Investing in crypto, let alone trading it, can make one age fast. Chris Burniske, co-founder of Placeholder, a venture firm that specializes in cryptoassets, sat down with the makers of the Bankless podcast. He shared some lessons on how to keep your sanity, not get rekt and trade well, through bull and bear markets. 

Lesson 1 - Look into new trends, even if you feel an allergic reaction at first

Burniske has been in crypto for the better part of a decade. What has he learned from his mistakes during the previous market cycle?

He tells that there were some trends he felt an 'allergic reaction to', such as the rise of very pricy NFT collections, and subsequently shrugged off these important developments. "What 2021 taught me is that if I have a really allergic reaction to something, I need to look closer at that thing. An allergic reaction is not an excuse to look away but actually a reason to look closer." 

Indeed, something that is negatively emotionally charged to you, can be positively charged for others. The take-away is to observe your emotions and then try to look with an objective mind at what trend is unfolding and if it's worth investing in.

 Lesson 2 - Make a plan before the bull market starts

Every investor can have different strategies, different time horizons on which he or she trades. But the point is to have a plan! Many beginning investors just throw money at the markets and see what happens. That won't end well.

Why do you need a plan, according to Chris? Because during the bull market you will feel drunk with joy. Your coins have been in the green for so long and so much, that it's almost impossible to slaughter the golden goose. And that's how you risk holding them all the way down to the next bear bottom - and then panic-selling. So, make a plan during the bear market. Determine at what percentage gains you will take profit on which slice of your holdings. Similarly, when prices are in a bear market bottom range, keep buying according to plan and don't shy up. 

But doesn't selling the coin you believe in mean you've betrayed it? Nope. According to Chris, you even help dampen the crazy volatility by selling when everyone's buying - and buying when everyone is selling. 

Lesson 3 - Ride waves that aren't crowded

Fomo is real during a bull market. You see all traders rushing to a coin that is pumping, and the urge becomes huge to join the wave. Alas, you'll probably be too late to make a lot of gains. Plus, how reliable is that project, have you investigated it enough?

Burniske on the other hand, doesn't like fomo'ing. He compares his approach to surfing:

"When I'm looking for a spot to surf on any given day, I'm always looking for the best spot that has the fewest number of people because I'm not going out there to compete with other people. I'm going out there to ride a wave. You could draw a parallel to how I invest: I want to be intellectually drawn to certain projects and certain value sets and want to ride that wave with that ecosystem. Hopefully it's a growing wave."

 
Chris Burniske (middle, down) with the Bankless podcast hosts Ryan and David. View here

Conclusion

This is all evergreen investing advice, but it's worth repeating and tailor-made for the hectic crypto markets. Ever since Wyckoff (and before), experienced investors have told us to try to act like smart money: buy during the 'accumulation phase' and sell (a bit) during the 'distribution phase'. Don't let your emotions get the better of you, but ride some nice waves...