Navigating this bull market and securing profit will be tougher than it seems

Strategically navigating the cryptocurrency market when it surges isn’t just a skil. It’s an art. Volatility is constant. Volatility measures the price movements of assets and demands a sophisticated approach from players in the market. Similar to the ebb and flow of tides, it can be navigated strategically.

Decoding the dynamics of market surges

Bitcoin (BTC) peaked at $69,000 during the 2021 bull run, while Ether (ETH) did the same at $4,800. Despite the market hitting an all-time high of $3 trillion in market capitalization, that figure sits a little below $1.7 trillion as of Dec. 15 — a difference of just more than 30 percent. While significant, the comparison obviously doesn’t do justice to what a rollercoaster the market has been.

Understanding the driving forces behind that volatility is key to navigate it. Market sentiment, technological breakthroughs, and regulatory developments play crucial roles. It is crucial to comprehend the prevailing mood and adapt to market dynamics, leveraging insights analyzing social sentiment, news sentiment, and technical analysis indicators.

Related: With Bitcoin’s halving months away, it may be time to go risk-on

Beyond the surface-level hype, dynamics that contribute to the complexities of crypto surges include global economic conditions, investor speculation, partnerships, market liquidity, and halving events (for certain cryptocurrencies).

Fundamental analysis

The bedrock of any successful trading strategy is the quality of fundamental analysis backing it. Cryptocurrencies with robust fundamentals consistently outperform those lacking a strong foundation, a principle supported by the efficient-market hypothesis (EMH).

This hypothesis, tested across various markets, underlines the significance of fundamental analysis in navigating crypto surges, offering investors a compass to identify projects with great potential. Staying informed on developments and narratives in crypto requires leveraging research and analysis tools like DefiLlama (one of my go-tos). Real-time data and in-depth analysis are helping for monitoring trends and making informed decisions.

The art of mastering technical analysis

While fundamentals set the stage, technical analysis is the script. Indicators like moving averages, the relative strength index (RSI), and Bollinger Bands decipher market trends. Technical analysis has become an art form among traders, significantly influencing trading decisions and boosting annual returns for those versed in its intricacies. Beyond chart patterns, it is about understanding market psychology, enabling traders to make informed decisions that strategically impact the crypto market. All exchanges offer these tools. TradingView is a top choice for more in-depth analysis.

During short-term swing trading in the 15-minute timeframe, the RSI indicator is my north star. Its simplicity, versatility, and function as a momentum oscillator help to identify overbought and oversold conditions, signaling potential reversals or buying opportunities. My own trading decisions are a blend of technical and fundamental analysis, evaluating trend patterns, support, and resistance levels, market sentiment, broader market conditions, token/project-specific developments, and relevant news events.

Know when to sell

"The year after Bitcoin's halving is usually the bull year," former Binance CEO Changpeng Zhao noted on Twitter Spaces in July.

Scheduled to occur in April, Bitcoin's halving will see the number of new Bitcoin issued to miners cut by half from a current block reward of 6.25 Bitcoin to 3.125 Bitcoin. JPMorgan analysts also anticipate the 2024 halving will double Bitcoin's mining cost, potentially establishing a new price floor. As a savvy trader, you can capitalize on these predictions by strategically acquiring assets that could run on Bitcoin's coattails, and by knowing when to divest.

The process you take to conclude when to sell your crypto is a nuanced one that demands a strategic blend of market analysis, risk assessment, and a deep understanding of your financial objectives. I typically get into projects that I see solving vital problems at very early stages. I do this to contribute to positive change that affects the world and make it a little better. That's my fulfillment. In my experience, when you solve a real problem, you eventually turn a profit. I take profit when getting some financial reward from a project makes sense.

This strategy doesn't work for everyone. Something that helps that you may want to consider is setting predefined profit targets. It's often prudent to secure profit on a investment if it has met or exceeded your expected returns. Eschew greed and you'll be just fine.

In addition, access to the overall valuation of the cryptocurrency is essential. A rapid and unsustainable surge in value mostly signals potential overvaluation, and it might be an opportune moment to sell, especially if it deviates significantly from fundamental factors. These fundamentals include alterations in project development, the underlying technology, or regulatory framework that can undermine the cryptocurrency's long-term potential.

Include external elements such as significant news events, economic conditions, and changes in market sentiment when making decisions. Ultimately, you achieve a holistic approach to managing your cryptocurrency by aligning your sell decisions with your risk tolerance, financial goals, and the need for portfolio diversification. Regularly reassessing your investment strategy with these factors in mind can contribute to a proactive and informed stance in the market.

Related: BONK, PEPE and SHIB are a menace to crypto

The best trades I've made came from paying attention to what was being said in the industry and then acting on it. My most successful trades have come from finding information (“alpha”) by being active and alert and byacting on it before it became mainstream news. To that end, it helps to join “alpha groups” and trader channels. You hear about updates on these platforms before they get to the market. These updates give you a brief window to take position before a large percentage of the market does.

This is how you win. In sharp contrast, the worst trades I've made came out of acting in haste. Calmness is a good quality to possess as a trader. As the saying goes, “Timing the market is a lot more important than time in the market.”

Navigating the market demands more than surface-level strategies. It requires a comprehensive understanding of the nuances that define the blockchain space. Beyond analytics and statistics, the industry demands the wisdom to recognize that, in the delicate dance of trading and investing in blockchain, strategy is not just a tool. It's what we use to chase down success in the market.

Evan Luthra is a crypto entrepreneur who sold his first company, StudySocial, for $1.7 million at the age of 17 and had developed more than 30 mobile apps before he was 18. He became involved with cryptocurrency in 2014 and is currently building CasaNFT. He has invested in more than 400 crypto projects.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.