Bitcoin Gift Giving 101: Useful Crypto Advice for Family and Friends This Holiday Season

The holiday season is upon us, and with it comes a new set of challenges for crypto investors. As prices continue to soar, your family and friends will likely be eager to join the bull market. But are you prepared to guide them through the treacherous waters of cryptocurrency investing?

Remember: You’re Not a Crypto Guru

It’s easy to get caught up in the excitement of the market, but it’s essential to maintain a level head. As Chris Burniske, partner at venture capital firm Placeholder and former blockchain products lead at ARK Invest, so aptly put 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. But don’t let this feeling fool you – stay humble and admit that you don’t have all the answers.

Give Them Context on Where We Are in the Bull Market

Retail investors often succumb to FOMO (fear of missing out) and rush into the market without fully understanding the risks. This is where context comes in – educate your family and friends about where we are in the bull market cycle.

Burniske notes that the ‘attention cycle’ accelerates when prices become extraordinary, making it more challenging for investors to enter the market at a favorable price. He advises giving them context on where we are currently in the cycle:

"The later we are in that attention cycle, the worse the entry."

Contextualizing the Bull Market

The market has been in a bull run for two years and may now be entering its final stages. This is an excellent opportunity to teach your family and friends about the importance of timing their entry into the market.

Burniske recommends advising them to enter with an equal proportion to Bitcoin, Ethereum, and Solana (50%/25%/25%), as this will ensure they’re holding quality assets if the market turns bearish. If they’re tempted to dive into altcoins or memecoins chasing get-rich-quick schemes, Burniske advises allocating no more than 10% of their total investment while reminding them that it’s "at their own risk."

Timing the Crypto Exit: The Real Challenge

Stepping into the crypto markets is easy; many retail investors dive in during a bull market. However, timing the exit can be far more challenging.

Burniske notes that investors often watch their coins continue to soar after selling, making it difficult for them to predict when the peak has been reached. He 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.

Avoiding FOMO: Placing Gains Out of Reach

To avoid falling into this trap, Burniske recommends placing gains out of the crypto market for 12–18 months in traditional accounts. This reserved money will be used to pay tax liabilities once they’re settled.

He also suggests "sniffing around again" in crypto markets when sentiment turns to apathy – typically around 12 months after the peak.

Guiding New Investors

As an experienced crypto investor, it’s essential to help guide new investors to 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.

Conclusion

The holiday season brings a new set of challenges for crypto investors. As prices continue to soar, it’s essential to maintain a level head and provide guidance to your family and friends. Remember that you’re not a crypto guru – stay humble and admit that you don’t have all the answers.

Give them context on where we are in the bull market cycle, and educate them about the importance of timing their entry into the market. Timing the exit can be far more challenging, but with careful planning, they’ll be well-positioned to avoid repeating the same mistakes.

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