{"id":1509872,"date":"2024-12-25T13:10:00","date_gmt":"2024-12-25T18:10:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1509872"},"modified":"2024-12-25T13:10:00","modified_gmt":"2024-12-25T18:10:00","slug":"bitcoin-christmas-how-to-give-family-friends-useful-crypto-advice","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/bitcoin-christmas-how-to-give-family-friends-useful-crypto-advice\/1509872\/","title":{"rendered":"Bitcoin Christmas: How To Give Family & Friends Useful Crypto Advice"},"content":{"rendered":"

Bitcoin Christmas: How To Give Family & Friends Useful Crypto Advice<\/span><\/p>\n

\n

Authored by Daniel Ramirez-Escudero via CoinTelegraph.com,<\/em><\/a><\/p>\n

Retail investors are famously always\u00a0late to the party<\/a>, flocking to Bitcoin only when it smashes through glamorous\u00a0milestones like $100,000<\/a>.\u00a0<\/p>\n

<\/a><\/p>\n

This Christmas, the dinner table will offer more than turkey and pudding. Expect curious relatives to test your crypto savvy and ask how to join the bull market. Are you ready for the spotlight?<\/p>\n

This festive season, your \u201corange pill\u201d credentials are on trial. <\/strong>Will you dazzle with\u00a0eloquent arguments<\/a>\u00a0on decentralization and monetary sovereignty or crumble like a stale mince pie and just stammer, \u201cNumber go up!\u201d under the holiday spotlight?\u00a0<\/p>\n

Fear not \u2014 here are some tips to steer your family and friends through the crypto conversation.<\/p>\n

Remember: You\u2019re not a crypto guru and can\u2019t predict the future<\/h2>\n

One of the first things you must do is make sure they know that any action taken \u201cis their responsibility.\u201d\u00a0<\/p>\n

Inexperienced investors might mistake you for a crypto guru, but let\u2019s be honest \u2014 that\u2019s probably not the case. Chris Burniske, partner at venture capital firm Placeholder and former blockchain products lead at ARK Invest,\u00a0put it<\/a>:<\/p>\n

\u201cNo one knows anything for sure about markets. The only people you know for sure are lying, are those who say they \u2018know for sure.\u2019\u201d<\/strong><\/em><\/p>\n

When crypto markets roar in a full-blown bull run, everyone feels like the next Warren Buffett. Stay humble \u2014 admit you don\u2019t have all the answers. Remind them not to follow your footsteps blindly like a herd of sheep. Caution is key, even in the frenzy.<\/p>\n

Give them context on where we are in the bull market<\/h2>\n

As Bitcoin dominates headlines, everyday investors with little experience often succumb to FOMO \u2014 the fear of missing out \u2014 and rush in without fully understanding the risks.\u00a0<\/p>\n

Retail investors are often desperate to get in fast, driven by the overwhelming hype where everybody seems to be\u00a0becoming rich with crypto<\/a>.<\/strong><\/p>\n

<\/a><\/p>\n

Bitcoin Roller Coaster. Source:\u00a0<\/em>Bitcoincoaster<\/em><\/a><\/p>\n

Successful\u00a0crypto traders counter their human instincts<\/a>\u00a0\u2014 they buy when crypto attention is low and sell when euphoria sweeps the market. Retail investors, on the other hand, often follow the herd, driven by emotion rather than strategy.<\/p>\n

Burniske\u00a0said<\/a>\u00a0the \u201cpainful reality\u201d is that rising cryptocurrency prices inevitably draw attention, which fuels further buying. The feedback loop, which he nicknamed the \u201cattention cycle,\u201d accelerates when prices become extraordinary.<\/p>\n

\u201cThe later we are in that attention cycle, the worse the entry.\u201d<\/strong><\/em><\/p>\n

Burniske\u00a0advises<\/a>, \u201cGive them context on where we are currently in the cycle.\u201d He believes the market has been in a bull run for two years and may now enter its final stages.<\/p>\n

So, what should you do when their \u201cappetite for crypto exposure remains insatiable,\u201d even if it\u2019s possibly the wrong time to enter?<\/p>\n

Burniske believes they should enter with an equal proportion to Bitcoin, Ether and Solana\u00a0 with a ratio of 50%\/25%\/25%. Burniske\u00a0said<\/a>\u00a0that if they get trapped if the market turns into a bear market, at least \u201cthey\u2019re holding quality.\u201d<\/p>\n

If they\u2019re tempted to dive into altcoins or memecoins chasing get-rich-quick schemes, Burniske recommends advising them to allocate no more than 10% of their total investment while reminding them that it\u2019s \u201cat their own risk.\u201d<\/strong><\/p>\n

