As we head into the festive season, many of us will find ourselves facing a familiar scenario: relatives and friends eager to discuss cryptocurrency. Are you ready for the spotlight? The crypto conversation can be intimidating, but with some guidance, you’ll be able to navigate even the most challenging discussions.
Remember: You’re Not a Crypto Guru
When it comes to advising your family and friends on investing in cryptocurrencies, it’s essential to maintain humility. Don’t pretend to know more than you do. Chris Burniske, partner at venture capital firm Placeholder and former blockchain products lead at ARK Invest, aptly puts it: "No one knows anything for sure about markets. The only people you know for sure are lying are those who say they ‘know for sure.’"
When crypto markets roar in a full-blown bull run, everyone feels like the next Warren Buffett. Stay humble — admit you don’t have all the answers. Remind them not to follow your footsteps blindly like a herd of sheep. Caution is key, even in the frenzy.
Give Them Context on Where We Are in the Bull Market
As Bitcoin dominates headlines, everyday investors with little experience often succumb to FOMO — the fear of missing out — and rush in without fully understanding the risks. Retail investors are often desperate to get in fast, driven by the overwhelming hype where everybody seems to be becoming rich with crypto.
The feedback loop, which Burniske calls the "attention cycle," accelerates when prices become extraordinary. The painful reality is that rising cryptocurrency prices inevitably draw attention, which fuels further buying. Burniske advises: "Give them context on where we are currently in the cycle."
He believes the market has been in a bull run for two years and may now enter its final stages. So, what should you do when their ‘appetite for crypto exposure remains insatiable,’ even if it’s possibly the wrong time to enter? Burniske recommends entering with an equal proportion of Bitcoin, Ether, and Solana, with a ratio of 50%/25%/25%. If they get trapped in a bear market, at least "they’re holding quality."
If they’re tempted to dive into altcoins or memecoins chasing get-rich-quick schemes, Burniske recommends advising them to allocate no more than 10% of their total investment while reminding them that it’s "at their own risk." This approach will help your family and friends avoid making common mistakes in the crypto market.
Common Mistakes Investors Make
When investors sell during a bull market, they may watch the coin continue to soar, as no one can predict when the peak has been reached. Burniske advises teaching new investors to resist FOMO and avoid reinvesting profits in an attempt to chase further gains. This is "generally a horrible idea."
This practice is risky because if the market suddenly collapses, investors could owe more taxes on realized gains than the value of the assets left after the crash. To avoid falling into this FOMO trap, he recommends placing the gains out of the crypto market for 12–18 months in traditional accounts, which can provide some interest.
Conclusion
As we navigate the complexities of cryptocurrency investing, it’s essential to maintain humility and caution. By giving your family and friends context on where we are in the bull market and teaching them about common mistakes investors make, you’ll be well-positioned to guide them towards making informed decisions.
Remember, nothing is certain except death and taxes. Armed with knowledge and experience, you can help your loved ones avoid repeating the same mistakes in the next bull market. Encourage them to get interested in crypto when the attention cycle is low — or non-existent. If done right, they’ll be well-positioned to educate other newcomers who might jump in during the next wave of hype.
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