Over the years while being involved with crypto I tried many different strategies and while some of them worked out great there were some which turned out be outright disastrous. Whether good or bad all these outcomes gave me new insights.
Based on these experiences I would like to share some principles I follow to keep building up my crypto portfolio.
I. Thou Shalt not become a No-Coiner!
Once you start investing in crypto then sooner or later you would come across a situation where one of the coins you are holding suddenly does a 5X or 10X or perhaps even more. You would be faced with a strong temptation to sell your coins and you begin fantasizing about how you can splurge those gains on the new iPhone or Playstation you had your eyes on.
I am not asking you to never book your profits, in fact I strongly recommend booking profits regularly but in a planned and controlled manner. You should not sell off 100% of the coins no matter how big the gains. The strategy I follow is to book profit by selling 20-25% of my holding when a coin does a 10X on my initial investment. I also set aside a part which I plan to HODL long term for 10 years more. For instance I keep a part of my Bitcoin in Trezor which I never touch no matter how high the price goes.
If you sell off all your coins then there are high chances you will really regret it during the next bull run when you see the coin you sold off at 5X is now doing a 100X. There are innumerable stories of people who sold all their Bitcoin when it moved from $100 to $200-$250 and they though it was a great move at that time.
A recent example is the Uniswap airdrop of 400 UNI tokens. When the airdrop was done each UNI was worth about $3 and most of the people I knew sold off all their tokens. I was also a bit unsure how this would unfold in the future and what if UNI collapses as more people start selling. I finally decided to sell half of my UNI and HODL the other half. That worked well as UNI is now worth more than $20.
II. Remember to store your valuable crypto in a Hardware Wallet
Many people don’t invest in a good hardware wallet thinking it’s too expensive and not worth the money. Some people think they are not going to invest too much and crypto and hardware wallets are only suitable for big whales.
In my opinion everyone who believes in crypto should have a hardware wallet no matter how small their holdings. My first Bitcoin purchase was when I got 0.1 BTC for $600, I immediately ordered a Trezor which cost me $150. Many friends ridiculed me saying why I am spending so much money to store such a small amount. That 0.1 BTC is now worth more than $5,000 and remains safe in my Trezor.
Considering how advanced the hackers are getting I expect more hacks to happen once the coins gain more and more market cap. It is an essential investment to buy a Trezor or Ledger to ensure safety of your coins. My personal recommendation would be Trezor.
III. Honor thy Risk Tolerance!
Chances are high that you will hear about crypto for the first time during a massive bull run. Most of the popular media platforms ignore crypto during the bear phase and put all their focus during the bull runs. This makes a newbie think that crypto is a get rich quick scheme and some people invest huge amounts without doing an assessment of what kind of risk can they manage in case of a sudden correction.
During the last bull run of 2018 many new entrants took loans to join the bull run and were devastated when the market crashed. They are the people who sold out at a loss and later claimed that crypto is a ponzi scheme.
Always invest in crypto with what you can afford to be locked for 5 years or more as in the long term crypto will surely outperform all asset classes but it can face short term corrections. Never invest money which is meant to service your regular living expenses.
IV. Thou shalt DYOR!
When you are new in crypto if you search about any topic you will always get a wide variety of responses. Some people will claim $1M BTC by year end, some will say it has reached it’s limit and some will even claim it is doomed to crash to $0 soon.
Never be influenced solely on what one person says. Always do a detailed research before putting you money in a coin. Try to gain as much info as possible on the project from multiple sources like their whitepaper, project blog, team credentials etc.
Just because a popular youtuber with 100K followers is claiming a coin to do a 10X by next month does not guarantee the gains.
V. Thou shalt keep an Open Mind!
Crypto is not like traditional asset classes like Bonds or Commodities it is a very nascent and evolving environment. You can not buy 1 coin and forget about it. To get the true crypto experience you need to experiment and play around with all the new offering that come up like Crypto based games, NFTs, DeFI projects etc. You also need to watch out for new projects based on new technologies which might have the potential to disrupt the one coin you are holding.
Being active on Telegram or Discord groups of the projects that you find attractive will give you the added benefits of members only airdrops and bounties.
VI. Thou shalt have Fun!
Last but not the least don’t take it so seriously that you get so involved by each market move that you can’t differentiate which is more stressful between crypto and your 9 to 6 job. Try to share your experiences on crypto platforms, vent your frustration about the coin that bombed or turned out to be scam or the new hidden gem you have discovered. Try out new platforms and projects and find out for yourself which ones you find most engaging.
If there are any other crypto related philosophies you follow do let me know in the comments.
Cheers,
SamBTC
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