Preparing for the Next Crypto Bull Run: A Strategic Guide
The cryptocurrency market is known for its volatility and cycles of booms and busts. While the timing of the next major bull run remains uncertain, proper preparation can help crypto investors capitalize on the potential opportunities when market sentiment turns positive. This guide explores key strategies for getting ready for the next crypto bull run.
Understanding Crypto Bull Markets
A „bull market“ refers to a period of sustained rising prices and optimistic sentiment in a financial market. In the cryptocurrency industry, a bull run is characterized by:
- Surging prices across major crypto assets like Bitcoin and Ethereum
- Increased trading volumes and market activity
- High levels of positive investor sentiment and FOMO (fear of missing out)
- More mainstream media coverage and public interest in crypto
- New investors entering the crypto market leading to further price rises
The previous major crypto bull runs occurred in late 2017 and late 2020-early 2021. During these periods, the prices of Bitcoin and other major cryptocurrencies rose to dramatic new highs before eventually experiencing downward corrections.
While it is difficult to predict exactly when the next bull run will happen, there are some potential catalysts to monitor:
- Bitcoin halvings – These programmed events happen roughly every 4 years and reduce Bitcoin’s supply issuance rate by 50%. The previous halvings preceded the 2017 and 2021 bull runs. The next halving is expected in early 2024.
- Institutional adoption – Growing involvement from banks, hedge funds, companies, and accredited investors can signal increased mainstream acceptance and capital inflows.
- Regulatory clarity – Clearer government policies around crypto could encourage further investment, especially from larger institutions.
- Economic conditions – Periods of high inflation, geopolitical uncertainty, or low interest rates could prompt more investors to seek out crypto opportunities.
Leveraging Crypto Exchanges to Capitalize on Bull Markets
As discussed in the section on understanding crypto bull markets, major exchanges like Coinbase, Cryptosoft, Kraken, and KuCoin play an integral role in enabling investors to capitalize on surging prices and trading volumes.
When crypto bull runs are underway, the massive influx of new users trying to open accounts often overloads the capabilities of exchanges. We already covered tips like verifying accounts early and having backup login options ready.
Key Ways to Prepare for the Next Bull Run
While timing the market is difficult, proper preparation will allow crypto investors to act quickly when conditions shift towards a potential bull run. Here are some key tips:
1. Start Accumulating Cash Reserves
It’s important to build up a cash reserve specifically for new crypto investments when prices start surging again. Set aside some fiat currency on a regular schedule, so you have dry powder ready to deploy when the market heats up. Try to avoid selling existing crypto holdings to free up cash, as this could result in a large tax bill.
2. Identify Your Target Cryptocurrencies
Do thorough research to create a watchlist of promising crypto assets to invest in during the next bull run. Look beyond Bitcoin and Ethereum to higher-risk, high-potential emerging cryptos related to areas like DeFi, NFTs, layer 1s, interoperability plays, and more.
When prices surge, you’ll want to have identified targets ready to move on quickly. Monitor your watchlist for signs of strength as the rally builds.
3. Learn Advanced Trading Techniques
Bull markets move fast. Educate yourself on advanced trading techniques so you can act quickly on opportunities. For example, learn how to:
- Set buy/sell limit orders on exchanges
- Use dollar cost averaging strategies
- Follow moving average indicators to identify trends
- Trade crypto options contracts to profit from volatility
The more you know, the faster you can move when prices spike across your target cryptos.
4. Prepare Your Exchange Accounts
Crypto bull runs bring a flood of new users to exchanges, which can cause slowdowns or service interruptions. Prepare by:
- Verifying your account ID and trading limits ahead of time
- Funding accounts with some stablecoin reserves
- Ensuring 2FA authentication is enabled
- Having backups available for critical logins
You don’t want to miss opportunities due to exchange access issues, so take care of these items before the mad rush begins.
5. Learn DeFi Protocols Deeply
Decentralized finance (DeFi) provides ways to maximize gains in a bull market without relying only on spot crypto trading. Learn how to:
- Provide liquidity to AMM pools to earn trading fees
- Lock up assets in staking pools to earn yield
- Leverage collateral to borrow stablecoins at low rates for buying more crypto
- Participate in IDOs to get access to new DeFi tokens early
DeFi can let you amplify your crypto holdings, earn passive income on holdings, and access new assets before they hit exchanges.
6. Practice Strong Security Hygiene
Unfortunately, bull runs also attract cybercriminals and scammers looking to steal crypto assets from unsuspecting victims.
