The 5 things I learnt after investing in Crypto for 1 year
Investing in crypto is like riding a rollercoaster. Let me help you get through without throwing up.
Some say investing in cryptocurrency is like a rollercoaster journey. I say they are correct. There are moments of pure happiness, with you screaming at the top of your lungs. And there are other moments when are you are screaming because you just vomited out your breakfast.
Should not have bought those shitcoins.
I experienced all of the above in what can be said as a relatively short period when it comes to investing. But hey, that’s what crypto is, right? Sometimes there’s ‘moon’ and ‘ Lambos, sometimes there is nothing but dirt. That hasn’t stopped me from investing. Over the course of a year with my crypto holdings, I have learnt quite a bit and I felt the need to share it with my fellow crypto enthusiasts, seasoned investors, or curious first-timers. It is about investing in crypto sustainably.
Just a friendly disclaimer: these are just my opinions. So don’t hold me liable for anything. Just take it as a friendly chat eh?
#1: Not all cryptocurrency is volatile
Ah, got you didn’t I. All you see in the news or on Twitter is how ETH is up by like a bazillion per cent, or Bitcoin is crashing to new lows. There is a new coin every week, breaking 10,000% ROIs. All of this is true (to some extent). Cryptocurrency, in general, is probably the most volatile investment out there.
But, among the thousands of coins available, there are some which are not driven by random Elon Musk tweets or hoity-toity whales (not actual whales since obviously getting a decent wifi connection underwater is a hassle) deciding to have a little fun. Some coins are pegged to real currency. Take, for example, Binance USD (BUSD) or even Tether (USDT). These coins are pegged to the USD, and thus the valuation of each coming fluctuates only from 0.99 to 1.00 USD.
Why is this important?
While these coins may give you ROI’s that are worse than even a savings account, they act as a good place to store your profits and capital. Instead of worrying about converting your ETH to fiat and then withdrawing to your bank account since you just did a big brain and rode the bull to big bucks, you could potentially just leave it in BUSD or USDT, lying in wait for the inevitable crash and then get those sweet sweet discounts. For which one is better, here is a link to a quora discussion.
#2: Education is really important
Now I don’t mean staying in school and completing whatever calculus problem that your lovely teacher gives you. I mean, educating yourself with cryptocurrency. I mean knowing about wallets, exchanges, gas fees, NFTs. You don’t have to be an expert to invest. But say, knowing which coins have the highest gas fees or knowing which wallet lets you swap currencies or buy/sell is important.
Apart from that, at least staying abreast of big developments in the coins you hold does give you an advantage regarding when to buy and sell. That’s not to say you will be right every time (otherwise, we all would have Lambos), but it does mean you can hedge your bets with more of a solid footing.
#3: Hype/Shitcoins are usually trash
It is extremely important to only invest in cryptocurrency or even a specific coin in general if you believe in the coin. It’s easy to get carried away by hype or just seeing insane returns on the new SHIB or other randomly popping coins. Like it or not, these returns are followed by inevitable crashes, wiping out the values of coins overnight. I did the same thing when I followed the hype and invested in DOGE. While DOGE is still around, the coin doesn’t support any infrastructure currently, unlike Ethereum. And after the SNL fiasco, my investment which had ballooned to a nice sum, popped. Again, do your research.
Admittedly, coins like Ethereum do crash now and then. But if you believe in the entire concept of blockchain and cryptocurrency powering the future, then you can understand why Ethereum is so popular, and in the long term, the trend will more or less always be upwards.
#4: Don’t be greedy
Say you followed all the above and have successfully invested in an up-and-coming crypto coin with infrastructure support that is surely going to wind its way up the ladder. You’ve made handsome profits, but you keep telling yourself, “Just a few more percent, and then I’ll sell it.”
While there is nothing wrong with this, remember all cryptos suffer from an inevitable pullback. None of us like to see our crypto balanced tumbling.
My advice: stick to a percentage. Here’s an example: say my percentage is about 25%, i.e. when my crypto balance goes up by 25%, I sell the majority of my holdings. Now, this is just an example, but another version of this could be to take out your capital once your portfolio has grown by say 40–50%. Then let the interest do all the work.
TLDR: while there is a big FOMO and everyone wants to make as much profit as possible, it is impossible to always time the market right. So just take your profit and be happy.
This percentage theory is also definitely applicable to taking the sting of those crashes, i.e. selling your holdings immediately after you have lost about 20%.
Just a small note, these percentages should be determined by you and your risk appetite (how fast and lose you want to play with your money). You can start low and slowly work your way up.
#5: Never, I mean NEVER invest money that if lost, could have serious consequences
I believe in crypto and its future applications. But that doesn’t mean that everyone does. The price of crypto is literally what people believe it is worth, and we all know this belief keeps swaying. Furthermore, while it is impossible to ignore the 1000% + returns, it is also equally difficult to avoid sharp dips. The entire industry is still in its infancy, and as such, it is best to only invest money that you can afford to lose.
This means any money that you can simply ignore belonging to you. Any amount that if lost, will have to impactful outcome on your daily life.
There are people out there who have their life set because they invested all their savings in crypto. Don’t be them. Not only is it unsustainable, but for every success story, there are plenty of failures. If you want to play the odds, then sure. But it is highly not recommended. Play it smart.
And those are my 5 tips. Now there are plenty of other tips that exist. I just feel that these are the most important ones. I know how difficult it is to be un-emotional when investing in crypto. At the start, you’ll keep refreshing your exchange/wallet day and night, hoping to jump on the rocket to the moon or avoid the not-so-pretty landing.
To you I will say, hang in there. Give yourself some time. As you will start building the experience, you will automatically build your instincts and have more control of your emotions. That’s just life, isn’t it?
Invest responsibly yeah.
