Things in the market are about to get very turbulent. There is a common perception that since we have hit market highs for most coins that it will be smooth sailing from here on out. That it will be nothing but days of profits. These are the people who are susceptible to losing everything and missing out on a chance of a lifetime. Change to have life-changing wealth.
I would argue that a bull run is much more dangerous for doing any type of leveraged investing than a bear market. The reason for this is great volatility. You embark on a journey where everything around you wants to hunt or eat you. This is when you need to be extremely careful and hopefully avoid using leverage.
But why do people use leverage? It's simple; allows people to bet or make investment calls with more money than they actually have. You can bet with $100 but use 100x leverage. This means your bet of $100 will now be a bet of $10,000. You can quickly see how big plays can be made that can quickly affect the markets. If you were to guess correctly with some of these highly leveraged plays, it could make you a lot of money. Like winning the lottery. Earning a lot of money with small initial investment. But there's a reason why you can make so much money with these plays. The reason for this is that so many others are losing everything. In leveraged investing, there are prices that are liquidation zones. This means, depending on whether you are short or long, if the price reaches a certain price, all your funds will be taken and given to the house; in this case the exchange. If you have been paying attention to the Bitcoin markets when the price is dumping. You will see that sometimes the price drops at an incredible speed. Most often, the reason for this is liquidations.
I'm quite risk averse. I have never invested in cryptocurrency using leverage and probably never will. For me personally, being in the cryptocurrency market is risky enough in itself. I can't imagine I could ever fall asleep if I used leverage. Not only do you have to be careful about the extreme volatility of the markets, but you also have to be careful about which exchanges you use. For example in the US; exchanges like Kraken and Binance US are known for having quite thin books and this means we can see some radical price movements and much more different than you would see on other exchanges.
There is a phrase that has become popular in the Bitcoin world and that is; “Pile on sati and chill.” So simple, yet incredibly important. I often imagine how I would feel if I were one of the people who were liquidated. Looking back on the years of hard work, investing, writing, betting and research to get my portfolio to the point it is today. If all of this was erased in just seconds; I don't know if I'll ever have the heart to go back into the crypto markets. That feeling would only get worse as this bull continues and we see the biggest transfer of wealth in our lifetime. It's something that will haunt me forever.
So my advice to you is never invest more than you can afford to lose. Yes, you should make the most of down days, but you should also maintain a long-term focus. This means dollar cost averaging, focusing on building your passive income through betting and lending, and using spot purchases.
During a bull, we can all start to feel FOMO and our heart can separate from our brain. Prices are increasing at an incredible rate, and while our brains would tell us to be careful, nothing can go up forever. But at the same time, our heart tells us that prices will continue to rise and that we may miss our chance to make life-changing money. Usually in these moments of extreme greed the price bottoms out and the price falls. Thus the chaos of the liquidations ensues.
Always be careful out there and just take this market day by day. You'll be so glad you did in a few years.