Dr. Pawel LachowiczMany times you ask me not only what is the best crypto to invest in but also what are the best rules one needs to folow to become a good crypto investor. A really good question! I’m glad you asked! Here is my best advice.
1. You make a decision you gonna be an investor.
Lots of people hesitate to go into crypto-market as they are feared by a sudden loss of money they put into the game. Very often the first attempts are painful. They lose a lot. I would say, following the classics, there is no reward without the risk or who doesn’t risk he doesn’t drink a Champaign. I know. It’s easy to say. But first things first. You need to decide to become an investor. Making that decision puts you in front of the rest. We are all here to make our life better, so taking no risk and keeping your savings for the best moment of your life can be more risker than you think. Think clearly. The inflation eats your savings on your bank account reversely proportional to your hopes that they will be worth the same dollar amount as they were a year ago. Not true! Investing makes your money work for you. This is a golden rule. Don’t get me wrong. It was Albert Einstein who made a note that a compounding interest can turn your \$1 into \$1000 only if you stick to the flow of time and wise decisions made today. People who invested in Bitcoin a year ago, now enjoy +139% gain as we speak. They made some decisions and it paid off. Certainly, it’s not always as pinkish as it is. If your bank tells you they they will pay you +2% in a year time on your savings account, think twice.
2. Do your research on the assets that would be profitable in 5 yrs from now.
The crypto-market is developing fast. Really fast. This is up to you to do your homework right. Focus on the crypto-assets that at the top of the list (e.g. CoinMarketCap or DeFi Market Cap). Some of them have a reason to be at the top. Don’t make a swift investment decisions. Approach the subject like Warren Buffett did many years ago with the stocks. Read absolutely everything on a specific crypto-asset what you can find. Weight your hopes and greed with the proper risk levels. Understand the business, technology, the world of trends, first. Being a good investor is being a knowledgeable investor! Some crypto-businesses are full of hopes! They emerge as the mushrooms after the rain. There are myriads of them out there today. That might discourage you at the beginning. Read, study, understand the fundamentals before you decide to invest your hard earned money into these assets. Knowing is better than buying an intra-day bullish trend which occurs to turn red before the Sun does down. Unfortunately, it’s so true in crypto-markets!
3. Buy a share of each valuable asset at the best time.
Once you decide what to buy (or invest in), this is just a first step. Trust me, many people even do not reach that point! Timing is a key. So, be keen to learn and study the current trends of trading of your assets. The experienced investors always say: We buy too high, we sell too low. They make the same mistake over and over again. So, don’t worry too much if you miss the right time. It happens to all of us. We try our best. Some say, buy the dip. Often it pays off. Sometime it doesn’t. Lots of cryptocurrencies are highly correlated to what happens to Bitcoin. It drags them down. But practice to be smarter. Engage your quantitative potential and learn to observe the market to spot the opportunities. It’s not easy. Do not follow rigidly the rules of big triangle as they can be misleading. For example, in BICO/USD trading today (Dec 2/3, 2021) any breakout from the downtrend failed and you could put your money at any moment hoping for a reversal:
Sometimes you lose, sometimes you learn. Technical analysis is helpful but not a winning strategy every time. Learn it but be careful. Not every asset will bounce back. That brings us to Rule #4.
4. Don’t invest in the asset you don’t understand.
There are supernovae in the crypto-markets. They shine very bright for a day and fade. Once you check a newly introduced asset to the exchange, it is already over 50%, 100%, or even 200% up. Their temporary value is high what makes you think buy now as it will go higher. So you open a long position and suddenly it turns down. Some people call it pumping the price up but the fall can be as painful as -50% in a matter of a few hours. Do you want to be a part of that process? Think always long term. Study before riding the wave. It can be mortal for your money in a blink of an eye.
5. There is nothing wrong in saying +10% PnL gain is enough for me today.
There is no better way of setting a daily goal in reaching certain level of positive Profit/Loss (PnL) and close the position. The whole crypto-market is like a tropical rain in Singapore. You walk the street and the Sun is shining. Suddenly, out of nowhere, it rains, and it heavily rains. The opportunities to earn next +10% are waiting out there. It is a matter of you practicing the patience, observing the whole market, and seizing the opportunity when it arrives. It will take time. Don’t rush. Before you buy, step back, analyse the situation, the global crypto-market. Then decide what to do.
So, What is the Best Crypto to Invest In?
Do your homework.
Good luck!