Timing the crypto exit is the real challenge<\/h2>\n

Stepping into the crypto markets is easy. Many retail investors dive in with excitement, quickly seeing gains as the bull market drives prices upward. But remember, what goes up must come down.<\/p>\n

The conditions for the crypto markets have rarely been more favorable, particularly in terms of crypto regulation and institutional adoption.<\/strong><\/p>\n

United States President-elect Donald Trump\u00a0made numerous pro-crypto promises<\/a>\u00a0during his election campaign. Securities and Exchange Commission Chair\u00a0Gary Gensler<\/a>\u00a0looks\u00a0set to be replaced<\/a>\u00a0by the pro-crypto Paul Atkins, and a Solana bagholder is set to\u00a0become the new US crypto czar<\/a>.<\/p>\n

Senator Cynthia Lummis has proposed a bill for the US to\u00a0buy Bitcoin as a strategic reserve asset<\/a>, and\u00a0institutional adoption continues to soar<\/a>, with crypto exchange-traded funds (ETFs) breaking new records.\u00a0<\/p>\n

<\/a><\/p>\n

The rise of the Bitcoin ETF market capitalization. Source:\u00a0<\/em>CoinGlass<\/em><\/a><\/p>\n

Given these transformative changes, some believe the historical four-year Bitcoin cycle will be replaced with a supercycle, where assets trend ever upward.<\/p>\n

But don\u2019t bank on it. Burniske\u00a0warns<\/a>\u00a0that this could lead retail investors to miss the opportunity to take profits at the market peak.<\/p>\n

\u201c\u2018Supercycle\u2019 is without fail a collective delusion.\u201d<\/strong><\/em><\/p>\n

Burniske acknowledges that \u201cETFs and potential sovereign buying \u2018could\u2019 mean we don\u2019t have as brutal a bear in the future for BTC.\u201d However, he\u00a0cautions<\/a>, \u201cAnything that goes 100x quickly is prone to at least an 80-90% crash at some point, structurally \u2014 too many people sitting on profit.\u201d<\/p>\n

<\/a><\/p>\n

Bitcoin\u2019s price performance peaks and lows from prior cycles. Source:\u00a0<\/em>Caleb & Brown<\/em><\/a><\/p>\n

Burniske\u00a0said<\/a>\u00a0that it\u2019s hard for people to grasp how sharply a cryptocurrency can decline. However, given you\u2019ve probably roundtripped your own bags in at least one previous cycle, you can warn them of the problem. \u201cSince you\u2019ve lived it, you know, and now you can teach them.\u201d<\/p>\n

Nothing is certain except death and taxes<\/h2>\n

Armed with the knowledge you\u2019ve given them about what to buy and when to sell, there are still further common mistakes investors can make, according to Burniske.<\/p>\n

When investors sell during a bull market, they may watch the coin continue to soar, as no one can predict when the peak has been reached. Burniske\u00a0advises<\/a>\u00a0teaching new investors to resist FOMO and avoid reinvesting profits in an attempt to chase further gains. This is \u201cgenerally a horrible idea.\u201d<\/p>\n

This practice is risky because if the market suddenly collapses, investors could owe more taxes on realized gains than the value of the assets left after the crash.<\/strong><\/p>\n

To avoid falling into this FOMO trap, he recommends placing the gains out of the crypto market for 12\u201318 months in traditional accounts, which can provide some interest (crypto stablecoins have additional risks). This reserved money will be used to pay tax liabilities.\u00a0<\/p>\n

Once taxes are settled, the cycle can begin anew. Burniske recommends \u201csniffing around again\u201d in crypto markets when sentiment turns to apathy, typically around 12 months after the peak.<\/p>\n

<\/a><\/p>\n

Wall Street cheat sheet: the psychology of a market cycle. Source:\u00a0<\/em>ResearchGate<\/em><\/a><\/p>\n

As an experienced crypto investor, it\u2019s crucial to help guide new investors to avoid repeating the same mistakes in the next bull market. Encourage them to get interested in crypto when the attention cycle is low \u2014 or non-existent. If done right, they\u2019ll be well-positioned to educate other newcomers who might jump in during the next wave of hype.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nWed, 12\/25\/2024 – 08:10<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/crypto\/bitcoin-christmas-how-give-family-friends-useful-crypto-advice<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Bitcoin Christmas: How To Give Family & Friends Useful Crypto Advice Authored by Daniel Ramirez-Escudero via CoinTelegraph.com, Retail investors are famously always\u00a0late to the party,…<\/p>\n","protected":false},"author":0,"featured_media":1509873,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1509872","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1509872","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1509872"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1509872\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media\/1509873"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1509872"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1509872"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1509872"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}