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How to Find Targets and Take Profit during a Bull Market
Guessing the top is hard. However, there are a few tricks to help you.
No one can predict the future, but we can estimate it. Life and trading are about probabilities and to be successful you need to skew them in your favor.
The more historic data you have, the better will your estimates be. In the case of trading, that means you are better placed to find targets where to take profit.
If you plan to invest in a coin or token with little to no price history, you are flying blind. From a risk perspective, that is not in your favor and my advice is to always avoid such plays.
Now lets find those juicy targets and discuss how you should take profit once they are hit.
A new bull market is almost inevitable. While nothing is guaranteed, historic data points to it as an extremely likely event. If you are still here after a prolonged bear market, congratulations.
Now is the time to plan for the bull market and you need to know how and when you should start selling.
Your signal to really PAY ATTENTION will be triggered when Bitcoin will do a new all-time high (ATH). That means its price will go over $69,000. By that point you need to already know when and how you will sell your alts and take profit.
First, targets and how to find them
The most important target for any coin or token with some price history is the previous ATH.
Take your favorite coin, open the chart, zoom out to the max on the weekly or monthly timeframes and check where the current ATH is. That is your most important target. Everything revolves around that price point.
However, and this is crucial, most altcoins will never reach their previous ATH. There are exceptions, but for example XRP failed to reach it's 2018 ATH in the 2020-2021 bull market. You’d expect the price to make higher highs from one bull market to the next, but that is not always the case for altcoins.
Another example, Litecoin, barely managed to exceed its 2017 high in the 2020-2021 bull market. Its current ATH of $413 is only 38 dollars more than in 2017. Not impressive. Take note of this before expecting your altcoins to 100x.
Most altcoins will be found between these two examples. As such, and especially for altcoins, always take profit when the price approaches the current ATH. At least plan to secure your principal! That means you get back the money you originally invested.
In some cases, particularly for coins with huge and abrupt volatility like with XRP, you want to start selling well before the ATH is hit. Guessing the top is hard and you need to maximize returns. Selling is part of that.
In the case of Bitcoin, there is strong evidence that it will exceed its current ATH.
From a fundamental perspective demand is expected to increase over time while its supply is going to be more and more limited as less coins are liquid and traded on the open market.
This is another way to say most people buy Bitcoin and never sell it. Look at MicroStrategy. They have 158,000 BTC worth over $4.5 billion and they keep buying. They never sell. Most altcoins do not have such fundamentals.
Therefore, in the case of Bitcoin, you want to set a target to start selling above its current ATH. Generally, I don’t recommend selling BTC. At best, you borrow against it if you need fiat money.
This is because Bitcoin’s fundamentals (mentioned above) become even stronger as more time passes. You don’t want to sell a $1 million dollar BTC at $100,000, right?
In any case, here’s how you should take profit and what to do after.
How to take profit
Regardless of the coin or token you hold, always ladder your exits or sell orders. That means you set sell orders at fixed intervals around the ATH or any other target you have set your eyes on.
In the case of Bitcoin, you should ladder your exit after $69,000. That can mean, for example, selling 10% of your position at $100k, then 10% at $120k and so on until you exit in full. Below is an example assuming BTC can go to $200k in the next bull market using Fibonacci levels.
The reverse is also applicable in a bear market when you buy. For example, buying in increments of $1,000 under $20,000 was an excellent strategy with the last buy order being hit at $16,000. Bitcoin bottomed at $15,500 in 2022.
IMPORTANT - Once you take profit, don’t jump back in!
This is a huge mistake and ruins your plan. Instead, do the following:
Take profit in USD or Gold (e.g. PAXG, XAUT)
Move your USD into a high-yield savings account to farm yield and your gold (if in crypto) to a hardware wallet
Wait 1-2 years with those profits to buy the next bear market, preferably BTC
It is crucial you RESIST the temptation to use those profits and jump back in. Especially if after you sold, the market makes new highs. Don’t be fooled. When that FOMO kicks in harder than ever, it means the top is near.
If you take profit in Gold, you may make more profits that way if markets are favorable while you wait. Either way, Gold’s volatility is rather low and should still protect most of those profits.
You should only consider getting back in once Bitcoin crashed by over 70% from its most recent ATH and altcoins by over 90%. If those conditions are not met, forget about it.
Got a question? Leave a comment below or ping me on Discord!
P.S. This is not financial advice.