On Monday (December 4), Bitcoin once rose to $42,000, hitting its highest level since April 2022. Judging from the current trend of Bitcoin, the encryption market has undoubtedly entered the initial stage of bullishness.
In the early stages of a bull market, there are indeed situations where people do not believe that the bull market is coming. Many may be skeptical due to the psychological barriers to losing money in a bear market and the fear of further market declines. But whether you believe it or not, if investors want to obtain excess returns in a bull market, it will be a good strategy to make arrangements in the early stages of the bull market.
What could cause a bull market?
Major industry events: For example, an exchange-traded fund (ETF) for Bitcoin or Ethereum is approved, or a new country adopts Bitcoin as legal tender. These events can trigger market optimism and investor excitement.
New Narrative: During the last bull market, decentralized finance (DeFi) and non-fungible tokens (NFT) were the market’s hot narratives. Some new narratives may emerge in this bull market, such as gambling finance (GambleFi), Telegram robots, real world assets (RWA) or game finance (GameFi). In addition, the NFT market may also explode again.
Improvement in the macroeconomic environment: For example, the Federal Reserve stops raising interest rates, allowing more liquidity to enter the cryptocurrency market, thus driving the market upward.
Regulatory changes: More transparent and effective regulation of cryptocurrency markets in the United States and other countries could increase investor confidence and drive market development.
Increased convenience: More convenient wallets and decentralized applications (DApps) for newcomers will help ordinary people enter the cryptocurrency market, further fueling the bull market.
Eastern market influence: Cryptocurrency investors and developers have geographical preferences and prefer Western markets. However, Eastern markets such as South Korea, China, and Hong Kong also have a strong influence on the cryptocurrency market.
Operational advice in a bull market
You can invest in altcoins, but do not take a full position or over-leverage because the risk is higher. Control your positions in altcoins and low-quality projects, and don’t use your home equity, retirement savings, or sell Bitcoin and Ethereum to buy large amounts of altcoins.
Reduce the position of losing assets and increase the position of profitable assets. Set a stop loss position and stop the loss in time to avoid blindly chasing the rise and killing the fall. Just because an asset brings 5x returns doesn't mean it can't have higher returns. You need to judge whether the price can still rise based on indicators and market sentiment. Take profit in time. No one can sell at the highest point. Establish a take profit strategy and stick to it.
There will be some short-term hot projects in the bull market, and project owners will use market sentiment to drive up prices, but the sustainability and long-term growth potential of these projects may be limited. Be cautious about these projects and avoid blindly following the trend.
Some projects that have experienced crazy gains may not have outstanding fundamentals and token economic models. Remember, only market enthusiasm and investor consensus will drive token prices upward. Most investors will not have an in-depth understanding of the project's operating logic and economic model, but as long as there is market consensus, there is a chance that the token will rise.
In a bull market, market sentiment may fluctuate violently, prices fluctuate greatly, and investor sentiment is easily affected. Stay calm and rational and avoid over-trading and impulsive decision-making. Study market trends, technical indicators, and project fundamentals to make informed investment decisions. Understand the dynamics of the market and track important news and events. Spread your funds across different cryptocurrencies and blockchain projects to reduce risk. Don't put all your eggs in one basket.
Summarize
Although Bitcoin may still test support in the short term, such a test will become insignificant in the face of the huge opportunities in 2024. Judging from various signs, the passage of the Bitcoin ETF and the Bitcoin halving will undoubtedly become the main driving force for the next bull market of Bitcoin. The US wealth management industry may be the most accessible and direct market, a new wealth creation effect. The curtain is about to begin.
From a long-term perspective, the Fed’s interest rate hike cycle is about to end or has ended, and with the coming Bitcoin halving, we are expected to see the arrival of a bull market in 2024. With clear regulations in the United States and the influx of capital from Wall Street and other large institutions, a new bull market does seem to be not far ahead.