For some reason, the general belief is that it’s “bad” if you sell in crypto. I’m here to tell you that I do it often and very well. You should too.
The Stigma of Crypto
Most of the bullish data in crypto revolves around stating that everyone who has held through the dips and ups/downs has seen a profit. This is all true. But – I am very successful at what I do, and I employ a very different strategy. You don’t need to be a high volume active trader to realize profits and de-risk, and it’s not going to cost you millions if you do it right. There’s some nuance to any investment strategy – you have to know what you’re buying.
The Formula for Crypto
If you follow us regularly, you’ll see that we preach often about having a thesis. You MUST have a reason or belief why something you’re purchasing is going to appreciate in value. Right, wrong, or somewhere in the middle, this is the litmus test for any purchase you’re ever going to make. It’s also important to be honest about the project, when it is or is not delivering, and so on. But, the name of the game is to make money, and risk is an important considering factor. The only thing worse than seeing huge losses during a market correction is watching huge profits evaporate. During the May 2021 crash from Tesla/Elon, I watched 3x profits on nearly every investment of mine evaporate in the span of a week. It lengthened my investment times considerably and fortunately I was able to DCA and still end up coming out on top. But – there’s no reason to feel this pain. Now, regardless of the market, I’m actively looking to profit take and I think you should be too, regardless of how “active” of an investor you are.
I watch the markets a lot, and the data we are seeing is overwhelmingly bullish despite any news or FUD that comes out. More developmers more money, more big companies, and more participation are happening across the industry. Projects on up-and-coming Layer 1’s like FTM, ROSE, ONE, SOL, and more are rocketing on a daily basis. Even if you spend a significant amount of time researching and believe a project is destined to make you millions – newsflash – no one has ever gone broke taking profits.
For example – I am a HUGE fan of FTM. However, I rode it all the way above $3 in the fall and didn’t take any profit. As BTC cooled off, I watched all those profits erode, and ended up underwater when FTM was below $2. At the time (and even moreso now) I believe that FTM is a top 20 project and I should HODL it no matter what. However, my strategy had a key flaw. If you have a strong thesis about a project, it is absolutely OK to HODL it. If you have a strong thesis and are WAY up in profit, my belief (after learning the hard way) is that you shouldn’t necessarily HODL your whole bag, no matter the project. In the case of FTM, I DCA’d and began incrementally selling my positions as it swung back up. I kept those sales in USDT, and during the recent dip I was able to deploy them and got some life-changing entries on a lot of projects like ETH, AVAX, GALA, ONE, and others.
I don’t think for anyone “set it and forget it” is the best play. When you’re up a lot on a project – take some profits and set them aside. We know few things as fact in the world of crypto… but the one thing we do know is that crashes and dips are part of life. Being prepared for this is paramount and if you (like most of us) want to make profit and limit risk exposure you need to be selling on the way up so you can buy on the way down.
Don’t blindly HODL. It’s a “fine” strategy for projects that have long term viability, but my belief is that it’s needlessly costing you money.
During this recent downtrend, FTM his a low of <$1.30 in late December. Watching it fall from $3 would be painful (late November), right? Well, I learned my lesson and have been successfully employing this strategy for a few months. Because I have a thesis with most of my investments, I’m willing to HODL losses and DCA projects that I believe have forward looking sentiments. But, during major upswings, I’m not HODLING.
In December, when FTM bottomed, I was buying. I bought what I could throughout the dump, and when the recovery started, I was well positioned. I believed (and still do) FTM is a top 20 or top 15 crypto project and is timed for major growth. But, having bought a lot at <$1.30, I began selling 15-20% of my bag as the price improved. In fact, I sold 15% at $2.2 and another $15% at $2.9. This let me recover far more than my DCA’s cost me, and it let me set money aside to eat up this recent crash we’re seeing. I love FTM and still have a lot, but sitting on large percentage profits is unnecessary.
So – don’t be afraid. I promise if you profit take you won’t lose millions if you take it incrementally. Even if you’re not an “Active” trader, you can check every so often and if you’re way up, sell some percentage for a good win. You do not need to try and capture every single cent of a gain or grab it at the absolute lowest. Trying to time the market is guaranteed to be unsuccessful, but buying and selling smartly is easy in any market condition. Good projects (with good approaches) will likely always be successful and selling even blossoming projects is STILL a good idea. So – when you’re watching your portfolio – if you see 30+% gains and the project isn’t moving parabolically – take some profit. Set it aside and save it for the next dip (via USDC, etc.). You’ll sleep better at night and be prepared for the next dip at the same time.