- Full time crypto trading can seem appealing in the middle of a bull market, but it is a risky move that doesn’t work for most
- Few people can handle the ups and down of markets, with crypto in particular being hard to master
Cryptocurrency bull markets have the potential to make you very rich indeed, and the thrill of making a small fortune in the space of a few short weeks can lead some to thinking that crypto trading is their true calling. There are several very good reasons why you should not do this however, no matter how tempting it might become, especially if you enter the market in the middle of a bull run.
Bull Markets Are Temporary
Entering the crypto market in the middle of a bull run can be a euphoric experience, as many who entered in mid-2017 can testify. Strike it lucky enough times and you could be forgiven for thinking that, compared with the daily grind, full time crypto trading represents the path to riches.
However, cryptocurrency bull markets are temporary and typically short lived – the cryptocurrency silly season of 2017, where anyone with a Coinbase account could double their money in the space of a couple of days, lasted for a period of a few weeks in December before topping out in January 2018. A cryptocurrency bull run may feel like it will never end at the time, but it will be over before you know it, and often before you’re ready for it.
Bear Markets Will Kill You
Bear markets follow bull markets, which is not something that amateur investors realize. Once the rug is pulled, as it was on January 5, 2018, all the euphoria and thoughts of Lamborghinis vanish in an instant. What comes next is an extended period of downtrending, where portfolios of the inexperienced can be reduced to nothing and crypto trading takes on a risk level all of its own.
Bear markets are long and cruel, with only those experienced and hardened in crypto trading making money during them. They eat up the vast majority of those who dare to trade during them, and anyone going full time into crypto trading on the back of a euphoric bull market is likely going to be in for a nasty, and potentially costly, shock.
Crypto Is a New and Uncertain Market
The cryptocurrency market may have been through two bear markets now, but it is still a young and risky market. The fast pace, 24-hour nature, extreme volatility, and presence of market manipulation make it unsafe for even experienced traders, let alone those jumping into it for the first time.
Educating yourself on the basics of trading is the bare minimum you need to survive, and even with more extensive knowledge you will not be prepared for what the crypto markets will throw at you. A technically sound position might be undermined by an error in that project’s code that leads to a collapse overnight, while technical patterns that pay off in a bull market often don’t come off in a bear market.
The crypto market is subject to influences that don’t exist in other markets, so even transitioning from one market into crypto can be difficult.
Regular Outgoings Need Regular Income
Everyone knows that traders don’t make regular money, and in a world with regular monthly expenses this can make for a stressful existence. You might be making money hand over fist crypto trading in a bull market, but this will stop very abruptly when the bull market ends.
In a crypto bull market it’s possible to make the equivalent of your annual salary in a single trade, and this can be intoxicating. However, maintaining such levels of return is impossible in the long term, yet your expenses will continue going out month by month regardless.
Unless you have made enough in a bull market to cover your expenses for a couple of years, you will soon find that the lack of a regular income which you have probably been used to for years if not decades is a recipe for anxiety and potentially debt. Sometimes the grass really isn’t greener on the other side.
Crypto Trading is For the Few, Not the Many
The unfortunate truth is that only a certain kind of person can cut it as a trader, and it is very rare that those who start the profession on the back of a bull market are able to make it full time. Unless you have experienced a full market cycle you won’t know if you are able to hack it full time, so it’s certainly worth treating crypto as a side hustle and seeing how you cope with the other side of a crypto bull market before making any decisions on that scale.
It is easy to get swept away with what a bull market can give you, but inexperienced market entrants don’t realize that a bear market can take it all away again. Crypto trading in a bull run can be intoxicating, but the merry go round will eventually stop, at which point only those with hardened stomachs will be able to survive. There is a saying that you shouldn’t make permanent decisions on temporary emotions, and this certainly holds true with cryptocurrency markets.