It is already more than four years since the beginning of my crypto adventure. This post is out of my experience and the many mistakes made. I am currently realizing how to design a better strategy and wanted to share the general concept, which in case you don't want to read is to hold Cryptocurrencies as a decade-long investment.
Mistakes were countless and the real problem was not managing to understand how my small investments could prove very wealthy with time. While when I joined I wanted to accumulate and hold for years, the previous bear market made me realize the huge risk I was overtaking by holding a large part of investments in Crypto.
In 2018, I deleveraged a lot and while I still had some profit after having easily reached my first targets, dreams of something better coming from crypto were quickly evaporated during the previous bear market.
Dealing with a damaged portfolio made me more conservative.
I wasn't pouring money in crypto anymore and no matter the buying the dip opportunities, I was investing with just 1/4th of what I used to back in 2017.
The problem was that in 2017 I had no idea how to treat the bull run, and I was also trading a lot like a newbie and losing trades too often. I had very little knowledge of the crypto market and I was even worse as a trader.
I managed to survive by pure luck because I still got in early and managed also to take some profit very close to the top in January 2018. It was luck that helped me time my entry and exit from the market correctly.
I deviated from my plan very often. It is not bad to make small alterations to our strategy, but sticking to the original is usually paying off way more and it is always a mistake to decisively alter our initial plan.
Also, it is a huge mistake having no plan at all or thinking that we can day-trade the crypto market easily. It is a huge mistake that leads to important losses. Even experienced traders that are profitable try to find an exit from their situation, as they always fear for the worst.
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When I entered Crypto, I had investing experience as I was also holding stocks at BoA- Merril Lynch. These stocks were part of my salary, given as a bonus by the company I was working for, which was listed in the NYSE. While colleagues were keen on liquidating this stock in fiat, I held for years, accumulated more and profited by more than 400% than they did.
However, stocks were not my cup of tea. The main reason was that I couldn't find a trusted third party that I could use except banks that were milking the customers with extremely high fees.
Just maintaining my account on the BoA-Merrill Lynch platform required a thousand dollars per year. Luckily for the first years I was using it, the company I was working for was paying those fees.
From day one, I had a plan to hold and increase my investment, but also to sell when it was to reach the desired heights. In between, crypto came into my life.
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Since 2017, I was investing in everything, Dogecoin, Bitcoin, Ethereum. Usually, during times of high volatility, all big exchanges were going down and trading was difficult. Sometimes even setting an order on Kraken required about an hour. Coinbase was also shutting down often and Binance was growing as it was a new, dynamic exchange, more stable, and offering a better user interface to trade.
A part of my thoughts was to keep up with the market volatility and another part was to withdraw before the end of the cycle. There was a time in 2017 I was losing money but the market recovered quickly and everything was pumping at the beginning of 2018. Any trade made then was profitable. I remember I even used exchanges like Livecoin and Cryptopia that were shady AF and made a good profit even from those.
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This was my way of trading and profiting from the market for the first two years. Not a great strategy though. If I invested and held all those cryptos I was buying at different times it would have been a different picture now.
Did I need the money I've invested so much? No, I was investing money that wasn't going to be invested anywhere else and wasn't required for my survival or well-being.
The big mistake was becoming frustrated by the losses in 2018 and not following a more risky plan when the market had bottomed. Moreover, in case I held my original investments I would be in hundreds of times more profit during this bull market.
For the first two years, I was in this market to speculate, gamble and profit in fiat. This is the mode of speculators.
There is also another mode. Investing.
Investing is not speculation. You believe in an asset and support it by funding it. Top investors have scrutinized the market and performed thorough research.
Bitcoin Cash top investors, for example, care about price fluctuations, but they are not moved by volatility. Investing is also about diversifying into multiple assets. You can't put everything in Crypto, this increases the risk of blowing your investment fund.
Investing means you have grown thick skin and emotions do not cloud your judgment. You don't listen to fud/fomo and just stick to the plan. It can take five to ten years or even more. There are investors that only sell when they have enough to retire. Everyone sets targets and when they have met we proceed accordingly.
But when numbers don't add up, as with the case of Dogecoin recently, then an exit plan should be ready. Profiting is important and getting out of an overvalued asset that has very few fundamentals is necessary.
The timing of our entry is also important. For Bitcoin Cash, I am expecting in the next two to four years to become even more adopted than it is today and potentially be used by millions, for their everyday transactions. The fundamentals are there and with the introduction of tokens on the main chain and sidechains like SmartBCH to offer financial services like DeFi, will definitely increase Bitcoin Cash utility and share of this industry.
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Bitcoin Cash is currently at an average price level that is not extremely high and should be considered a great entry. However, it is also subject to the market swings and sentiment. This effect with time will lessen as the network adoption increases.
We can invest and set targets and when reached we can sell for fiat. But there is another way. Some cryptocurrencies will reach a very wide adoption level.
Finding these and investing for a longer horizon (5-10 years) is important. Not allowing influencers and mainstream media to cloud our judgment is the way to succeed in the long run.
Lead Image from: Unsplash (Free Download, by: Mathieu Stern)
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As a newbie in this flatform and in BCH in general I thank you for all your effort to make this article it is such a good advice and a reminder to a newbie like me. I wasn't involving myself to buy and sell yet but I know I must ready myself soon. For it will happen sooner or later.