Guides Archives | CRYPTOCURRENCY INVESTMENT AND TRADING

crypto coins do your research and make your diligence

Oliver R. George
July 29, 2019
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Make Your Due Diligence

Make Your Due Diligence https://cryptocurrencyinvestment.org/wp-content/uploads/2019/01/crypto-coins-do-your-research-and-make-your-diligence.jpg 1200 668 Oliver R. George Oliver R. George https://secure.gravatar.com/avatar/18ade14b50c751107b6494391f4fc8b2 July 29, 2019 July 29, 2019

It’s a great time for risk-conscious investors.
Venturing into the blockchain technology can be daunting but exciting at the same time.

We wish you that you make lots of money investing in cryptocurrencies, tokens, etc. whilst being aware of the real risks and dangers. Cryptocurrency Investment will support the community with News, Research and reports.

The questions you should minimum ask before you invest:

What issue does the coin solve?
Is the coin really needed? Does the token have any utility?
What is the token economics? Why should the value increase?
Why does the company need blockchain? Really needed?
Is the management qualified? What is their experience? Who are the advisors?
What are the credentials of the team of developers?
Do they have competitors within the space?

Quite simple: Investing in the coin’s fundamentals and not the hype, sets you up for the long term, and most importantly it gives you confidence since you’ve made your decision based on your own analysis.

cryptocurrency token coins do your research and diligence

The best way to protect your money and investment is to acquire the skills and knowledge needed to make informed investment decisions.

Trusting an unknown third party is high risk. If you need someone to invest for you, make sure you ask questions to verify their credibility. There’s no such thing as earning fixed returns when investing in cryptocurrencies. Don’t fall for the various scams or Ponzi schemes which Cryptocurrency is full of.

Importance of Due Diligence

One of the most fundamental skills that new investors must possess is the ability to identify cryptocurrencies that are backed by solid fundamentals.

There are over 3000 coins and crypto tokens available, and there is, unfortunately, a tendency for new investors to overlook the fundamentals of the coin and make investment decisions based on hype (FOMO). This is especially common since many don’t understand the mechanics of the coins they invest in.

The hype is not bad at all. You can make some solid gains buying tokens based on hype, but there’s a very high chance that it could backfire and you could get burned. Be patient. There are and will be numerous opportunities to make money with cryptocurrencies

Relax, be patient and wise to acquire the right knowledge before investing. Don’t be the person that invests based on the current hype in a FOMO mode.

Keep calm. Don’t fall prey to irrational excitement; you can get burnt very easily, if you don’t know what you’re doing.

Always do your research first. Check several sources. The website and the company twitter handle are not enough. If it’s too complex, look for answers and ask. Reddit, Twitter, Telegram groups, the entire cryptocurrency community is filled with awesome individuals that can simplify things and help you along the way.

Know that there are plenty of opportunities to make lots of money in the cryptocurrency market, and they don’t run away. What sounds like a good investment idea today, will not disappear tomorrow.

Investing is exciting and very tempting when we see markets soaring.

Do your research first!

absolute beginners guide cryptocurrency investment

Oliver R. George
June 2, 2019
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The Absolute Beginner’s Guide to Cryptocurrency Investing 2019

The Absolute Beginner’s Guide to Cryptocurrency Investing 2019 https://cryptocurrencyinvestment.org/wp-content/uploads/2019/01/cryptocurrency-3412302_1280.jpg 1280 673 Oliver R. George Oliver R. George https://secure.gravatar.com/avatar/18ade14b50c751107b6494391f4fc8b2 June 2, 2019 June 3, 2019

Before we start: Please note that this is not investment advice and not a solicitation to buy or sell a cryptocurrency asset, coins or tokens. Since cryptocurrencies are a new asset class, references are made wherever possible. All statements are based on publicly available information and the author’s experiences. The author and The Coin Research have not received any payments from third parties to promote this article.

The blog will focus on Cryptocurrencies as we experience them in daily life. If you are interested to learn more about the blockchain technology behind cryptocurrencies, please refer to this Blockchain TED talk introduction video.

