We know that crypto investments may seem difficult and mistakes not only lead to losing money but can make you want to completely give up on this industry. Don’t worry, most of us have been through it.
If you’re a crypto beginner and you don’t have an investment strategy, well good – you’ve come to the right place! In today’s article, we’ll talk about what works if you want to actually make a profit.
Build a Balanced Portfolio
First of all, remember the old saying: don’t put all your eggs in one basket. Investing all of your money in one memecoin is clearly not a good idea. The risk is real, especially in the case of high risk – high rewards projects where volatility is so big that you could lose your money in the blink of an eye.
The best advice we can give is to always have a well-balanced portfolio with an appropriate number of cryptocurrencies – try not to have too few of them but too many are not good either.
Avoid investing in projects that have the same utility and make sure to read and understand what each of them is doing – their purpose.
DCA
A golden rule is not investing all of your money at once. Maybe you’ve heard of DCA before but if you didn’t you can check out this video – we went into more detail there.
Basically, try to make a habit out of investing small amounts regularly, regardless if you do it once a month or once a week – the important thing is to stay consistent.
This way you won’t be keeping track of price trends every minute or stress out, you won’t risk all of your money and you’ll learn healthy habits for investing.
To better understand it, know that I tend to invest 20% of my monthly income in crypto. But I don’t use the entire amount, all at once, I invest 5% in multiple projects weekly. If I am to lose, I’ll lose less because this way I’ll decrease my chances of buying all my digital assets at the all-time high price.
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HODL
Sometimes, you can win more by not really doing anything with your investments.
The best example of this is holding or HODL, as it is called in the world of crypto.
Although it may sound simple, not doing anything with your assets is hard, especially during a bear market when your portfolio can lose half of its value in a sec.
Think about the ones who invested in Bitcoin at the beginning, they purchased it for $1, $10, $100, or $1,000 and became rich by simply holding for a long time. Those people were patient and made a huge profit when they decided to sell. So remember, at least from time to time to take some profit from your investment, especially during bull markets.
Buy the Dip, Not the Top
One way you can do this is by applying this rule: buy low, sell high. If you felt left behind the last time Bitcoin reached an all-time high don’t worry, you’ve seen what happened after: tears fell as the price went down. This is why you should never buy coins when their prices are up. Instead, be patient and wait for the market to settle in – we can assure you it always does.
Even if it seems difficult to invest when the price is down and everyone is discouraged, try not to be influenced by anything, and do it because that right there is your opportunity to double or triple your gains.
Don’t forget, what goes up, must come down!
Prioritize Liquidity
When it all goes down it’s important to have the necessary liquidity to buy the Dip right then and there! Our recommandation is to always keep at least 25% of your portfolio in stablecoins, even 40-50% during uneasy times. This way it’s easier to make purchases whenever you want and take advantage of the low rates.
By the way, you can also make money through stablecoins and you can enjoy a pretty nice interest rate if you stake them on exchanges or DeFi platforms – you’re basically locking them there and they act as deposits.
Index Funds
Still, you may not have the time to learn about projects or study to develop investment strategies. No problem, we have a solution for this as well!
The easiest way to invest is in an index fund i.e. a collection of assets selected to offer the best return possible.
For example, Stakeborg DAO has its own index fund, ILSI that comprises 10 projects from various crypto branches. This way you don’t have to deal with choosing crypto coins to invest in or to decide how much of your portfolio needs to be assigned to a project because the index will do it for you.
If you’re a crypto beginner, then certainly, an index fund is a great option!