ve lost bags of money or slept on opportunities that 100x’d on me within a year. I think these lessons are even more valuable than my other blogs. So keep on reading, and try not to judge me too harshly.
In a bull market, I’m heavily involved in many sectors of the cryptocurrency industry. I see what’s trending and jump on the bandwagon. In a bear market I just simply hodl my bag and wait for better days. Even if that means I won’t open my crypto wallet for years.
This habit kinda started back in 2013. With high swings and limited information available, buying and holding just seemed like it’s the best strategy that is possible. For two main reasons, firstly, you never know when the price goes back up and you don’t want to see the price moon without having exposure in crypto. And two, because if you wait long enough, the price of BTC will be higher.
The latter is still true today. If you hold BTC for over 4 years, there is no wallet on the blockchain that is at a loss. However, there are better things to do than just sit on your hands and wait. I’m here today to share some of the major fuck ups of my last 2 bear markets. Mistakes I’m going to avoid this time around. I hope you can learn from them and make smarter moves than I did in the past.
Are We Bear Yet?
No, we’re not bear yet. At least not in my opinion. Onchain metrics look good, stock to flow model still pointing up, even technical analysis puts us close to the bottom of this pullback. And the graphs of the last few days look really bullish.
However, there’s always a possibility that the bull cycle is over, and that we’re going sideways or down for a much longer period than we want. But I’m still in the boat of BTC will break 100k this year, and probably a lot higher.
As always, this is not financial advice. You decide your bets, the risk you’re willing to take, and when to take profits.
What I see often in my network, and with myself, is that at the end of the bull cycle, it’s extremely difficult to manage your emotions. Life-changing money could be on the line. You can see your monetary targets in reach. Dreams of that tesla you want to buy are almost real. Things like that clutter your decision-making process, and before you know it. The bull is over.
I don’t want your dreams to chatter, so let’s try and avoid these mistakes that I’ve made in the last bear markets.
1] Altcoin bag
We all love our altcoins that can 100x. But in a bear market, they crash the hardest. If you’re holding SafeMoon, you won’t be very safe.
In a bear cycle, Bitcoin loses 60-70% of its value. That’s already quite the hit your portfolio will take. However, altcoins can lose 90-100% of their value.
Just look at Ethereum, at ICO it was sold for $0,30. The first bull cycle of 2017/2018 ETH topped out around $1400. But come December 2018, the bottom of ETH was around $90 that’s a 94% dip. After sideways for over 1 year, we saw a small recovery to $250, only to dip back to $120 when COVID hit.
And keep in mind, during this major crash, Ethereum always remained the second largest cryptocurrency after Bitcoin.
Other large altcoins had a similar cycle, while the majority of even smaller tokens lost 98% of their value and most of them never recovered. They went full bankrupt.
Missed Token Swaps
Another risk on altcoins is that there is a chance at some point during a bear, there will be a token swap even. Maybe they upgraded the token standard, or they are changing to a different blockchain. Whatever the reason is, I’ve missed several token swap events, because not only wasn’t it automatically airdropped into my wallet. The projects set deadlines of when I can swap.
Miss the deadline, you lose the tokens. So if you’re not keeping a close eye to altcoins you hold throughout a bear market. You risk losing them.
Do Not Buy High And Sell Low!
I’m not telling you to buy high and sell on losses in short-term moves. But I’m trying to make you realize, that once we confirm a bear market on a larger timeframe (weekly candles, and bad on-chain metrics), do not get stuck holding a bag of altcoins for years.
I’ve seen many friends, jump into exotic altcoins in 2018. Only to lose all their money and never touch crypto again. Why is that?
I did the exact same thing actually. Simply put, I was gambling on “the next Bitcoin or Ethereum”. Once the prices went down, I didn’t want to sell at a 50% loss, because hey the price can bounce back right? Then once the coin is 80% down, I conclude “This should be close to the bottom and the upside potential is too high now, I’m going down with this ship”.
