Is everyone enjoying the pump? Are we seeing a return of the bull?
Whether the bear is heading for hibernation is yet to be determined. The excitement of the last few days, led by Bitcoin, could simply be a bounce. It is far too early to conclude if the bull is running.
That said, it is best to take a look at the way money is made and how markets are to be treated.
To start, it is great to be able to trade the ebb and flows of the markets. Some can do this; most cannot. For that reason, we will stick with longer term focus.
We see evidence of how sentiment is a finicky thing. The last couple days have people partying like it is 1999. Of course, if Bitcoin drops to $15K, then we will see people back on the ledge ready to go over.
Unfortunately, those who buy into the emotions of the market show themselves, for the most part, ill-equipped to deal with it. Bear markets are a part of life and cannot be avoided. Those who approach it from this perspective are able to act when most others are losing their minds.
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Bear Markets Are Money Makers
This is a statement that goes counter to the common knowledge yet that is probably why most don't end up with abundance out of markets. They operate from a perspective that is the opposite of what leads to riches.
Anyone can ride a bull run. That is easy. People pile in because of the excitement and euphoria. Of course, the peril there is they are often buying at or near the top. This is naturally not a great way to amass a fortune.
Many will state things such as buy at the bottom. Well if we could pinpoint that, we all would do it. The reality is we have no idea where that is. We might thing it is there but suddenly, another drop takes place. Such is life in the markets.
Nevertheless, filling the bags is where the money is made. One thing we know, the bull always does return. Thus, if an asset is fairly strong, it will eventually rebound. This is another fact of markets.
In the end, the key is to have as much as possible when the market does turn. This makes the ride up so much sweeter.
Unfortunately, even if you filled your bags, there is still regret. We always wish we had added more when prices were lower. This seems to be another unavoidable part of markets.
Nevertheless, in spite of our feelings, if we took the time to keep adding when the bear was awake, our wallets (or accounts) will be well positioned for the bull.
Crypto Markets Are On Steroids
Cryptocurrency markets take everything to an extreme. The swings are enormous, both up and down. The bull runs provide returns that make loan sharks blush. Yet, when the bear shows up, pullbacks of 80%+ are common.
All of this can send someone on an emotional roller coaster if not careful.
The riches are made by holding the course and adding to positions when down. Depending upon the time period, it is also good to sell on the way up, to take some profits.
Success is counterintuitive. This is something to always keep in mind. Warren Buffett, probaby the greatest investor of all time, is credited with advising to "buy when there is blood in the street". This is not common thinking.
But it is the road to riches. The approach is equally valid no matter what the market.
Keep this in mind as things go forward, whatever direction the crypto market heads in.
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