Top 5 Strategies For Maximizing Your Profits With Cryptocurrencies

It is not possible to win every time, but you can put the maximum chances on your side.

Sylvain Saurel
Nov 20, 2019 · 6 min read
Photo by Thought Catalog on Unsplash

he cryptocurrency world is often described as merciless. This reputation is probably the result of the unfortunate experience of many early-stage investors during the euphoria in the cryptocurrency market at the end of 2017. Driven by FOMO’s feeling and greed, these investors launched themselves into the market, without even understanding its fundamentals, by buying Bitcoin and all the Altcoins that were making the buzz on the web.

All this had led to the creation of a bubble around Bitcoin and cryptocurrencies with a Bitcoin price reaching even a historical price of $20,000 at the very end of 2017. What was to happen happened and the bubble that burst in 2018 with a prolonged bear market that made all last-minute investors pay for their greed and lack of judgment.

The Bitcoin market, and consequently the cryptocurrency market, holds great promise for 2020 (and beyond). In order for you to maximize your profits in your future investments, I suggest that you discover the top 5 strategies to follow when buying cryptocurrencies.

1. Invest Only Money You Can Afford To Lose

The first strategy when making investments in cryptocurrency is the same as the one you had to follow when investing in traditional financial markets. Indeed, this strategy is based on the most important rule of investing:

Never invest money that you can’t afford to lose.

This rule is a great classic but I feel compelled to repeat it over and over again to cryptocurrency investors. Why? Quite simply for two reasons:

  1. The cryptocurrency market, led by Bitcoin, is very volatile.
  2. The cryptocurrency market never sleeps, which means that trading takes place 24 hours a day, 7 days a week.

In fact, you may well fall into the trap of constantly monitoring prices in the cryptocurrency market. You would then quickly be won over by fatigue which would favor your stress and a loss of farseeing when doing your trades.

A tired investor is an investor who is much more sensitive to FOMO’s feeling.

In order to avoid being exposed to the FOMO’s feeling that could lead you to make bad trades, you should only invest what you can afford to lose without risk to the finances of your daily life.

To be sure you can do this, you must follow the following rule:

Define a monthly budget for investing in Bitcoin and cryptocurrencies, then stick to that budget no matter what.

2. Bitcoin Must Remain Your Priority

You may have noticed that Bitcoin is increasingly being criticized. The attacks will come from economists, regulators or people in the world of traditional finance. But they will also come from within the cryptocurrency market itself.

All the cryptocurrencies of the industry are direct competitors of Bitcoin, no matter what they may say.

From Ethereum to Ripple, EOS or Bitcoin Cash, all the main cryptocurrencies on the market are aimed at one thing only: taking the place of Bitcoin as the dominant cryptocurrency.

You must keep this in mind and not forget that despite all these criticisms, Bitcoin still has a market dominance of more than 65 percent.

The capitalization of Bitcoin alone represents more than 65 percent of the total capitalization of the cryptocurrency market.

When the general public think cryptocurrency, they instantly think of Bitcoin. Bitcoin is among the most decentralized cryptocurrencies while still having the largest user base. All this makes Bitcoin one of the investments that best combines the security of the money invested and the significant potential for long-term capital appreciation.

Bitcoin must therefore remain your priority when investing in the cryptocurrency market.

3. Diversify Your Cryptocurrency Portfolio

I have just explained to you that Bitcoin must be your priority when you invest in cryptocurrencies. However, this does not mean that you should not follow other promising cryptocurrencies. On the contrary, I even advise you to diversify your cryptocurrency portfolio.

The distribution of your portfolio in cryptocurrencies can have the following ratio: 70 percent for Bitcoins and 30 percent for Altcoins.

I give you an order of magnitude here. You can then increase the share of Bitcoins in your portfolio or reduce it to give more chances to Altcoins that you consider promising. You will make your choices and define this ratio precisely according to a certain number of criteria at the centre of which is your risk aversion.

If you are willing to take more risks, you can go to 40 percent of Altcoins to target a cryptocurrency project that addresses a real problem and for which you believe the price could go up.

In this diversification strategy that I invite you to adopt for your cryptocurrency portfolio, do not forget to rebalance regularly between your Altcoins and even in some cases with the percentage of Bitcoins you own.
This will probably allow you to make greater profits by adapting to events and economic news that have a strong impact on the cryptocurrency market.