However, if this happens with your entire altcoin bag, and you don’t hold any Bitcoin. Then after the ship sinks, my friends never got back into other coins or even Bitcoin, because crypto is hard.
Does that sound familiar?
I’m not saying my friends are idiots. I mean I’m guilty of those debacles myself as well. But I have a well-diversified portfolio. And my altcoins positions are usually less than 1% of my portfolio per alt. So I just write them off as losses and move on. It’s the exact same mistake, but I’m kinda protected because of diversification. Which hides the level of mental mistakes I’m making here.
The conclusion here is, have a solid exit strategy for altcoins. The end of a bull cycle will be the craziest, especially for altcoins. It will be difficult to cash out money when it seemingly doubles every week.
You’re going to have to set price points where you take profit, into Bitcoin or stablecoins. Humans are notoriously bad at making financial decisions on the spot. Emotions like fear, anger, greed, disbelief cloud our judgment. So have a plan ready, and stick to it.
Altcoins That Survived The Bear
Hey, not all was bad. Some of my 2017 altcoins did manage to survive the bear market. Coins like Stellar, Waves, Litecoin, and others. Most of them were top 10, or maybe top 20 coins.
But you know what’s funny. None of those altcoins are at their previous All-time high yet. So even holding on to them for an entire bear market. After 1 year of the bull market, they still aren’t back at the levels they once were.
So even if your coin survives (remember 90%+ of altcoins will die) a bear market. That doesn’t mean it will 10x on the next bull cycle.
Maybe I’ll get lucky with a few, and they will do a multiplier in the final stages of a bull. But needless to say, I could have used that money better elsewhere.
2] Funds on Small Exchanges
This one should speak for itself. But I’ve been lazy myself and lost funds on exchanges that were questionable to begin with.
In a bull market, sometimes you need some funds in shady places to buy some assets that aren’t tradable in many places. Altho, DeFi platforms like Uniswap kinda solved this problem in this bull.
I’ve held crypto on BTC-e, Cryptopia, and the official Waves dex which all got lost because the exchange either got hacked or completely disappeared. Especially the last one is a tough one. I’ve had Waves (formally a top 10 coin) on the official Waves Dex throughout the bear market. When the bull market came around and I want to trade my Waves, the entire exchange was gone. My coins are still at the address I had, but I have no way to recover them. You can see my 2500 waves sitting right here, and I’ll never be able to trade them. During the bear it was just a few thousand, I didn’t bother to move at all. Now that’s worth $62,500 and who knows where it will go in the future.
The coins you decide to hold on to, store them safely. Preferably on a hardware wallet like Ledger or Trezor. And make sure you have a backup of the seed phrase.
3] No Private Keys of Wallets
Even an avid crypto user like myself fails to stick to the simplest rule of them all. Not your keys, not your coins. Duh!
I didn’t save my private keys for DogecoinQT (the OG’s will remember this one) wallet, on which I mined DOGE back in 2014. When the hard disk crashed I lost total access. That’s worth mid 6 figures today. At the time of the crash, it was only a few hundred bucks, so who cares? But as you can see, losing private keys can add up to significant numbers when the years go by.
Another example is a Bitcoin wallet I don’t have access to. For an affiliate program, I got paid satoshi’s on a weekly basis. I didn’t even know about it until this bull market came around and I was checking old wallets I used to have. On a little treasure hunt, I found this wallet that has 0.43 BTC on it. However, I didn’t have the private keys stored anywhere. Just the log-in for blockchain.info, which rebranded to blockchain.com. After their rebranding, my previous log-in didn’t work anymore. So the BTC’s are lost forever.
4] Cash Flow
Cash is king. This is always true, but it hits the nail on the coffin in a bear market.
First of all, you don’t want to liquidate any assets to cover your monthly expenses.
Second, if you have a healthy cash flow you can buy dips, or buy into new opportunities that come across your desk.
I played this very well in 2015 when I was still crushing the poker tables and just reinvested 10% of my poker profits into BTC each month. Awesome.
I completely failed in the 2019 & 2020 bear markets. When my business was cash-flow negative and I had to put my reserves into the business instead of buying dips.
