Cryptocurrency Investment Strategies

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The first few years of cryptocurrency existence was encountered by slow growth. Most people ignored it as just another passing shoddy scheme. While futurists and technicians could see the potential of the new currency, it didn’t draw much interest as an investment instrument. Today, it is pretty hard to miss hearing about cryptocurrencies and associated opportunities. 

You need not be a super techie to realize that businesses, banks, and savvy investors are cashing on digital currencies. If you have been on the sidelines for long, then you have probably asked yourself: Is it too late to get started with crypto? Did the Bitcoin bubble burst? Well, these are valid questions, but we cannot deny the fact that the crypto industry has stood the test of time. While major currencies like Bitcoin are yet to reach the 2017 heights, they have proven that they are neither a fad nor a bubble. 

Have a Crypto Investment Strategy

Investing in cryptos requires a level of diligence that isn’t completely different from research and analysis in other conventional asset classes. But you should note that the crypto market is highly volatile. To be able to handle unexpected price swings, you should have a hardcore stomach and a solid strategy. Actually, the key to success with cryptocurrency investment is sticking to a specific strategy. So, what is the best investment strategy? 

Well, there isn’t a one-size-fits-all strategy that can be adopted by everyone. Some prefer a long term, hands-off approach to investing, while others are comfortable with the rapid buying and selling of currencies. That is why it is critical to understand your risk appetite. Investment in crypto can seem complicated, but it is straightforward when you break down your strategy into steps. Disciplined and skilled investors are mining big profits over time, while gamblers and noobs are always unstable. 

Here are cool tips to improve your strategy.  

1. Get the Basics Right
Before jumping in, take a bit of time to educate yourself on crypto trading and then develop a strategy. What is your knowledge of Bitcoin and blockchain technology? Do you know about wallets, exchanges, public keys, and private keys? Are you familiar with terms such as total supply vs circulating? 

2. Decide on your source of funds. You definitely don’t want to fund the portfolio with debt. As an investor, you have two main options to fund your crypto account: fund with a bank transfer or use a debit/credit card. 

3. Take care of fiat to Bitcoin exchange. First, it is necessary to know which cryptocurrencies you wish to trade. To maximize profits and reduce risks, choose exchanges that have high trading volumes for the chosen currency. You should also consider exchanges with diverse cryptos or altcoins to gain exposure to the crypto market and diversify your investments. Popular options include Binance, Coinbase, Bitfinex, LocalBitcoins, Kraken, and Coinmama. 

Before buying any crypto, select the right wallet. Crypto wallets will allow you to store your cryptocurrencies. Most exchanges will let you store purchased coins in specified exchange wallets, but it is better to keep your coins in private wallets. This way, you are safe from theft and hacking.  

Crafting Your Crypto Trading Strategy

Once you have identified the right exchanges and wallets, formulate your investment strategy. But you have to take into account these key deciding factors.

Trader Durations: If you have several spare hours to monitor and analyze price swings, a shorter and medium-term strategy would make sense. 
•    Typically, large coins should form a huge part of your long-term strategy. However, with proper research, you can include smaller coins.
•    Small coins tend to be volatile but can increase earnings intraday. But you should limit them to 20% of the total investment pool.  
•    For medium-term strategy, which is usually less than a month, try a mixed portfolio of both small and large-cap coins. 

Cryptocurrency selection: To address liquidity issues, strike a blend of smallest to largest cryptos by market cap. For cryptos that have values exceeding the intended investment, try to identify exchanges that offer partial investment of crypto or CFDs. 

For any strategy that you choose, always use indicators and risk management tools. These tools will allow you to use stop losses and trade profit, therefore, protecting your downside. 

Sound Investment Strategies

Hold is a common term used in Bitcoin investment circles. It means hold on for dear life. The slang dates back to 2013 when Bitcoin was retracing deeply. With HOLD, an investor buys a steady coin then holds it for a little longer. Surprisingly, of all the crypto investment strategies, HOLDING has proved to be the most profitable one. 

2. Buy the Dip or BTFD
If you have been in the crypto community for a while, then you must have heard this term. It simply means buy low and sell high. Simple as it is, many people still don’t use this strategy effectively. The most challenging part is what to purchase in a dip and when. Just because the price of a coin has fallen by over 20% doesn’t mean the market will recover. Sure it will recover for some popular coins.  

Here are quick tips for managing volatility:
•    Use trends to your advantage: To get it right with BTFD, ensure the big picture is a bull market. 
•    Purchase in batches: If the price of a promising coin is dipping, don’t invest all your money at once. Be patient and buy in batches.   
•    Be alert: In the crypto market, price swings are very common. So, a smart investor would set aside some cash to buy more crypto when the situation is ripe. 

3. Dollar-Cost Average
Dollar-Cost Average (DCA) is a straightforward strategy. You start by setting aside the money you intend to invest, and then invest equal portions at regular intervals till you hit the initial goal. For instance, you can invest $150 every Tuesday for the next 12 weeks. You will find that on some Tuesdays, the prices will be high. 

4. Copytrading
Copytrading is a new strategy in the crypto space, but it has been applied successfully in traditional financial markets. With Copytrading, inexperienced traders can monitor investment moves of successful traders and then copy. This strategy provides them with the opportunity to learn while also profiting from low-risk opportunities.

In fact, there are platforms such as E-Toro that focus on social trading. These platforms enable traders to monitor the financial trading activities of other traders. 


Trading in volatile markets such as digital currencies can be a challenge, but you can minimize the risk by sticking to a proven strategy that fits your situation. So, do not fear to step out. After all, all investments come with some risks. 

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