Bitcoin (BTC) just blasted past $88,000 and is now inches away from a new all-time high…
It’s following its “post halving” script to a tee, and I still expect it to hit $150K this cycle (roughly a double from here). Especially Republicans—by far the more pro-crypto party—came out on top last week.
If you’re new to crypto or thinking of jumping on board, it’s worth remembering that despite the immense upside, this is still the most volatile asset class on Earth.
Crypto has a history of rewarding long-term investors who have conviction in its world-changing potential.
On the other hand, it tends to punish investors with “weak hands”—those looking to make a quick buck who can’t or won’t stay invested through volatile periods.
That’s why rule #1 in crypto is:
Embrace the volatility.
Throughout history, early stage assets have gone through HUGE booms and busts. They rewarded early investors with 10X–100X their money.
#2: Accept you’ll be underwater at times.
I’ve been in crypto long enough to witness a few cycles. Those ups and downs have thickened my skin over the years. If you’re used to investing in the stock market where 50% sell-offs are rare and 70% sell-offs almost never happen—crypto is a shock to the system.
When prices hit record highs late last year, the world marveled at how much money crypto investors were making. In the past few months, we’ve seen the other side of that.
#3: Be optimistic.
Humans are hardwired to be pessimistic. The skeptic who talks about what could go wrong sounds intelligent. He sounds smarter than the oblivious optimist. That’s why you see so many gloomy Wall Street analysts on news.
Being optimistic isn’t the same as being naïve. As Nat Friedman, CEO of software firm GitHub, said, “Pessimists sound smart. Optimists make money.”
#4: Correct position-sizing is key.
Investors should only allocate a small portion of their portfolios to crypto. One to two percent is a good target. Five percent is pushing the limit. Generally, you should invest less in crypto than you think you should.
If you believe crypto and blockchain tech will transform the world (like I do), you only need to own a little bit to make a big difference in your financial life.
#5: You must stick around during the tough times.
You never know when prices have bottomed or when the next bull run is starting. More important, only investors who stick around during the tough times have the conviction to buy quality tokens when they’re 90%+ off their highs.
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