There is a fact that I have noticed that most of you who are new or have been in the market for a long time do not have much concept of the so-called trading strategy or personal investment strategy. This article is part of a series of articles introducing some basic strategies that you can use when participating in the cryptocurrency market.
The most common question I receive from new cryptocurrency investors is…
“How do I make money investing in cryptocurrency?”
There is a fact that I have noticed that most of you who are new or have been in the market for a long time do not have much concept of the so-called trading strategy or personal investment strategy. This article is part of a series of articles introducing some basic strategies that you can use when participating in the cryptocurrency market.
But before we go any further, you should know that ALL cryptocurrencies are extremely volatile investments and carry a higher risk profile than other traditional assets. Different strategies will offer different levels of risk and reward on a relative basis (within the crypto investing world). But in general, cryptocurrencies are much more volatile than stocks, gold, or forex. Never invest any money you can’t afford to lose. Furthermore, even the biggest coins on the market today cannot be defined with the term “Blue chip” as in the stock market.
Strategy: Buy and Hodl
The first strategy I’m going to introduce to you is the long-term buy and hold (and then forget about) investment strategy. It’s similar to how stock investors invest in blue chips, except that in the crypto market every coin is relatively more volatile. The main benefit of this strategy is that it gives you exposure to the entire crypto market without having to spend a lot of time trading or managing your portfolio.
With crypto, you can apply this strategy in a few different variations. In the simplest way, you can just go to CoinMarketCap.com and look at the top 10-15 coins (by market cap) and simply invest the same amount in each of them or go to the Bitwise 10 Large Cap Crypto Index and buy 10 of the coins they feature in the index (minus any stablecoins like Tether). You can also consider increasing your position size in Bitcoin (BTC) by 100% to 500% of the average size in your portfolio to help minimize risk.
There are a few downsides to this strategy. That is, cryptocurrencies are still considered a very new asset class and the industry changes very quickly. Looking back at the top 10 coins on Coinmarketcap at the beginning of 2018, only 5 coins are still in the top 10 today and 2 of them are not even in the top 20 anymore.
Another limitation of this strategy is that some of the major coins in the market today still have little or no real-world use cases because cryptocurrencies are still a relatively new asset class, so being in the top 10-15 today does not mean that the coin will last for a long time and continue to be a top cryptocurrency.
A variation of this strategy is to first create a list based on the top 20 coins on Coinmarketcap and then from this list of 20 coins, pick the 10 coins that you like the most based on your own research. Always do your own research (DYOR) before investing in any coin.
So far, I have shared with you the essentials of this cryptocurrency investment strategy. As you can see, this strategy is very passive, because you are investing in the largest cryptocurrencies in the market, the profits will be significantly lower than other investment strategies.
In the next article, I will share with you the cryptocurrency investment strategy that I often use, which is the strategy: Venture Investment
This strategy really has the potential to change your life. It allows you to invest a very small amount of capital to get a really large profit.
I hope this information will help you.
Good luck and invest safely.
Editor: TonyCapital Team
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