Placeholder Partner: Advice for "Cryptocurrency Newbie investors" in the current environment

Author: Chris Burniske, Partner at Placeholder

Translated by: Yuliya, PANews

If you are in the cryptocurrency circle, you may often receive inquiries from friends asking for investment advice. In a market environment where the price of Bitcoin is close to $100,000, providing guidance for newbie investors is indeed challenging. Here are some insights I have gained from observing the market for over 10 years.

Basic Principles

Sense of personal responsibility

Clearly inform every investment decision is the investor's own responsibility. Even if you are experienced, it does not mean that judgment is always correct. The market has no absolute certainty, and those who claim 'absolute certainty' are often lying.

Market cycle perception

Try to inform your fren which stage the coin circle is in, for the author. Currently in the second year of the bull market (from the bottom in November/December 2022). BTC has risen more than 6 times, Ethercoin more than 4 times, SOL more than 30 times. At this stage, there is a harsh reality: the rise in encryption asset prices will attract more follow, and these follow will turn into buying demand. However, the later the 'follow cycle', the less ideal the timing to get on board.

Investment strategy advice

Asset allocation

For Newbie investors, keeping their investment portfolio simple is a wise choice. Newbie recommends allocating the portfolio as follows:

BTC (BTC) 50%

Ethercoin (ETH) 25%

Solana(SOL) 25%

Even if there may be deviations in the timing of getting on board, at least holding quality assets. If interested in other Tokens, it is recommended to keep it within 10% of the total position to limit the risk.

Profit Strategy

Profit management is equally important. When the investment doubles (2 times), it is recommended to withdraw half of the profits and retain the original investment cost to continue holding. When it reaches 3 times, you can exit all, or realize 2 times profits and retain the cost portion to continue holding.

It is worth noting that if you encounter a firm holder of BTC, they may never want to sell, which is understandable, but you need to be mentally prepared for the pullback in Depth.

Risk Management and Tax Considerations

In Cryptocurrency investment, every transaction is a taxable event, including Crypto-to-Crypto Trading. It is recommended to transfer funds to a high-yield account in a traditional Financial Institution for 12-18 months after obtaining substantial profits. First, deal with tax issues before considering getting back on board, preferably during market panic or general disinterest.

In terms of market cycles, although the launch of ETFs and possible sovereign purchases may slow down the depth of future bear markets, the concept of a 'super cycle' is often a collective illusion of the market. The fourth quarter of 2025 may mark the top of the cycle, and any asset that achieves a 100x rise quickly tends to experience a pullback of 80-90% due to many investors holding substantial profits.

Investment mentality and cognition

Newbie investors often follow absolute prices rather than percentage increases. For example, Solana rose from $8 to $240, an increase of $232, which is actually a 30x increase; while from $240 to $1000, although the increase is $760, it is actually only a 4x increase. Understanding this point is crucial for forming a correct investment mindset.

It is more challenging to stay sober in a bull market than to stay brave in a Bear Market. Chasing the market after making a profit is often a very dangerous behavior, as investors may face the dilemma of tax expenses on realized gains exceeding the remaining asset value if the market suddenly collapses.

The current market may continue to peak in the fourth quarter of 2025, or it may break the four-year cycle rule. Although crazy returns may not be achievable starting from current prices, participation in the market is still possible through reasonable strategic planning and risk control. The key is to stay clear, control risks, and manage expectations reasonably.

(The above content is excerpted and reproduced with the authorization of the partner PANews. Original link )

Disclaimer: The article represents only the author's personal views and does not represent the objective viewpoint and position of Block. All content and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and trades, and the author and Block will not be responsible for any direct or indirect losses incurred by investors' transactions.

The article 'Placeholder Partner: Advice for 'CryptocurrencyNewbie Investors' in the Current Environment' was first published in 'Block Chaining'.