Like every beginning: When you first start with a completely new topic like cryptocurrency, you get overwhelmed. How to start and where to start? What keyword to search in Google? Where do you find helpful resources to learn more? This cryptocurrency learning guide is developed for beginners and it will take you max. 30 min to get through it. It will give you a solid first impression about what you can expect from the new world of cryptocurrencies.

Let’s just start the journey. Enjoy the learning experience. This journey might change your thinking about money, value transfer and potentially lead to a new future in your life.

Development of Cryptocurrencies

Cryptocurrency is still at a very early stage. However, among the millennials and with a huge distribution of computers and mobile phones, the technical knowledge of the population increases. This is driving the adoption of the crypto as a potential store of value. The concept of cryptocurrencies receives high acceptance among the younger population and has the potential to boom in the future. Crypto has been pushed by media along the all-time high from Bitcoin and Ethereum, two of the leading cryptocurrencies. News help to drive awareness and might turn skeptical people into “involved” who are slowly understanding the technology and thinking behind digital money.

Since this is a very young industry, market development is very volatile. Coming from a market capitalization of nearly not existent, it went over $500 billion and is at 119 billion at the time of writing. It’s impossible to estimate, where this will be in a year from now. However, over 3,000 different cryptocurrencies have been launched and around 2,000 are trading on the crypto exchanges.

Introduction into the Ecosystem Cryptocurrencies

In this article, we mentioned it already and you will have heard of Bitcoin and so-called “Altcoins”. Bitcoin is the legacy coin of the cryptocurrency ecosystem. It’s although not the first crypto coin, that has been invented. However, all the coins before Bitcoin failed because of technical challenges. Since the software and protocol of Bitcoin is Open Source, everyone can use this software to produce a new Bitcoin-like cryptocurrency. These new coins are called Altcoins (Alternative Coins). Whether the Altcoin is based on the Bitcoin blockchain or a completely different blockchain (like Ethereum) it falls under the same definition, to be an “alternative coin to Bitcoin”.

Splits of a blockchain, to create a new cryptocurrency, are called forks. The forks or clones of Bitcoin or a different blockchain aspire to serve different areas, aiming to be ‘better’ to address and solve a specific issue. Still, Bitcoin is leading the market capitalization in the crypto ecosystem and is by far the largest cryptocurrency. At the time of writing, Bitcoin dominates with 52.6%.

Cryptocurrency and Fiat

The money we use every day (like US-Dollar, Euro, Yen, etc) are called “Fiat” in the crypto communities. Fiat does not refer to the Italian carmaker, but to the official definition of the word in the English vocabulary (Fiat) and means “decree”, “edict”. Fiat money is a currency that has been established as money, often by government regulation. The Fiat currencies have been digitalized in the cryptocurrency space and they relate 1:1 to the formal official money.

Do not get puzzled with the concept of cryptocurrencies. Although cryptocurrency includes the word currency, when you purchase Bitcoin or Altcoins, you are in fact buying some participation on a blockchain project or company. You are not buying a currency in the traditional understanding. The value of a cryptocurrency can change significantly. The cryptocurrencies you buy are more comparable to a very high-risk stock participation, although they lack the qualities of a stock and the regulation and consumer protection behind it.

Cryptocurrency Exchanges

As mentioned, there are over 2,000 cryptocurrencies available and counting. Buying and selling of cryptocurrencies happen on specialized exchanges. These are different exchanges compared to the well-known stock exchanges, like Wall Street, NASDAQ. Crypto exchanges are websites where you may buy and sell your cryptocurrencies, using fiat money.

A short introduction into Cryptocurrency Exchanges

To start with: there are 2 types of crypto exchanges. Centralized exchanges and decentralized exchanges.

The difference is: in a centralized exchange, you deposit, trade and withdraw your cryptocurrencies with a centralized company, via a trading system. The centralized exchange factually “owns” your crypto, while its there. It’s fully under their control. This has become an issue several times in the young history of crypto. Exchanges can get hacked and you can lose your money. The famous Mt Gox hack is only one example, where 740,000 Bitcoin has been stolen. A staggering value of over $500 million.

In decentralized exchanges, you own your crypto. You transfer it to the blockchain, where your trade (buy, sell) will be listed and mined. The risk of losing your crypto is significantly lower and is in line with the risk of the specific blockchain to be hacked. However, decentralized exchanges are still very new and experimental in some cases. They have less liquidity compared to central exchanges and the user experience is not far developed yet.

