How to avoid the pitfalls of crypto investing in preparation for the next bull run

When thinking about cryptocurrency crashes, the expression 20/20 comes to mind after wisdom. Since its peak in November 2021, the market capitalization of cryptocurrencies has been around 70% Worth it, crypto investors are in a pinch, regardless of when they buy.

Verena Ross, chairman of the European Securities and Markets Authority (ESMA), said investors should consider it a “lesson of caution” when investing in unregulated assets. FT..

“Many of these [crypto assets] Will survive. .. .. I hope some of these investors will see this and at least take careful lessons to think about how much money they will invest in these types of assets. “

Ross noted that the ESMA warned private investors earlier this year about the serious risks associated with investing in cryptocurrencies. This means that the economic loss of a recession is self-determining.

It has an element of truth, but for some reason the problem can be oversimplified. For one thing, regulated assets are also on the decline during this period. And the great attraction of digital asset investment lies in its anti-authoritative spirit. This transcends short-term price behavior.

Nevertheless, price is the primary criterion for measuring success or failure, and even the most stubborn crypto advocates will find it painful in portfolio trackers.

To raise awareness on this issue, CryptoSlate contacted several industry players to find out what lessons they could learn.

Industry leaders share their thoughts on cryptocurrency crashes

Russell StarCEO of Cryptocurrency Exchange Traded Product (ETP) Company courage, Warned that the “get-rich-quick scheme” does not work. He extended this by stating that users should work on more mature crypto investments, especially when performing due diligence.

According to Star, all markets are moving cyclically, and investment strategies based on “optimistic growth forecasts” are “destined to fail” at some point. That’s why the recent crash has made us realize the importance of recognizing that the crypto market, like all markets, moves cyclically.

“The recent recession acts as a wake-up call to many investors. The code has the same cyclical market conditions as all other assets, despite ample runways and room for growth. Affected by. “

Star acknowledged that controlling risk acceptance and being content with “realistic and sustainable productivity” is an important lesson.

Garry KrugljakowFounder and CEO of GOGO protocol When 0VIXThere was a message similar to the star, saying that the expectation that the market would continue to rise forever was wrong.

Krugljakow also pointed out that rapidly evolving market variables often cannot explain the health of the market, which surprises investors. To embody this with an example, Krugljakow said that in the case of DeFi, the available models (for risk assessment and health analysis) often do not assess the user’s “credit value”, which can lead to overexposure. He said he had sex.

“For example, limiting the scope to DeFi shows that the soundness and stability of the lending system depends on the collateral value provided by the borrower, although the risk assessment associated with asset price fluctuations has improved, Models often fail. Address the ability of users to lend and borrow multiple assets. “

Macroeconomic situation

Listen to investor analysis, Michael RosmerCEO and co-founder DeFiYield“The timing of the market is usually a fruitless effort,” he said.

Reiterating the maxim that past performance does not predict future movements, Rosmer pointed out that unlike previous cycles, the recent bull market did not end in a blow-off top. Therefore, it gives the investors who are monitoring this a false sense of security. The lesson here is to set aside deep-rooted market expectations.

“People also believed that we would see the top blown away because it happened in the previous cycle, but the idea is that the market is based on what people expect and prepare. I don’t understand what to do, so it’s often unlikely that people’s expectations will happen. “

Rosmer commented that it brought about inflation, and investors mistakenly assumed that rising inflation was equivalent to rising asset prices. However, as we are witnessing now, rising inflation has led to hawkish movements from central banks and poor asset price performance.

Rosmer advised investors to pay attention to price euphoria as it considers it a key indicator of an overly hot market in closing the tip. At such times, smart play will lower your risk exposure.

“Reversing the cycle, thinking about risk when the market is falling and rising, reducing risk when the market is rising, learning that there is a risk of falling, high with the general stock market Notice the correlation. “

Bitcoin is a major cryptocurrency for reasons

Bitcoin is generally far superior to other Bitcoins, losing about 70% of its value from its all-time high (ATH) in November 2021.In contrast, significant large cap losers include: Solana When AlgorandATH decreased by 87% and 92%, respectively.

Regarding lessons to keep in mind, Max Keizer said, “There were no new lessons.” In the sense that investors should have already learned from the previous crash. But he warned that malicious individuals would continue to target “a new generation of naive and greedy suckers.”

For this reason, Keizer does not recommend complex, profitable DeFi products or common alternatives. Instead, Kaiser said the only way to “escape from madness” and protect yourself is to stick to self-managed Bitcoin and Hoddle.