So this game I’m 1-1 at a draw. I’ll make sure I’ll score the winning goal in the next bear cycle.
5] Head in the sand
That brings me to the next mistake, keeping your head in the sand. Due to lack of cash flow, and my HODL bag of BTC, ETH, and other alts.
I had no room for new investments. When your alts are at an 80-90% loss from an all-time high, with still potential to go back up. It’s very easy to tell yourself, let’s just wait it out. Things will go back to old levels and let’s look at new opportunities when the time comes.
I saw DeFi pop up, looked cool. But didn’t seriously dived into it to research its full potential. If I wasn’t going to put money down, why spend the time on it?
Same with the early boom of NFTs. I was tracking Beeple before he blew up, but didn’t want to put $1k down for the first NFT purchase.
Obviously, the explosive growth of these things is early. By the time it reaches mainstream media, people already made their 100x or even 1000x. This mistake is sort of a ripple effect of the earlier mistakes. Holding too much in Altcoins and not having a healthy cash flow or cash reserve.
We all know money compounds, but mistakes compound even harder!
6] Turning Off Trading Bot
My GSMG bot has been very profitable this year. However, the bot buys dips and never sells at a loss. Meaning when the market crashes, it will stack up on alts, and when alts crash 90% it will have all your money into alts. Exactly what I’m trying to avoid.
I rather turn off the bot in the next leg up, let’s say when Bitcoin is between $100,000-$150,000 I’m turning mine off. The bot will steeds need a bit of time to exit the positions it is in. And if I miss a bit of the blow-off top to the peak, that’s ok. I just don’t want to end up holding a bag of alts, and therefore I believe the risk/reward ratio changes. Time to take a botting break.
Set your own target based on your risk profile on this one.
If you’re using other trading bots that trade on margin. You will risk getting rekt on large wick downs. When we do reach the peak of the bull, the first 30-40% down will happen in a blink of an eye. You won’t have time to react to that, and neither will your bot.
So be careful in fully trusting your automated trading bots at cycle flips.
7] Margin Trade To 0 BTC
I don’t know about you, but when I speak for myself I’m a huge moonboy. I have an unbelievable bias that BTC will go up in the long term. This bias also has an effect on my short-term vision.
Whenever Bitcoin dips 30-40%, I believe a recovery is inevitable.
Now if you take that bias into account when margin trading, it could be a slippery slope.
When margin trading, you are leveraging your current asset to bet on price movement. Meaning I could use 1 BTC to bet the price is going up or down and make more BTC. The flip side is, that I can also lose that 1 BTC if the price moves in an opposite direction.
I only started margin trading this year. So far, so good. Although I know that by the end of the bull, I will take a pause. I don’t want to risk losing my long-term hodl bag for quick wins.
I have heard from some poker friends, who were margin trading with 100 BTC and lost them all. This was obviously in earlier days, but imagine just sitting on those BTC instead of using them as leverage to make more. Margin trading can be very profitable, but it’s a dangerous game.
What Do We HODL?
Now that you know how to avoid the above 7 mistakes, what do you want to keep in mind?
Well, there’s always a chance that Bitcoin will go up only from here, a super cycle. You see this with tech stocks like Apple, Google, Youtube. The first 10-15 years they are highly volatile. Until they reach a certain adoption point, and from there it’s up (almost) every year.
This could be true for Bitcoin and the larger cryptos like Ethereum. For the last one, with the recent updates to proof of stake, and burning part of the gas fees. We can see ETH being deflationary on some days. And because of these improvements, and future updates that are yet to come. I don’t expect ETH to dip 94% again. It should be more stable this time around.
So because I want to balance my risk, I also want to balance the risk of missing out on the up-only phase. Since the beginning of the bull cycle, I always said I have a long-term hodl portfolio. This is what I’m talking about. A part of my BTC/ETH holdings I will not touch. They will stay in crypto forever, and in a bear market, I’ll focus on passive income streams for this, like lending, staking, farming and botting.