There are several indicators to estimate the reliability and quality of a crypto exchange. Important is the availability of trading pairs, like Bitcoin to Fiat, Bitcoin to Ether, etc. Not all exchanges trade all available cryptocurrencies. Secondly, its the liquidity of the exchange, this means how much volume is the exchange trading in a specific pair. As the last point, you must consider pricing spreads, fees, limits to purchase and withdraw, security topics, insurance of your crypto, user-experience. Always have a look at the contact area of exchange. Very often they share no official contact address, are located in “legislation friendly” and “tax haven” countries, with zero regulation.

Best cryptocurrency exchanges for beginners

We recommend 2 crypto exchanges, that we find appealing for beginners. Coinbase and Binance.

By far the number 1 for newbies and best cryptocurrency exchange is Coinbase. It has a beginner-friendly user interface, very similar to your online banking or Paypal, and unbeatable insurance of your crypto deposits.

Number 2 on our list on crypto exchanges for beginners is Binance. Binance is more complex than Coinbase. It covers a significantly wider range of trading pairs and offers an advanced modus for passionate crypto traders. The user interface is a bit more complex and less intuitive, however, most beginners have no issue using it immediately.

The onboarding process is very similar to all exchanges. After setting up an intermediary exchange account, you will be required to go through a “Know Your Customer (KYC)” process to verify your details with Coinbase and Binance. You will need some more details for Coinbase, since they are a regulated exchange. Binance has fewer requirements and as well as less protection. Now after you finalized the KYC process, you are only six simple steps away from a Bitcoin or Altcoin purchase:

Transfer Fiat money to the exchange (or use your credit card)
Access the “Buy/Sell Bitcoin or Altcoin’ tab
Select the payment method using the drop-down menu
Enter the desired amount of cryptocurrency to buy or sell
Click “Buy or Sell Instantly”
View your credited or sold Altcoins on your dashboard

Now you own your first Bitcoin or Altcoin. You can trade different pairs, transfer it to other exchanges or to your hardware wallet. Note, however, that the transfer of crypto between different parties costs a small amount in cryptocurrency. Costs are far lower than real bank transfers, however, you need to monitor these. Transfers are not free and exchange might charge you a withdrawal fee.

Next steps in your “career as a crypto trader” could be that you onboard on other exchanges, like Bittrex or Bitmex. Bittrex is comparable to Binance, Bitmex, however, is a trading platform that semi-professional traders use. (Check it out and sign up with Bitmex)

When signing up on these exchanges for the first time, please consider that the verification process on these exchanges may take several hours or some days, and purchase/withdraw limits may only increase gradually as you trade.

An additional point for funding or withdrawals: the US Dollar is the most common Fiat currency used by exchanges. If you are using a currency other than US$, do check out the exchange’s funding and withdrawal policy. Note as well that some exchanges might have regional restrictions and e.g not serve US customers, due to applicable legislation.

Cryptocurrency Wallets

In the crypto ecosystem, your wallet is similar to your bank account in the real world. This is the place where you store your Bitcoin or Altcoins. All exchanges have inbuilt online wallets to receive, keep and withdraw cryptocurrency. However, as mentioned above, it is definitely not recommendable to store big quantities of crypto on exchanges, due to safety concerns and hacking risks. We recommend storing your crypto offline in a hardware wallet like Nano Ledger or in an online paper wallet like MyEtherWallet. Both serve the purpose of removing the exchange platform risk, at the cost and hassle of taking up the responsibility of keeping your cryptocurrency safe.

Our preferred offline hardware wallet is the Nano Ledger. A simple user interface, well documented and a good fit for most users.

To transfer your cryptocurrency from exchange to your hardware wallet, simply follow this very simple process, using Coinbase exchange and Nano Ledger as an example:

Plug in your Nano Ledger USB cable
Open your Ledger Live Software (a Software from Ledger to simply manage your crypto)
Find your wallet address on the Nano Ledger Live Client by clicking on “Receive Crypto”. Software will show your receiving address.
Access Coinbase ‘Send/Request’ tab and input your Nano Ledger wallet address
Confirm the amount to transfer and click “Send Funds”

We always recommend testing the address and system working first. Therefore transfer only a small amount first to test it. In blockchain and cryptocurrencies, mistakes in the transfer process (e.g. wrong receiving address, sent Ethereum to a Bitcoin address) can lead to the loss of your crypto.

