Reflecting on the 2020 to 2022 cryptocurrency bull market offers a chance to revisit both the opportunities and the costly errors many investors encountered. While market upswings can create substantial gains, they also present unique psychological and strategic challenges that are often underestimated until it’s too late.
This cycle was my first deep immersion into crypto investing. Although I had been interested in Bitcoin since 2013 and more actively involved since 2017, this was the period where I committed fully—with all the triumphs and regrets that came with it.
Even as development continues and new projects emerge, the mood across the crypto space has shifted dramatically alongside falling valuations. It's a good time to pause and reflect—not with the benefit of hindsight, but with an honest review of what went right, and more importantly, what went wrong.
Here are some of the key mistakes I made and the lessons I learned.
Failing to Take Profits and Rebalance
One of my most frequent mistakes was holding onto altcoins for too long. As a long-term believer in crypto, I viewed Ethereum and Bitcoin as core holdings, but my approach to altcoins was far less disciplined.
I bought TOKE at $30, held it up to $80, and kept it all the way down to $2.
I purchased ALCX at $200, watched it reach $400, and still held as it fell to $20.
I did the same with LUNA, MATIC, JEWEL, OHM, TIME, and several others.
There were multiple moments where these assets gained 20% to 100% against Ethereum, yet I didn’t act. My goal was to accumulate more ETH, but by refusing to take profits, I was effectively doing the opposite.
The one time I did follow a clear plan was with JONES. I bought at $5, set a sell target, and exited most of my position at $13 ahead of investor unlocks. That single disciplined decision paid off.
On a broader level, I also failed to rebalance my portfolio as crypto began to dominate my net worth. Early in 2021, I had clear allocation targets across crypto, real estate, and index funds—but as crypto surged, I forgot those goals. It wasn’t until I considered buying a house that I realized how overexposed I was.
I began taking profits in early 2022, which helped mitigate later losses—but I should have started sooner.
Lesson learned: Schedule regular portfolio reviews, intentionally rebalance, and set clear profit-taking rules.
Over-Diversifying and Lacking Conviction
It’s easy to fall into the trap of wanting a piece of every promising project. While diversification is a classic investment principle, in crypto, it can lead to diluted focus and unnecessary risk.
My highest-conviction bets were Ethereum, MATIC, SOL, CVX, and ALCX. Had I focused only on these and used them as benchmarks for other investments, I would have been better off. Instead, I spread myself too thin.
I joined dozens of Discord communities, invested in projects I didn’t fully research, and held tokens out of attachment rather than rationale. I also failed to cut losses early when projects showed clear signs of weakness.
Now, I’ve consolidated almost entirely into my highest-conviction assets. Ignoring new, shiny projects is difficult, but it’s a more sustainable strategy than trying to catch every wave.
Lesson learned: Focus on high-conviction bets and avoid the noise of endless new opportunities.
Misjudging Project Fundamentals and Tokenomics
Even fundamentally strong projects with solid tokenomics can be poor investments if their emission schedules are overly generous. High yields often attract mercenary capital—investors who farm and dump, leaving long-term holders at a disadvantage.
TOKE was a classic example. I believed in the team and the product, but the token was designed with high emissions. When yields were attractive, the price climbed. Once incentives tapered, sell pressure overwhelmed any positive fundamentals.
The same dynamic played out across DeFi. Most participants are motivated by short-term gains. Apart from blue-chip assets like Bitcoin and Ethereum, playing the long-term “value investor” can be a losing strategy.
Lesson learned: Recognize that high emissions often lead to inflation and eventual selling pressure. Avoid falling in love with a project—especially those with unsustainable rewards.
Misreading Market Cycles and Narratives
The broader crypto bull market contained several smaller, narrative-driven cycles:
- DeFi Summer (mid-2020 to early 2021)
- NFT profile picture frenzy (mid to late 2021)
- OHM forks (late 2021 to early 2022)
- GameFi (evident in tokens like JEWEL)
These hype cycles often follow a predictable pattern:
- Stealth phase: Early investors accumulate
- Awareness phase: Public interest grows, prices rise
- Mania phase: Media hype peaks, late entrants buy in
- Blow-off phase: Narrative exhausts, price collapses
I performed best when entering during phase 2 and exiting late in phase 2 or early phase 3. For example, I bought a Bored Ape early and sold when friends outside crypto started asking about NFTs—a classic mania signal.
But with Olympus, I misjudged the cycle. I held too long, conflating my belief in the project with its investment potential. The same happened with RAIDER and JEWEL—I mistook a late-cycle pump for sustained growth.
Lesson learned: Identify the narrative cycle stage. Invest early in strong trends or leading projects—avoid chasing late-stage hype.
Ignoring the Dangers of Maximalism and Cult-Like Behavior
Extreme maximalism is often a red flag. Whether it’s Bitcoin maxis, Luna enthusiasts, or Cardano loyalists, uncritical belief can mask fundamental flaws.
Genuine projects don’t need fanatical advocacy—they stand on their own utility. Maximalism often emerges when investors feel defensive about underlying weaknesses.
I knew Luna felt wrong. The Anchor Protocol promises seemed too good to be true. I even wrote about the risks of stablecoin farming—yet I still bought LUNA. I ignored my skepticism due to FOMO, and eventually suffered the consequences.
The same pattern repeated across other assets. When fervent communities promote a project relentlessly, it’s worth asking what they’re compensating for.
Lesson learned: Trust your intuition when something feels off. Avoid investing in projects driven more by hype than substance.
Final Thoughts: Patience and Selective Action
Looking back, I would have benefited from more patience and fewer trades. Concentrating on high-conviction bets and periodically taking profits into Ethereum would have significantly improved my results.
That said, being highly active also led to valuable experiences—collaborating with teams, creating content, and engaging with the crypto community. Some lessons can’t be learned passively.
I don’t regret the journey. Every mistake has refined my strategy and deepened my understanding. Crypto remains one of the most dynamic sectors in tech, and I’m excited to keep building and learning through the cycles.
Frequently Asked Questions
What is the most common mistake crypto investors make in a bull market?
Many investors fail to take profits or rebalance their portfolios. Emotion and attachment often override discipline, leading to missed opportunities and preventable losses.
How can I avoid over-diversifying in crypto?
Focus on a few high-conviction assets rather than chasing every new project. Establish clear criteria for investment and stick to them, avoiding impulsive decisions based on hype.
What are the signs of a crypto hype cycle ending?
Late-stage hype is often marked by mainstream media coverage, inexperienced investors entering, and soaring valuations detached from fundamentals. 👉 Explore more strategies for identifying market turning points.
Is it possible to recover from major investment mistakes?
Yes, but it requires honest evaluation, learning from errors, and adjusting your strategy. Portfolio review and risk management are essential for long-term recovery.
Why is maximalism a red flag in cryptocurrency?
Extreme loyalty to a single project often signals underlying insecurity about its value or technology. Healthy projects are typically evaluated critically and don’t rely on fervent fan advocacy.
How important is timing in crypto investing?
While timing isn’t everything, understanding market cycles and narrative trends can significantly improve entry and exit points. 👉 Get advanced methods for timing your investments more effectively.