Every crypto investor wants to sell the top, but is this really achievable? Let’s lean on prior market cycles to see how realistic this is.
Disclaimer: Employees of Collective Shift hold material amounts of the cryptocurrencies discussed in this article. See our Trust & Transparency, which is updated weekly, for more details on team member holdings.
Key Takeaways
- Selling the top is extremely difficult.
- Manage your expectations of what is achievable when it comes to selling.
- If you sell within 15% of the market peak, history suggests that it is an amazing outcome.
Everyone calculates how much money they’ll make when they sell at the top. “When the price goes to $xyz, I’ll have $abc money and life will be great.” But how do you actually sell the top? Remember, there is actually only one trade at the top. One buyer, one seller. That’s it! So, guess what? It’s probably not going to be you.
So, realistically, what can you achieve when it comes to selling the top?
Let’s use Bitcoin (BTC) as the example looking at 2021 top of $69,000. You’re probably thinking, “If I can get within 5% of the top—or $65,550 (green line below)—I’ve done well.” I have some bad news for you: you’re simply not that good! Last cycle, BTC’s price spent just three days above $65,550. Yes, three! You had only three days out of the entire four-year cycle to nail it within 5% of the top.
What about 10% from the top? A price of $62,100 (red line below)? The price closed above this only 16 days of the entire cycle. Again, how good do you think you are?
What about 15% from the top? A price of $58,650 (purple line below) There were 33 days that the price closed above this. Maybe now we’re starting to see what we can realistically achieve. If you get 15% from the top you have done amazingly well. Of a cycle that is 1,461 days long (i.e. four years, with one being a leap year), you have one month to sell 15% from the top.
Let’s take a quick look at Ethereum (ETH).
ETH topped at $4,870. So, 5%, 10% and 15% is $4,626, $4,383 and $4,140, respectively.
5% from the top you had five days to nail it.
10% from the top you had 20 days.
15% from the top you had 39 days.
Are we seeing a pattern?
Finally, let’s look at Solana (SOL).
Top of $260, we are looking at $247, $234 and $221, respectively.
5% from the top you had three days.
10% from the top you had 10 days.
15% from the top you had 15 days.
So, in summary, selling the top is a myth. If you sell within 15%, history says you’ve done incredibly well. Adjust your expectations and your thought processes accordingly. For example, if you think BTC can hit $200,000 this cycle, consider setting your sells for $170,000 and be happy taking profits.