How to Invest in Cryptocurrencies
As you watch the cryptocurrency markets tumble, itʼs easy to get caught up in the feeling that theyʼll never come back up again. These negative thoughts can lead to poor decision making including being shaken out of a good position too early based on fear.
How should you invest in cryptocurrencies? The answer to that varies greatly depending on your risk tolerance and trading experience, but there are general guidelines that are useful for protecting your capital and watching it grow.
Patience Is Key
Above all else, patience is paramount. Pantera Capital CEO Dan Morehead advises investors to wait for a coinʼs price to rise above its 230-day average before buying. Once in, hold your investment for a minimum of one year before taking profits.
The reasoning here is simple: leave day-trading to day traders and donʼt worry over intraday price action. Checking prices day in and day out will only leave you feeling exhausted and short-sighted, making it easy to forget about the big picture and cryptoʼs bright future.
By “setting and forgetting” your investments after extensive research, youʼll be much more at ease and will be able to take advantage of more massive moves down the road.
Buy Bitcoin
It should go without saying, but buy and hold at least some Bitcoin in your portfolio. As the king cryptocurrency, the market ebbs and flows by Bitcoinʼs gravitational force. By not holding Bitcoin in your portfolio, youʼll be at its mercy during big moves up or down, and the potential for being caught out is high.
Crescent Crypto Asset Management Fund advises holding a majority of your portfolio in Bitcoin. They lead by example: 44.7% of the $50 million under their management is invested in BTC.
Strong Hands
Common mistakes of cryptocurrency investors all involve, in one form or another, having weak hands. Bobby Lee, Litecoin-creator, Charlie Leeʼs brother and the founder of BTCC exchange, believes that there are four mistakes made by crypto investors that keep them from building a strong, dynamic long-term portfolio:
- Indecisiveness, which prevents investors out of good opportunities or carries them into bad decisions.
- Underinvestment, which keeps positions so small that profits remain paltry even after parabolic moves up.
- Panic selling, which causes investors to take heavy losses at the bottom only to FOMO back in when the market rockets upward.
- Cache exit, which causes investors to exit their positions after a small rise in value prematurely.
By merely buying unique projects based on your own in-depth research and holding for a minimum one-year period, youʼll avoid these pitfalls and will develop a much stronger portfolio for it.
Rely on Professional Fund Managers
to Guide Your Portfolio
The cryptocurrency market is a very complicated and volatile place. Doing your own research requires committing an unthinkable amount of time and effort. Additionally, keeping your portfolio in a proper balance requires skill, experience, and a watchful eye.
Rather than experimenting on this yourself and having to learn the hard way (via potential losses of wealth), consider using MultiToken, a ready-made, decentralized cryptocurrency fund managed by a professional. The basket of cryptocurrency assets that are represented by such a multitoken are automatically rebalanced by arbitrage opportunities handled via smart contracts based MultiToken Protocol.
Your MultiToken portfolio works for you, bringing you a tangible return on your investment without the risk of handling it all yourself. If, however, you are an experienced fund manager, you can create your own multitoken decentralized fund and offer it on the MultiToken platform.