Be sure you are prepared by taking steps like:
- Storing holdings in a hardware wallet
- Using a password manager with unique, complex passwords
- Enabling two-factor authentication (2FA) everywhere
- Watching out for phishing attempts and other scams
- Keeping devices updated and running anti-virus software
Strengthen your security posture so you can stay focused on opportunities instead of constantly worrying about risks.
7. Structure for Tax Implications
In many jurisdictions, trading and selling cryptocurrency can result in capital gains tax obligations. During a bull market, these tax liabilities can quickly multiply.
Be strategic by:
- Keeping detailed records of all crypto buy/sell transactions
- Harvesting capital losses to offset capital gains
- Holding assets longer than one year to qualify for long-term capital gains treatment
- Researching the crypto tax regulations in your specific country
Sound tax planning will let you retain more of your portfolio’s profits.
Evaluating New Crypto Assets
When a bull run happens, hundreds of new cryptocurrencies will emerge trying to ride the wave. While some will be legitimate innovations, many will be shallow projects without much substance.
How can you tell the difference as an investor? Here are key factors to evaluate:
Team and Track Record
- Does the project have an experienced and capable founding team? Look for technical competence, business experience, passion for the problem space, etc.
- Do the founders or key team members have success with prior crypto projects? Serial entrepreneurs often continue to build winners.
Token Distribution and Supply
- Is the initial token distribution structured to encourage long-term holding instead of quick flipping?
- Does the project have a maximum token supply or emission schedule that discourages excessive inflation?
Product Vision and Use Cases
- Does the project address a real problem or use case that people urgently need solved? Avoid solutions looking for a problem.
- Is there a bold, revolutionary vision that can disrupt an existing industry rather than just tweaking it?
- Does the project introduce any novel technical innovations like new consensus mechanisms, cryptography approaches, governance models, etc? Technology breakthroughs often underpin major new cryptos.
- Are there plans to encourage robust ecosystem growth through incentives for developers, partners, community members? A healthy ecosystem leads to long-term viability.
- Is there an active, passionate community of users, developers, and advocates forming around the project? Community momentum drives growth.
Conducting due diligence using a framework like this allows separating promising crypto projects from superficial hype during a bull market. Do your homework before investing in new assets.
Managing Risk During Bull Markets
While bull markets bring incredible opportunities, they also come with amplified risks, such as:
- Market manipulation – Bad actors spread misinformation to pump up prices and attract unsophisticated investors before dumping holdings.
- Scams/hacks – Criminals leverage the hype to create fake projects, compromised exchange accounts, phishing websites and other traps for stealing funds.
- Overhyping – Some projects make unrealistic claims that don’t hold up to scrutiny and later collapse in value when the hype fades.
- Reckless speculation – Greed and euphoria can lead investors to take excessive risks across marginal projects.
Here are some tips for mitigating these risks:
- Avoid „get rich quick“ groups/signals. Do your own research.
- Verify URLs carefully to avoid fake exchange sites.
- Don’t invest based solely on social media hype and FOMO.
- Dollar cost average into assets instead of buying all at once.
- Take some profits along the way instead of getting overly greedy.
- Maintain a portfolio with fundamental blue chip crypto assets instead of chasing exotic moonshots.
- Keep stop losses in place to limit downside during corrections.
The keys are protecting capital, avoiding impulsive decisions, and balancing risks across your holdings.
Crypto bull runs can create life-changing wealth building opportunities for savvy investors. By learning key concepts, developing your knowledge, identifying targets, enhancing security, and mitigating risks, you can strategically prepare for the next major crypto market rally. With the right moves, you can capitalize on this historic opportunity while also protecting your existing assets.
How long do crypto bull runs normally last?
There is no definitive time period, but previous bull runs have tended to last 6-12 months before hitting a peak and sliding into a bear market. The specific timing depends on various sentiment and market factors.
What percentage gains are typical during bull markets?
While past performance does not guarantee future results, previous bull markets have produced gains in the range of 500-3000% across the major cryptocurrencies before topping out. Altcoins usually outperform Bitcoin.
How can I find „hidden gem“ crypto projects early?
Make use of communities like Reddit, Twitter, Discord and Telegram to uncover promising new projects in the early stages. Look for teams solving unique problems and discuss the projects with other crypto enthusiasts.
Should I sell everything when a bull run ends?
Not necessarily. Consider taking some profits to realize gains, but also retain a core position in fundamentally strong assets that you have long-term conviction in through the bear markets. Don’t panic sell the bottom.
How do I avoid getting exploited during bull markets?
- DYOR instead of blindly buying hype
- Use cold storage or hardware wallets instead of only hot wallets
- Enable Google Authenticator or other 2FA everywhere
- Keep some holdings in stablecoins to reduce risk
- Only invest what you can afford to lose