The Coin Research teams recommend using hardware wallets. Not only because you have a tangible item with your money, but mainly because it is safer, compared to “hot” online wallets. However, you have the risk of losing the wallet. Therefore it’s important to not your key and keeps it extremely safe. You can recover your crypto with the key if you lost your wallet.

Investments in Cryptocurrencies

Cryptocurrencies are a new asset class. the companies operating in crypto are very young and do not have a long term record. The business is partly experimental and blockchain developments have exponential growth, on the technological side. Based on the unknown developments and insecurity in the sector, the prices of crypto have extremely high volatility. Investments in cryptocurrencies are therefore not suitable for every investor, because of the risks involved.

Cryptocurrency as a Percentage of Your Investment Portfolio

This is not investment advice and we can not evaluate your personal situation. Please speak to a financial advisor, before you invest.

Generally speaking, cryptocurrency investments have the potential to realize many “get rich fast” stories, but the risks involved and the volatility makes it unpredictable. To be on the safe side: whatever you invest in crypto, you should be prepared for losing it. Emergency funds, pension funds, retirement reserves should never be invested in cryptocurrencies. The upside to gain is huge, but it comes with lots of risks and may put you under emotional stress. The emotional pressure and stress to lose 20% per day is something you should consider before you jump in this adventure.

For a conservative investment portfolio, we would suggest the following:

People below 25 years, not married, no kids: maximum 20% in cryptocurrencies and 60% in traditional stock investments, 20% in cash (depending on investment cycle this could be higher or lower)
If you are between 25 – 50 years old, married an maybe with kids, maximum should be 10% in crypto and 60% traditional investments, cash 30%.
Over 50 years old, you should hold a maximum 5% in crypto, and 75% in traditional stock investments, funds or similar.

This rough calculation considers the different live phases people are generally in. It reflects the financial responsibility or burden one might have and the risk associated with investment in crypto. It is definitely not a clever idea, to maneuver yourself into a paycheck by paycheck life and to risk the funds acquired to und your house, kids college or retirement.

How to identify the right crypto investment opportunity? What crypto coin should I buy?

There are several approaches to identify cryptocurrency investment opportunities. these are two types of analysis that investors generally do. Technical Analysis and Fundamental Analysis. Most of the high-frequency traders and day-traders we know are good at technical analysis and most of the investors look more into the Fundamental Analysis. Best investors usually do a mix of both. They use the fundamental analysis to understand the basics of a project and the technical analysis to decide the purchase point/price point.

What is Fundamental Analysis for a cryptocurrency coin?

Fundamental analysis is the study of the fundamentals of a project that you are investing in. It involves intensive researching about the project, the company, the team behind the company, their previous achievement, the business area they are working in, the real world problem the project is trying to solve, the roadmap and commitment to it, the financial abilities, the development team, the technical struggles, and much more. The research form The Coin Research Team is mainly focused on Fundamental Analysis.

What is Technical Analysis for a cryptocurrency coin?

Technical Analysis is the art of reading charts. Basics are to read a pattern in the charts, trade on a pattern and hope that the price development follows your estimated pattern. It is founded on the principle that price action tends to repeat itself due to the collective, patterned behavior of investors.

Sounds complicated? It is!

This is why The Team Research offers a set of researched reports for cryptocurrency investors. We analyze the fundamentals of projects based on the proprietary Cryptocurrency Valuation Modell from The Coin Research. Based on these we can estimate developments of crypto coins and make researched and founded recommendations.

In addition, the coin Research offers a comprehensive Risk Management guideline for every coin, to address the volatility and reduce losses to planned and calculated levels.

How to get more Crypto? Trading and Investing in Cryptocurrency

You might have your first Bitcoin and want more. There are several ways to get more crypto. Trading, Mining, Stacking are a few of them.