4. Take Warren Buffett’s Advice About Greed And Fear

I imagine you must be surprised to see Warren Buffett’s name appear in an article dedicated to the best strategies to maximize your profits with cryptocurrencies.

It must be said that Warren Buffet, probably the largest investor in the history of traditional finance, thinks very badly of Bitcoin and cryptocurrencies. Judge instead what he once said:

“Bitcoin is probably rat poison squared.” — Warren Buffett

That even one of the richest men on the planet with a fortune of more than $85 billion can be wrong! It’s reassuring in a way.

Here I want to come back to another well-known quote from Warren Buffett that I think is much smarter:

“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” — Warren Buffett

This warning was addressed to investors in traditional financial markets. Nevertheless, it is perfectly applicable to the cryptocurrency market since human psychology in terms of investment remains the same regardless of the targeted market.

You should therefore be extra careful when everyone is in FOMO mode on a cryptocurrency and pushes you to buy some. That’s when you risk the greatest disappointments.

On the other hand, when everyone is panicked and starts selling, you have to step out of the crowd and let your greed work because it is often at this very moment that the best investments are made.

If you doubt it, I let you calculate the profit made once again by the HODLERS of Bitcoin who choose to invest against the selling madness of the market throughout 2018.

At the bottom of this prolonged bearish cycle in the cryptocurrency market, they were even able to accumulate new Bitcoins with a price just over $3,000 in December 2018!

5. Do Your Own Research

In a market as volatile as Bitcoin, you can only trust your instincts when trading. In order to position yourself to make winning trades as often as possible, you must train yourself and then be able to inform yourself.

The fundamental rule for investors in the world of crypto currencies is: DYOR (Do Your Own Research).

To do this, I advise you to train yourself in technical analysis. This will allow you to do your own analysis of the price forecasts for the cryptocurrencies you are targeting.

On the other hand, you need to spend time learning about each cryptocurrency you target by reading its white paper and all the information available on the web but also social media like Reddit. The latter being a real mine of information for all that concerns cryptocurrencies.

Finally, since your decisions will be based on your own research and the synthesis you make of your various favorite sources of information, you will have no regrets about your investments.

From then on, you can easily move on to the next trade keeping a cool head regardless of the outcome of the previous trade.

Conclusion

The cryptocurrency market, led by Bitcoin, is a very volatile market. There are many opportunities to make large profits but also to experience large losses. You must therefore keep a cool head in any situation and carefully follow the 5 strategies I have just revealed to you.

By limiting your investments to what you can afford to lose while making Bitcoin your priority, you will start on an excellent foundation. A good diversification of your portfolio with various promising Altcoins on which you will constantly rebalance will finally put you in a position to maximize your profits in the cryptocurrency world.

It’s up to you to be ready for the next boom in Bitcoin and the cryptocurrency market in 2020!

The Startup

Get smarter at building your thing. Join The Startup’s +788K followers.

Sign up for Top 10 Stories

By The Startup

Get smarter at building your thing. Subscribe to receive The Startup's top 10 most read stories — delivered straight into your inbox, once a week. Take a look.

By signing up, you will create a Medium account if you don’t already have one. Review our Privacy Policy for more information about our privacy practices.

Check your inbox
Medium sent you an email at to complete your subscription.

Sylvain Saurel

Written by

Entrepreneur / Developer / Blogger / Author. In Bitcoin We Trust: https://www.inbitcoinwetrust.net

The Startup

Get smarter at building your thing. Follow to join The Startup’s +8 million monthly readers & +788K followers.

Sylvain Saurel

Written by

Entrepreneur / Developer / Blogger / Author. In Bitcoin We Trust: https://www.inbitcoinwetrust.net

The Startup

Get smarter at building your thing. Follow to join The Startup’s +8 million monthly readers & +788K followers.

Medium is an open platform where 170 million readers come to find insightful and dynamic thinking. Here, expert and undiscovered voices alike dive into the heart of any topic and bring new ideas to the surface. Learn more

Follow the writers, publications, and topics that matter to you, and you’ll see them on your homepage and in your inbox. Explore

If you have a story to tell, knowledge to share, or a perspective to offer — welcome home. It’s easy and free to post your thinking on any topic. Write on Medium

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store