Welcome to another Nugget of Wisdom! A weekly post I send out every Thursday. These are designed to be short and sweet, a quick read to (hopefully) impart some sort of wisdom, or at the very least to get you thinking about something interesting.
A common saying in crypto is that it takes three cycles to make it: the first time you hold your bags too long and round trip, the second time you have ptsd from the first time and so you sell too early and don’t realize significant gains, and the third time you’re like goldilocks and get it juuuust right.
It makes a nice story and there’s certainly nuggets of truth to it, but it’s obviously an extreme generalization as well. Lots of people make it their first or second cycle, and lots of people absolutely do not get it just right their third time around.
I still think there’s wisdom in knowing and thinking about this though. Ideally if this is your first or second cycle, you still want to make it! It’s undeniable that one of the largest mistakes people make in their early times in crypto is holding too long – you buy into all the stories being sold to you, you drink the koolaid, and you can’t imagine the price doing anything but continuing to go up.
If that happens your first time, then you absolutely will feel some ptsd the second time around and be fearful of not roundtripping your bags. I think you can harness this though and try to thread the needle by using your experience from the first cycle (roundtripping) to take more consistent and regular profits, while not entirely selling your positions way too early.
The best way to do this is to scale out profits as price goes higher – it’s my personal take profit strategy, and it has served me well. Basically anytime there’s a rally or pump or significant bump in price for the tokens i’m holding, ie whenever they hit a new ATH, i’ll shave off and sell 5-15% of my position.
There are many ways to “make it” and many strategies for taking profit in crypto, ultimately you have to find what works bests for you, and this is what i’ve found works best for me.
Ultimately, this little parable is a nice thing people tell themselves when they don’t make it the first or second time around. It makes us feel better. It’s nice to feel better, but I wouldn’t rely on it too much or read too much into it.
Like most things in crypto — everyone’s situation is different, and you shouldn’t compare yourselves to others. Only to yourself.