Trading and investments in cryptocurrencies are quite simple. Once you understand the basics of the crypto world, it’s as simple as buying stocks and trading options or other investment instruments.

Short Term Crypto Trading with Margin

For the experienced stocks and forex traders, the trading with margin on crypto is not new at all. Crypto trading with margin follows similar principles. For the new crypto investor, however, this requires a bit of learning and a short brief up on how to make a margin / leveraged trade.

It goes without saying, that short-term trading takes advantages of incoming news or trend development to make some quick money. If you foresee the development of a coin based on maybe some good news or announcements, you could open a long leveraged trade and see how it goes. Like in the real world: you have to be fast and buy the rumor, sell the news. Take the profit, once you have it and be very disciplined with your trading strategy if you wish to make a profit with short term margin trading.

Mining of cryptocurrency coins

If trading is not your world and you like more the computers and software, mining could be the way to earn some crypto. However, due to very high difficulty levels for most blockchains, you might need high tech equipment to be competitive. Mining involves setting up a rig of computers, consisting of Graphics processing units or Computer processing units and quite high investment in the electricity. Mining with a regular PC or Laptop is technically possible, but for most blockchains not worthwhile. The computation power of a standard computer is far to low and electricity costs will be higher compared to the crypto-coin rewards you will get for Proof of Work Mining.

Staking of Cryptocurrency to earn more coins

For Proof of Stake blockchains, the staking is the comparable version of “mining. As a matter of fact, it’s not mining at all, as it requires no mining equipment. You get a reward for staking your coins and participating in a governance model of the blockchain. Very similar to the dividends you might get for holding a stock. The reward rate and staking method differ greatly among Proof of Stake coins, but in general, it takes less effort as compared to mining.

Further Helpful Resources for Beginners in Cryptocurrencies

The best place to check your coins value is Coinmarketcap.com You will find the actual price of your coins at different cryptocurrency exchanges. As well as links to project details, community, twitter handles, etc. A good source of information is the coins’ subreddits for news and market sentiments.

The Coin Research Team wishes you success and researched investing. Do your own diligence before you invest or check the reports in our member’s area.

cryptocurrency investment coin research what you must know before you invest in crypto

Oliver R. George
June 1, 2019
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Cryptocurrency Investment: What You Must Consider Before Investing in Crypto

Cryptocurrency Investment: What You Must Consider Before Investing in Crypto https://cryptocurrencyinvestment.org/wp-content/uploads/2019/01/coin-research-what-you-must-know-before-you-invest-in-crypto.jpg 1200 736 Oliver R. George Oliver R. George https://secure.gravatar.com/avatar/18ade14b50c751107b6494391f4fc8b2 June 1, 2019 June 9, 2019

When it comes to cryptocurrency investments, one of the biggest challenges for investors without a professional trading background, is not getting caught up in the hype. Cryptocurrencies have quickly risen in market cap and public attention, even as analysts have cautioned investors about their volatile nature and unpredictability.

Cryptocurrencies investments are a new asset class with extreme volatility, high chances combined with high risk. We prepare you for your first cryptocurrency investment.

First Step: Get a Feeling for the Crypto Industry

This is particularly important for those investors who are new cryptocurrencies, it’s essential that one develop a sense for how the crypto industry works before investing.

Take time to learn about the different cryptocurrencies available. With over 3,000 different coins and tokens available, it’s crucial to look beyond the biggest names like Bitcoin, Ether, Ripple, EOS, and Litecoin. Different coins have different dynamics.

Also, explore the blockchain technology basics, to get a sense for how this aspect of the cryptocurrency world works and why it is important.

Like every start, it might be challenging at the beginning, if you don’t have a computer science or coding background. Don’t give up if some aspects of blockchain technology will be a challenge to understand and might sound too technical for you.

Once you got some basics and you’ve identified potential cryptocurrencies for investment, look into how those coins make use of blockchain and what they provide that is different from the rest of the field.

Main questions are:

Why are these coins really useful?

What are the token economics that will ensure the growth in value?

By better understanding cryptocurrencies as an investment class and blockchain in general, you’ll be better equipped to determine whether a potential investment opportunity is worthwhile.