On top of that, I consider my long-term hodl bag my insurance policy against the current financial system. At some point, the dollar printer will stop, and fiat as we know it could collapse. I don’t know if this is likely to happen in my lifetime, but if it does, I want to have crypto!
There will be a small % of alts I’m keeping. I’ll stick with a little BNB, UNI, and CAKE. They all have good passive income potential, and there is a chance they will hold up well in a bear. I’m prepared to take 90% losses on them in a bear because I believe strongly they will be around for the next bull. By adding them in liquidity pools I should at least double possibly triple the number of coins before we see the next bull.
You can pick your own alts or coins that you’re going to stick with. As long as you keep in mind what I wrote above and you understand the risk you’re taking.
Also, realize that having to take a 90% loss on your investment takes a mental toll on you. It would be a shame to not see you around in the next bull market, just because you lost some money this time around. So take that into consideration when you’re deciding your hodl positions.
When I’m exiting my crypto positions. This doesn’t mean I swap them to euros and look at them sitting in my bank on negative interest.
No, I’m investing in other assets and keeping large portions in stable coins. I can quickly jump bank into BTC with stable coins.
Note: be careful with USDT, too many red flags.
God, I love my JPEGs. Do I plan to hodl them all through a bear market? Hell no.
Even tho NFTs have been around since the counterparty days in 2015, it didn’t catch on like we’re seeing today. Okay, the Cryptokitties and Cryptopunks had a small hype in 2017, but nowadays we see billions of trading volume per week on marketplaces like Opensea.
In my opinion, they haven’t been put through the test of time and cycles yet. And I’m not planning to have large exposure when shit hits the fan.
Right now, I’m still having fun flipping NFTs for ETH profits and investing in some for the long haul. But in my mind, most of them are like exotic altcoins. So when the time comes that the whole crypto market takes a dive, I expect people to liquidate assets into cash, NFTs included.
But like my crypto portfolio, I will have a few long-term holds. Projects that I believe are solid, with a strong team, roadmap, and utility. Right now I’m thinking that my Mutant Ape and Trevor Jones NFTs will fit in this bucket. They would be less likely to crash hard and bounce back quicker. But my opinion might change over time.
On another note, the “bear summer” for crypto was extremely good for NFTs. This is exactly the time that PFP NFTs started booming. So it could be a “safe haven” for ETH holders. Who knows? That’s why I do want to keep some exposure to the more solid projects.
I will keep a super close eye on this market when the dip starts, as I want to add a few blue chips to my portfolio, which might be at a huge discount in a bear market.
Buy The Dip
Buy the fucking dip! I mean it. The biggest mistake you can make is to not buy the dip.
During the COVID crash, Bitcoin touched $3800 in March 2020. 1 Year later we broke $40,000. That’s a 10x in twelve months on the safest asset in crypto. Ironically, most people will FOMO into Bitcoin when it breaks $100,00 and hits all the mainstream media. But what’s the medium-term upside at that point? A 3x at max?
Understand risk/reward ratios. When Bitcoin is at a loss of 80% from an all-time high, the chances of going down lower are small. While the chances of reversal are high. When Bitcoin is at its all-time high, the chances of a 10x are much lower than a chance of a reversal to the downside.
So buy the dip.
And I don’t mean when Bitcoin drops 20% go back all in buying the dip. No, I mean when the markets turn on you, wait on the sidelines for a few months and once BTC is 50% from its all-time high, find spots to get back in. Do it slowly, because there’s a chance we go deeper over the next few years. Time your entries and spots you want to invest some of your stable coins back into the market.
Like an exit strategy goes in small percentages, a new entry strategy should look similar. More on that when we’re mid-bear market.
Bears Are For Sleep
The nicest thing about a bear market is, that you don’t need to check your graphs, portfolio, and news every hour of the day. Take some time off, you deserve it. Spend time with family or go on a trip to unwind a bit.
I don’t know about you, but I can most definitely use it. Some time away from my screen, recharge my energy to head back in the trenches when I smell the next opportunity.