How to Bet on Crypto Like a Monk
Calm collected and never YOLOing the family farm.
In fact, all you need is a solid strategy with some concrete rules, and you’ll be able to ride the sea of tranquility while everyone else sinks in the storm.
This isn’t financial advice. It’s common sense.
If you want big returns, you have to be able to stomach big risks; that’s the way it works.
There is no free lunch, and even though it feels like a game, sometimes the money you’re playing with in crypto doesn’t have the monopoly guy on it. It’s yours. You worked hard for it, and it can be gone in the blink of an eye, the stroke of a key, or the pull of a rug.
If you’re smart and patient, you can realize incredible gains in the crypto world. Scratch that you don’t even have to be that smart as long as you have a solid strategy and the patience of an inner-city foster parent.
As of writing, it’s been two days since El Salvador adopted Bitcoin as legal tender, and there was a flash drop in the price of Bitcoin. Some are already referring to it as bloody Tuesday because Bitcoin dropped by 10% in a matter of minutes, and $3.4 million of positions were liquidated.
How could something like this happen? The first country making Bitcoin legal tender should’ve been bullish right?
Usually yes, but that’s exactly what everyone else thought as well, and so they decided to “buy the news.”
The big problem was doing it with leverage.
When a few whales started taking profits, and the price ticked the wrong direction, all of those long positions were liquidated, and there went the family farm.
This leads me to the first rule of not YOLO-ing yourself into the ground; Stay away from leveraged trading.
The crypto market is already incredibly volatile. Trading on leverage WILL WRECK YOU. If you tried it and you survived, consider yourself lucky. The risk of leveraged trading for Regular Joes isn’t worth it. Because let’s be honest, no one knows what the market will do, anything is possible, and in crypto, that means it’s not only possible; it’s probable.
The smart play is to buy low and hold it until you hit your target price.
I know that’s boring, right? It’s funny how often smart and boring end up being the same thing.
Don’t invest it if you can’t afford to lose it.
If losing every cent of your investment is going to put you on the street or take food out of your kid’s mouths, then don’t do it. It seems ridiculous that this should even be on the list, but FOMO is real, and it’s powerful AF. It’s one thing to nod your head and roll your eyes when you’re reading this. It’s another thing entirely to watch the price of a coin you’ve been researching 10x in 48 hours and keep your money in your account.
Speaking of doing your research, that brings us to number three; Know your projects.
Who’s on the team? Are they credible?
Do they know what they’re doing, or did they clone Ethereum and slap a kitten on it?
Is the project progressing? Check the GitHub, is it regularly updated, or has it been sitting dormant for weeks on end?
Is the community growing and vocal? If it’s not, then who will move it forward? The long-term sustainability of a project depends on people who believe in it and are willing to talk about it. The more “evangelists” a project has, the longer its lifespan will likely be.
Does it solve a real-world problem? Look at NFTs. How useful is a crappy picture of an ape or a punk that looks like a villain from an NES Ninja Turtle game?
Not super useful.
But how useful would it be to move a real estate contract onto the blockchain and have the deed to your home exist as an NFT? Then when you sell it using a smart contract, the entire process could be done in a matter of minutes and cost just a few dollars instead of tens of thousands.
That’s pretty useful.
Ultimately we’re talking about the same technology but a different application. If you’re willing to take on exponentially more risk, you could sink your money into an NFT, but I’ll be sticking to the projects focused on real problems people face TODAY, and that same problem will likely GROW in the future if not addressed.
Take profits along the way. Timing the market is impossible unless you’re up to something extremely shady. No one knows where the top or the bottom will be.
We’re all guessing and trying to mitigate risk. That’s what we tell ourselves. In reality, most people are just greedy. I don’t mean that in a derogatory way. When we’re graced with good fortune, we want to squeeze it for every drop of juice it’s worth.
The problem with that is we usually hold onto things for longer than we should in hopes (greed) of making higher returns.
Fear and greed move the market, but you don’t have to be swept up in the current. If you go in with a plan of how and when to take profits on the way up, you’ll be able to lock away some profits before they evaporate. Sure, you’ll leave some money on the table but is it worth it?
I don’t think so, but you’ll have to answer that for yourself.
Pray for the dip. Bull runs get all the attention, but they really shouldn’t. As they say, the bull market can make you money, but the bear market can make you rich.
If you’re chasing a pump, you already missed the best opportunity. You might get a 2x or even a 4x which is nothing to scoff at, but that’s not what most people come to the crypto world for. Most people are looking for 10 or 100x profits because, hey, it’s possible. The only time that really happens is when you get in REALLY early or buy it during the deep dark bear market when everyone else is running for the hills. The bear market should be seen as an opportunity. Personally, I love it when I get a good buy. Kind of like when airlines “accidentally” list a flight for like 90% off, and you get to go on a trip for pennies on the dollar. It works the same way with crypto. The bear market is when everything goes on sale. That being said, you HAVE to do your homework. It doesn’t matter if the coin you’re buying went up %5000 last market cycle if it doesn’t have any utility and it won’t survive long enough to make it to the next bull run.
Last but not least, Don’t put all your eggs in one basket. Dumping all your money into a single project is the MO of YOLOing into the market. There are thousands of cryptocurrencies, and as I mentioned earlier, not all of them will be here to stay. Allegedly the average lifespan of a fiat currency is 27 years. That means that most fiat currencies that are backed by governments and utilized by the citizen of a country don’t even survive beyond three decades. If that’s the case, some random sh!t coin that was a dumbed-down cloned version of Ethereum launched in some dude's basement isn’t likely to weather many storms.
The smart play is to stock up on the blue-chip cryptos, Bitcoin and Ethereum. Both of them have been battle-tested and are here to stay. If the majority of your crypto portfolio is made up of these two, you’ve got just about as much security as you’re going to get in the crypto world.
But the crypto world is also a single basket, and all of your eggs shouldn’t be in it. Whether it’s stocks, real estate, precious metals, or anything else, diversification is your friend not so much that it strips all of your attention but enough that your risk isn’t concentrated in a single market.
Beyond that, your eggs shouldn’t always stay in the same basket either. Crypto is a great tool for wealth creation and as wealth grows preservation becomes more of a priority. When you take your profits move them around and make sure you’re able to hold onto them.
To quickly recap
Stay away from leveraged trading
Don’t invest anything you can’t lose
Know your projects
Does it solve a real-world problem
Take profits along the way
Pray for the dip
Don’t put all your eggs in one basket
This isn’t financial advice; if anything, it's advice that will preserve your mental health while you navigate the exciting world of crypto.
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