Second Step: Check Social Media Channels and Word of Mouth

Because cryptocurrencies are new and in an exploration phase, things tend to develop very quickly. Crypto is trendy for millennials and there are robust and very active communities of cryptocurrencies investors and enthusiasts in communication with one another around the clock.

Get plugged into this community to learn about the buzz going on in the cryptocurrency world. Twitter, Reddit, Telegram Groups, Slack have become a central hub for digital currency enthusiasts, but there are also many other communities online with active discussions going at all times, 24/7.

Third Step: Check the Whitepaper

While word of mouth and the community support is important, the specifics of a cryptocurrency project and details regarding the technical side, business model, coin / token usability, governance of the project, etc.are more important.

When you’re considering an investment, take the time to read the project’s white paper. Every crypto project should have one, and it should be easily accessible.

General advice: No white paper, no investment in cryptocurrencies.

cryptocurrency research what you must know before you invest white paper

Study the white paper very carefully; it should tell you everything about what the developers of the project intend in their work, including a roadmap and timeline, a general overview of the token mechanics, etc.

If something in the white paper is missing or feels incomplete, if the white paper consist of marketing descriptions only, consider it a serious red flag.

Checklist for Cryptocurrency Investments

Following data points are important when you buy cryptocurrencies:

Market capitalization
Exchange volume
Trusted exchanges that listed the coin
The total available supply of coins
Total future supply of coins
Transaction volumes on a chain (Does someone use the blockchain?)
Hash power, decentralization of mining for PoW (Proof of Work)
Distribution of coins (Do a few people, e.g. the management/team, own biggest part of available supply?)
Events coming up, roadmap
Community activity (Twitter, Facebook, Reddit)
Google trends for keywords

do your diligence make research coin cryptocurrencies

Before you invest in cryptocurrencies: Always DoYourResearch and DoYourDiligence

Due diligence is always advised for investors. In the world of cryptocurrencies, it is an absolute must! The level of research required, given the industry and the fast changes in the early stages, is exponentially higher and more difficult.

Investments in cryptocurrencies are not comparable to investments in stock, not even in penny stocks! Investments recommendations in stocks are based on the fundamentals of a business and financial figures, P&L, balance sheet, KPI metrics. For cryptocurrency, this is not possible and does not make sense in most cases.

Therefore a mindset change is required in research and due diligence for crypto, not only from the requirements of a considerably more volatile and illiquid market but given its extraordinary speed of evolution in the early stage.

Given the unpredictability of risk and the potential for high returns, the most prudent approach for new investors in crypto might be to hold just a very small proportion of their portfolio in cryptocurrencies. This would give some exposure without excessive risk as the market continues to mature.

There is ultimately little downside from investing 1%-3% of the portfolio in cryptocurrencies, but the potential upside is almost unlimited.

Again: Invest only what you can afford to lose in crypto and DoYourDiligence! OR check the Investment Reports from Cryptocurrency Investment on this website.

Risk cryptocurrency investment crypto risk investment

Oliver R. George
May 31, 2019
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Your Risks for Investments in Cryptocurrencies

Your Risks for Investments in Cryptocurrencies https://cryptocurrencyinvestment.org/wp-content/uploads/2019/01/Risk-Cryptocurrency-investment-e1546725896123.jpg 1241 855 Oliver R. George Oliver R. George https://secure.gravatar.com/avatar/18ade14b50c751107b6494391f4fc8b2 May 31, 2019 June 2, 2019

Let’s face it: Jeannie is out of the bottle and there is no doubt cryptocurrencies, coins, digital tokens, and blockchain-based business models are here to stay. And there is a lot of hype around Cryptocurrencies. Because most investors do not know what they’re investing in and expect this to be a “get rich quick” scheme. However, there are quite some Risk for Investment in Cryptocurrency.

Therefore it will become key for every investor to understand how risk interplays with this new industry and the underlying blockchain technology.

Risk for Investment in Cryptocurrency no. 1: Market Volatility

The sharp increase and later the decline in the value of cryptocurrencies in 2017 and 2018 should be examples everyone understand and are well documented.

Example Bitcoin, which peaked at $20,089 on December 16, 2017, is trading at $3,866 on January 5, 2019. It’s a similar story for Ether, Monero, Litecoin and across all other altcoins.

