Crypto Investing Strategies

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Crypto - Photo by Worldspectrum from Pexels

Introduction.

Over the past 10 years, cryptocurrencies have proven to be not only one of the best performing asset classes of our generation, but also one of the best performing asset classes with no expected downtime. Since cryptocurrencies came to be, the biggest cryptocurrencies like Bitcoin and Ethereum have grown at a nearly exponential rate, giving crypto investors returns that make traditional investors jealous. In the same way, speculators have made a lot of money with even less well-known cryptocurrencies and digital assets.

So, this guide is for you if you want to invest in cryptocurrencies but don’t know where to start or what strategy to use.

So, what are the best cryptocurrency investment strategies you should follow to invest in crypto?

When investing in cryptocurrencies, it’s important to come up with a plan that you’ll stick to. So, here are the best ways to put money into cryptocurrency for a maximum return:

  • Choose the best tools for storing your crypto.

When looking for the best strategy to invest in cryptocurrency, it is important to think about storing and securing them well. Unlike money placed in the bank, you must ensure the security of your cryptos yourself. So, to store (and secure) your cryptocurrencies, you must use what is called a “wallet”. It is an analogy that was made with the wallet that we all use to store our cash or bank cards.

A crypto storage wallet does not store your cryptocurrencies, but it groups the addresses of the different digital assets you own.

Thus, a wallet is software that organizes all of your crypto access and is used to send and receive cryptocurrencies.

Above all, a storage wallet allows you to maintain full control over your private keys. The public key is accessible to everyone and necessary to receive cryptos in your wallet. However, to retrieve the digital assets present at a given address, it is necessary to possess the private key. By keeping it in your possession only, no one else will be able to touch your digital assets.

You will therefore be the one and only holder!

  • “HODL”

What is known as “HODLing” is a popular cryptocurrency investing method for investors. “HODL” refers to the purchase and retention of bitcoin or any other cryptocurrency. The term came about when a BitcoinTalk forum user mistyped the verb “hold.”

But “HODL” has become very popular among investors because of how the prices of cryptocurrencies have changed in the past. This is a strategy that some people think will continue in the years to come as crypto becomes more popular with mainstream investors and more people use it in the real world.

  • Make the most of volatility.

Many investors would be shut out of the market if all stocks, mutual funds, and currencies only went up. Volatility makes it possible to get more fractional coins and gives your money more buying power. 

Since cryptocurrency is a new asset, there is still a lot of hype and speculation about it, which can sometimes make it very volatile. Large price changes are often seen as a risk, but daily volatility on the crypto market is normal and can be a chance to make money. In fact, volatility means there are more chances to buy when prices go down and better chances to make money when prices go up. You can take advantage of crypto volatility by investing in different currencies over different time frames.

  • Consider short-term trading.

In volatile markets, short-term trading is another good strategy to invest in cryptocurrency because it lets investors lock in profits whenever and wherever they can. But in volatile markets, profits are more likely to get out of hand and turn into losses before investors think about leaving the trade.

So, how do you make sure you’re making money and getting out of trades at good times? An investor can do this by deciding how much profit they want to make from trading in cryptocurrencies. When trading, selling assets in chunks is another way to make sure you are always in profit. If the value of an asset is going up quickly, an investor can sell some of it and keep the profits while the rest of the assets continue to grow in value.

  • Diversify your portfolio

In this volatile market, one of the best ways for crypto investors to invest is to spread their money across multiple digital assets. You can’t put all of your money into one cryptocurrency in the hopes that its value will go up. Keep in mind that cryptocurrency is a very risky asset compared to other investments, especially because of its volatility. It is best to make a crypto portfolio that is diverse and well-balanced.

Traditional markets are less risky than crypto markets, so investors are encouraged to spread their money across a wide range of assets.

Using derivative products to hedge a portfolio is another way for an investor to protect their investments from the effects of a volatile crypto market. The value of derivative financial instruments is based on the stocks, commodities, bonds, and other assets that back them up.

  • Choice of currencies

As an alternative to building a diversified portfolio of cryptocurrencies based on certain metrics, some investors prefer to pick specific coins and digital tokens that they think have the most potential to go up in value.

This “coin picking” approach like stock picking in equity markets is reserved for expert crypto traders and professional investors who spend a lot of time researching which crypto projects to invest in.

Generally, when crypto assets are chosen, they are retained for medium to long-term investments.

  • Invest whatever amount you can afford to lose.

Just like with traditional investing, you should only invest in the crypto market with money you can afford to lose. If you can’t handle the possibility of losing all your cryptocurrency investment, you can’t afford to take the risk of investing in that cryptocurrency. As someone who is new to crypto, you should think about putting about 5% of your income into the crypto market. As someone who is interested in crypto, you should think about putting about 10% of their income into crypto, and as an expert crypto trader, you should probably think about putting 20% or more into crypto. But in all, invest what you can afford to lose.

Conclusion

Even though the above crypto investment strategies are tried and true ways to make money in uncertain markets, as a new investor, it is advisable that you do your own research to find out what works best for you. Doing your own research includes buying your cryptocurrencies from a reliable exchange, too. Also, if you’re a beginner, the best strategy to invest in cryptocurrency is to put only 5-10% of the money you don’t mind losing into crypto.