The Rules Still Apply
Even in a bull market, capital rotation is an important practice. Perhaps, even more important than any other market condition. At the end of the day, every investor is faced with three distinct approaches. However, for most investors, the most viable option is to HODL. At least until the bull market matures. I say this, as the majority of Crypto investors are not truly investors. They are market participants but lack the knowledge, skills, and experience to navigate the market accurately.
That being said, it’s a difficult task, even for those equipped for the challenge. The best approach for inexperienced investors is to HODL, as well as to continue accumulation during deep, or significant retracements. When it comes to a bull market, this is a solid approach, for inexperienced and experienced investors alike. However, there does come a time when ongoing accumulation is no longer a wise move.
This takes place during the final stages of a bull market. In hindsight, it’s easy to identify and point to a cycle peak. However, identifying it beforehand is a tough task, by any standards. Furthermore, the expansion and growth into ETFs and other traditional investment vehicles makes it even more difficult to identify. That’s why rebalancing is a great tool, especially in the hands of a seasoned or experienced investor.
Rebalancing
This is an excellent way to reduce risk and capture enormous gains simultaneously. Generally, this is a strategy to execute when dealing with riskier assets such as memecoins and micro-caps. However, if you are building a long-term position to build a staking stack, you might choose to pass up on this idea. Rebalancing is very much like stepping stones.
To maximize this practice, one needs to not only sell local highs but also redistribute capital into projects that are either primed for a big move or are oversold, subsequently, offering enormous value, relative to the current market valuation. Rebalancing into a project that has also had an enormous rally is not going to help much. A trader, or investor skilled in the art of capital rotation can work wonders when it comes to multiplying investment capital.
Stablecoins In A Bull Market?
Yes, even in a bull market there is use for stablecoins. However, looking at this current market, one could easily argue the relevance. That being said, there have been two decent corrections so far, which I managed to call before the collapse. It also depends on your risk profile and the sectors you choose to be exposed to. Trading certain altcoins makes shifts into stablecoins almost mandatory.
This is however an approach that most Crypto investors will avoid during a bull market… and in all fairness, it’s understandable, especially as the masses tend to focus on blue chips. More experienced investors are likely to identify points of weakness, and subsequently, when and where corrections are likely to occur. It’s at these crucial points in the journey that a swift shift to stables can be incredibly helpful.
Final Thoughts
As I have mentioned numerous times, ongoing accumulation, especially during the dips and a HODL approach make for an excellent bull market strategy. Even less experienced investors can explore the idea of rebalancing. Stablecoins, on the other hand, are perhaps reserved for the more technically minded investors. Remember, risk management and diversified ideas, as well as investment exposure, are paramount. See you next time!
Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.
Posted Using InLeo Alpha