Over the years, retail investors have entered the crypto market way too late. For instance, a recent study shows that most people started buying Bitcoin when it reached $100,000. With interest in digital currencies rising among retail investors, we expect your curious friends and relatives to ask you how they can join crypto this bull run.
But fear not! We have shared some tips in this guide to steer your friends and family through the cryptocurrency conversation.
Don’t Act Like a Crypto Guru
As ARK Invest’s former crypto products lead Chris Burniske says, no one can accurately predict how digital assets will perform in the future. Therefore, avoid acting like you know where the market is headed in the coming months because inexperienced investors like your family and friends may take your word for it and invest blindly.
That said, advise them on how to conduct thorough research on crypto projects and how to spot scam tokens. Additionally, remind them to invest what they are willing to lose.
Explain to Them Where We Are in This Bull Run
As crypto prices continue to rise, inexperienced retail investors are likely to succumb to the Fear of Missing Out (FOMO) and quickly invest in tokens without understanding the involved risks.
These investors see experienced crypto traders becoming rich from trading digital assets and believe they can replicate their success. However, what they don’t know is that those traders bought tokens at relatively low prices when no one was interested in crypto and will likely use new investors as their exit liquidity.
According to Burniske, crypto enthusiasts talking about digital assets with their loved ones this Christmas should tell them that we are in the ‘attention cycle,’ a period where high prices draw retail investors’ attention. He argues that the ongoing bull run has lasted for two years and could be entering its final stage.
So, what advice can you give to an inexperienced friend? Burniske says incoming retail investors should only invest in Bitcoin, Ethereum, and Solana, arguing that if the market suddenly turns bear, at least they will be holding quality assets.
Furthermore, he recommends telling your family and friends who want to invest in meme coins to only allocate a maximum of 10% of their investment fund.
Timing a Perfect Exit From Crypto is Challenging
Buying cryptocurrencies is super easy. However, knowing when to take profits is quite a challenge for many retail investors, especially now when crypto enthusiasts are optimistic that prices will keep going up as the United States prepares for a pro-Bitcoin president.
US President-elect Donald Trump promised to create a conducive environment for crypto upon his re-election. He has already replaced Gary Gensler with pro-Bitcoin Paul Atkins, who will head the Securities and Exchange Commission. Moreover, Trump is reportedly ready to approve the proposed Bitcoin strategic reserve bill once it reaches his desk. If the bill becomes law, the US will buy 200,000 Bitcoin annually for five years. This move could push the coin’s price higher, according to some analysts.
While the future looks bright for Bitcoin and other cryptocurrencies, Burniske says what goes up will eventually come down. So, retail investors should take partial profits as the bull run continues and avoid the notion that the expected favorable environment under Trump’s administration will turn this bull run into a supercycle.
Tell Them Not to Reinvest Profits
As retail investors watch their crypto holdings rise in value, they may be tempted to book profits and invest in cryptocurrencies with low market caps in a bid to chase the next 1000x. But this could be a horrible idea, considering that most low-capped tokens barely last, leaving you and other investors in losses.
So, what is the best advice in this scenario? Burniske recommends advising your loved ones to convert their profits into stablecoins or fiat rather than reinvesting in less-known cryptocurrencies.
