Crypto investing seems easy. The reality is that most crypto investors fail miserably. This goes against the mainstream thought of ‘easy and quick wins’ when investing in cryptocurrencies. Nothing is further from the truth. Even FTX which was led by what once was a legendary personality SBF was not profitable, imagine that. With this in mind, we go back to the basics of crypto investing and summarize the 7 investing tips to become profitable over time with crypto investing. These 7 investing tips have been the recurring theme in our premium crypto investing service since 2017.
Let’s start by creating a picture of what the daily life of an average crypto investor looks like. Below is an overview of ‘typical inputs’ that the average investor is looking for when interested in crypto investing with interest in a specific token (say ‘token X’):
- Bloomberg publishes an article featuring very negative comments about cryptocurrencies by guru Roubini.
- A new Twitter storm in which ‘token X’ get lots of criticism because of their proof of work technology.
- The SEC is warning that they will introduce regulation in the crypto market.
- The World Economic Forum warns about a global economic recession in 2023.
- A tweet of a crypto guru mentions the tokenomics of ‘token X’.
- A blog post appears which compares characteristics of multiple tokens with each other, one of them ‘token X’.
- The Fed decides to hike rates again, the market sells off right after.
- CPI data come out, inflation came in 0.1% hotter than expected.
- The CEO of a global bank says that crypto will disappear over time as it serves no purpose.
The list goes on.
Good luck with these inputs, they will create a triple headache to the average crypto investor.
As if all these inputs are relevant. As if they are determinants of the price of ‘token X’.
We love KISS – Keep It Stupid & Simple.
If we apply KISS to crypto investing, we have 7 strategic and simple investing tips for crypto investors. They are outlined below:
- Every next secular bull run in crypto markets will be slower than the previous one. The first bull market back in 2010 was a parabolic one, the subsequent ones were ‘less steep’.
- Bitcoin will lose dominance over time because adoption (utility) will start dominating prices of individual tokens. Bitcoin has no utility, it’s an investment vehicle and leading indicator of the crypto sector.
- The way to manage risk in crypto which is the most volatile sector ever is to get your principal back. In our own terminology, keep ‘free tokens’ by selling once your holding doubles in price.
- Harness the power of long term investing. Fortunes can be made over a long period of time.
- We are living in an inflationary system. Prices eventually move higher.
- 95% of cryptocurrencies is crap, worthless, speculative.
- Crypto is the sector in which charting is, by far, the most important tool for investment decisions. Chart patterns in crypto are clearer and cleaner when compared to chart patterns in the stock market or commodities.
One of the key problems, other than too many and irrelevant inputs that investors expose themselves to, is the timeframe. Investors believe that crypto investing can be profitable very fast, presumably because of the ‘big pumps’ that characterize crypto price action. They forget that ‘pumps come with dumps’. They forget that ‘pumps’ make it very hard to find the ‘perfect entry price’. They forget that big pumps tend to trigger action by the human mind. They forget that you need a long term vision and strategy to overcome this problem.
Here is the point: our 7 investing tips are simple, very simple to understand. They are not easy to implement, consistently.
Crypto investing seems to be one of the toughest ‘easy things’ to do. Long term members of our crypto investing research service take a long term view and are very profitable because they understand the long term cycles and have learnt to be patient. We published the details about 30 tokens that we track in 6 categories (segments) which came with clear conclusions, short and medium term: Layer1 tokens, Web3 & NFT tokens, Defi 2.0, Big data & AI tokens, Web3 infrastructure tokens, Meme coins.