Risk investment cryptocurrency crypto investors risk — Bitcoin development Sep 2017 – Jan 2019, highly volatile investment

But this is only half of the story.

Volatility in the crypto markets has always existed. We’ve seen plenty of other similar crashes before: In 2011, the first Mt. Gox hack resulted in a 95 percent loss. In 2014, the second Mt. Gox hack led to a 63 percent loss. Ultimately, buying cryptocurrencies could result in losing everything you invested in them.

You should never invest more than you can afford to lose.

Risk for Investment Cryptocurrency no. 2: Regulatory Issues

This is a very young industry with a “Wild West” mentality.

Regulatory and legal issues are two of the big obstacles facing the crypto sector in 2018 and 2019. Because the asset class is so new, governments and financial institutions have not yet formed a legal framework for them. Therefore, there’s a significant risk that the legal status (securities or not?), trading rules, or even outright legality, could change overnight.

Risk for investment in cryptocurrency Crypto regulation SEC cryptocurrency regulation tokens and coins — Missing regulation for Cryptocurrencies is a risk for investors.

To be clear: these uncertainties mean that the money you’ve invested in coins, tokens or cryptocurrency companies carries more risk than your capital in established asset classes.

Risk for Investment in Cryptocurrency no. 3: Coins Might Have a Short Life. Many Coins Will Disappear or Lose Entire Value

The actual number of altcoins represents a significant risk to an investor. We estimate that there are between 2,500 and 3,000 coins in existence.

Coinmarketcap lists 2,086 coins in January 2019, with names like “Halloween Coin”, “Runners Coin” and “Gossip Coin”. And it’s incredibly difficult to know which of those coins have realistic, mainstream, long-term potential. Some cryptocurrency coins are very obvious that they have no chance.

However, there are still very few real-world examples of blockchain and cryptocurrency adoption. Right now, the price of most coins is predominantly being driven by speculation.

Therefore we face the risk, that some Cryptocurrency coins will drop in value significantly or become zero.

Risk for Investment in Cryptocurrency no. 4: Security Offer / Consumer Protection and Exchanges Risks

Most of the cryptocurrency coins or tokens will be regulated either by the U.S. Securities and Exchange Commission, SEC, as a Security Investment or as a usability token under the for Consumer Protection.

Since the exchanges, that trade these crypto coins and tokens might be located somewhere in the world and not regulated, you face the risk to lose your investment.

If your exchange becomes insolvent, you will lose everything.

Similarly, exchanges get hacked on a worryingly frequent basis, often resulting in a considerable loss of money. The big difference for other assets: If something similar happened at your bank, brokerage, or credit card, you’d get your money back swiftly.

risks for investments in cryptocurrency - you lose your crypto lost key crypto coin — Risks for investments in cryptocurrencies: Always control the keys of your wallet.

Therefore always control the keys for your wallet. Not your keys, not your money! If you keep your investment in an exchange, you will usually not control the keys. Use a secure “cold wallet”, to keep your crypto coins and tokens safe.

Risk for Investment in Cryptocurrency no. 5: Market Manipulation

The markets for cryptocurrencies are very young and as mentioned, mostly unregulated. Therefore a high degree of insider trading, “Pump and Dump”, Bot trading, etc. must be assumed.

You will find many examples with assumed manipulation. So-called “Whales” can significantly influence the prices of crypto coins and tokens in both directions. On a day-by-day basis, crypto coins can increase up by dozens of percentage points within a short period of time, to dramatically fall back to their previous levels a few hours later.

risks for investment in cryptocurrency crypto whales manipulate the market cryptocurrencies — Risks for your investment in cryptocurrency: Whales have the Power to Manipulate the Market

Be wary of sell walls from whales (buying coins cheaply ahead of positive news) and hidden activities, e.g. dark pools (anonymous trading) are common market manipulation tactics. These technics create a considerable amount of risk, especially for “noob” investors who are not familiar with the underlying market mechanics.

