3 crypto trading strategies that are similar to investing in stocks
- A long-term investor suggests treating crypto like a 401 (k), regularly investing small amounts.
- Buying crypto and forgetting about it is a more effective strategy than day trading.
- Make informed decisions about the usefulness of each piece instead of blindly following the hype.
- Read more stories from Personal Finance Insider.
Some people think cryptocurrency is a shortcut to getting rich, but it’s not always that simple.
Crypto expert and studio director NFT CALV! N at Purebase Studio started mining and buying cryptocurrency in 2013, years before apps like Coinbase and Gemini gained popularity with the masses. Because crypto investors can be vulnerable to theft and violence, CALV! N uses a pseudonym to protect its assets and physical security. Business Insider has independently verified his identity.
âIt was a whole different world back then,â he says. “There weren’t any exchanges that let you easily connect your bank account or store crypto.”
CALV! N and its business partner made additional profits from their business and bought bitcoin and litecoin, and started mining dogecoin. He spent $ 4,300 on mining equipment, $ 1,700 for the first month on utility bills, and started investing a few dollars in bitcoin and litecoin. âIn 2013, we mined around 5 million dogecoins, but it was only worth a few hundred dollars, so we were losing a ton of money,â he says.
CALV! N has stopped mining dogecoin and stored it in a crypto wallet. He turned to other companies, completely forgetting that he even had 5 million dogecoins in that wallet. By the time he got the wallet back in 2017, it was worth $ 65,000.
Between 2013 and 2021, CALV! N relied on very successful transactions to build its portfolio, investing only five figures in total over the past eight years. Now his wallet is worth millions.
CALV! N has shared three long-term (and stress-free) investing strategies for people looking to build wealth through cryptocurrency – and they’re not all that different from the best tips for investing in the stock market.
1. Invest only what you can afford to lose
âUnless you’re a professional stock trader or someone who watches charts 24 hours a day, I would keep it simple,â CALV! N said.
Just as financial planners generally don’t advise investing the cash you’ll need over the next five years (the time horizon is too short to make up for losses), CALV! N cautions yourself against buying yourself. bitcoin: buy crypto with the money you need for a living today. “
You shouldn’t be sacrificing your quality of life just to buy crypto, and if you do, you might not be in the free space to make rational decisions about your investments.
2. Buy it and forget it
âToo many people are trying to make that 300x gain happen in a week or a month, and it could happen. But for the majority of people, it doesn’t happen that way,â says CALV! N. “A lot of people who have billions or hundreds of millions of crypto are people who have held it for seven or eight years.”
He says this strategy far outperforms day trading. âMy friends and I pooled our resources to buy 40 bitcoin at the start of 2020. Our initial investment was $ 280,000 in total and it is now worth over $ 2,000,000. We could never have won this genre. money through trading. “
He suggests treating crypto like investing in a 401 (k) for retirement: slow and steady over time. If you can afford it, start by investing as little as $ 10 on each paycheque, “whatever the cost.” he says. This is a traditional investment strategy called dollar cost averaging, which helps manage risk. Plus, it’ll save you the emotional roller coaster of checking out the market every day – it’s never a good idea.
3. Know what you are investing in
Find out about the purpose of each coin (or token) – what people actually use it for – before diving in.
Ask yourself: can this project change the way people interact with technology in the future? Do I see myself using it in the future? If the answer is no, don’t invest in it.
It’s the same approach you might take for the stock market, investing in mutual funds, ETFs, or retirement accounts: invest in stocks you understand and leave the speculation to the pros.
For example, the use of bitcoin is to store value, much like gold and silver. The utility of Ethereum is to execute smart contracts that provide fraud protection to its users. And there are coins that are all hype and useless, but can offer great rewards.
No matter how you invest, it’s important to make informed decisions without getting lost in the hype.