My Crypto Investment Strategy

My Crypto Investment Strategy. Credit image: Raw Pixel, at Unplash.

In a previous article I published more than 4 months ago, I explained why I think the crypto market won’t suffer from a tulip mania, dot.com or housing type crash where many investments suffered losses of 97% or more over a very short period of time.

For some investments, I was wrong. For example, folks who bought NXT during the markets peak in December lost around 93% on their investment even when factoring in the IGNIS airdrop they received. But if you look at the overall crypto market the total market cap is somewhat lower than in February, but not significantly.

Even with regards to NXT itself, people who bought NXT during 2016 and held, still made a profit and also received Ardor and some Ignis for free.

All in all, I think the same factors I wrote about in my last article are still true now, and my overall outlook on the crypto market is still positive. Assuming you agree, and that you have some available funds to throw at the market and forget about for the next several years, here are my investment strategy principles laid out from top to bottom according to their importance.

Invest for the long run

Do not waste your time and money on day trading, ignore short-term market fluctuations as there is almost no way to predict these changes, especially not in the volatile crypto markets.

Buy and sell gradually

To make sure you are not buying into an asset like real estate in Japan in the early 1990’s just ahead of a 20 year bear market, I would spread my buy orders over a long period of time. Similarly, to make sure you are not selling just before a December 2017 style crypto pump, I recommend to sell gradually.

Do not invest what you cannot afford to lose

Seriously guys, this is a risky business, you can lose a lot of money over a short period of time, so don’t gamble your latest paycheck and surely don’t invest money you don’t have.

Diversify

While the overall crypto market is a good long-term investment in my view, specific tokens are a very risky investment. Therefore I suggest you buy many types of tokens and not hold a significant position in only one or few.

From theory to practice

The problem is that it is difficult and risky to buy many types of tokens since every token has its own interface, wallet, blockchain and complex tools that you need to learn. You can just buy and leave tokens on an exchange but this is also very risky for the long term.

My suggestion is to carefully select five tokens which work on different technologies like multi-chain, scaling, privacy, storage, and DAG. Learn them and hold them. Follow the projects actively on their social channels, get involved and contribute in any way you can. Collect bounties if they are available to increase your position. This way you are protecting your investment, something you can almost never do with traditional investments.

Crypto tokens are essentially startup companies, therefore when reviewing blockchain infrastructure projects, look for the ones that control their own intellectual property, not the ones which are clones of some other blockchain. When looking at blockchain based projects, look for the ones that are solving a real market problem, have a real business plan, and an experienced team behind them. Avoid tokens which pay people to use them or tokens which look like a marketing operation without substance or tokens which just happen to be listed by some exchange for no reason. And for god sake don’t refresh coinmarketcap.com every few minutes.

The small print

This is just my 0.02$, as always, I can be completely wrong, and I maintain the right to contradict myself in the future. Also, for the record, this article references only my opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice if you want to. And, remember, always do your own research (DYOR).

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