Risk for Investment in Cryptocurrency no. 6: Enter and Exiting the Crypto Markets is a Risk

Deposits in fiat to unknown exchanges with a low reputation might include some very high risks. Unregulated, smaller websites and exchanges will not provide you with a customer service level you are used to and there are many examples, where the funds disappeared. However, this is often based on user mistakes, e.g. transfer of Coins to a wrong address or similar, technical errors, etc.

Exiting the markets into fiat might be a similarly high risk, if not done via a trusted and reputable exchange. Some exchanges require a very detailed KYC (Know Your Customer) process, in order to allow you to withdraw fiat money. This verification process can take weeks.

Expect the unexpected: Some exchanges have been accused of withholding funds for vague and nondescript reasons.

Risk for Investment in Cryptocurrency no. 7: Cryptocurrency Scams

A very high risk for newbies are crypto scams. They are widespread in the industry and can be very sophisticated. Some statistics show millions of USD lost to scams in the in 2018.

The four most commonplace scams are fake ICOs, Ponzi schemes, advertising on websites and Twitter bots.

Many new investors trust the details they see on a webpage and don’t perform sufficient due diligence and research. Scammers have an easy game. They create intensive hype around a fake ICO on all channels (Telegram, Twitter, Websites), but once you transfer your Ether or Bitcoin, you will never hear from them again.

risks for investment in cryptocurrency Crypto Scam Bitconnect Cryptocurrency Scams

Scams are a risk for investors in cryptocurrencies.

You also need to keep an eye for Ponzi schemes branded as altcoins. Some of the most famous include Bitconnect, OneCoin, and Plexcoin have been intensively covered by the media. Want to learn more about scams? Check these Bitcoin scams from last year.

Before you Invest in Cryptocurrency: Know What You’re Investing in

Cryptocurrencies, Crypto Coins or Tokens are not Currencies comparable to the Euro, Pound or Swiss Franc. They are digital assets that are intangible, very often illiquid (small altcoins), often unregulated and always uninsured!

There is no deposit insurance “floor” for this asset class, which will safeguard your investment. Crypto exchanges are often unregulated and located in legislation that prevents them from legal prosecution. In most cases, the Crypto exchanges provide zero investor security.

You need to control your investment. this is not carefree for the time being. The wealthiest crypto investors are going to great lengths to protect their intangible crypto coins by using cold storage devices (e.g. Nano Ledger) placed in physical (offline) vaults.

Given that Crypto Coins are an intangible asset class, human error and something as simple as you forgot or lost your password, can cause total loss of your crypto investment. The risk of being locked out, losing hardware or facing “real-life risks,” such as spilled coffee is often enough to create losses.

Precisely because there are risks in the cryptocurrency market there are rewards. Understanding the potential financial gains of surfing these waves should however not make you blind for the risks involved.

Check our Guide for Beginners with Tips and Actionlists for your Crypto Investment. Learn more about Risk for Investments in Cryptocurrencies.

cryptocurrency investment strategy guide and actionlist for beginners crypto-strategy new

CryptoInvestResearch
February 12, 2019
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Cryptocurrency Investment Strategy 2019: Guide and Action List

Cryptocurrency Investment Strategy 2019: Guide and Action List https://cryptocurrencyinvestment.org/wp-content/uploads/2019/02/cryptocurrency-investment-strategy-guide-and-actionlist-for-beginners-crypto-strategy-new.jpg 1600 1014 CryptoInvestResearch CryptoInvestResearch https://secure.gravatar.com/avatar/f1a16d9dd13804cb7bf37650a57aa4e9 February 12, 2019 June 9, 2019

In 2018 the cryptocurrency market has been a bloodbath for most investors. A proper Cryptocurrency Investment Strategy is worth millions for investors. And it’s continuing in 2019.

This is a natural correction of an unsustainable exuberance during the end of 2017. ICO’s and FOMO propelled prices to the moon. For investors who entered the market during the second half of 2017 and bought into the rising prices, the HODL has been extremely tough. Based on the current investor’s sentiment and market valuations, it seems like a lot of investors have given up and realized their losses.

Understand the Cryptocurrency Market

We from CryptocurrencyInvestment.org have suffered too. Over the last 3 years of research and involvement with cryptocurrency strategies and in the crypto market, we experienced by far the most extreme of emotions as investors. We developed very quickly an investment strategy for cryptocurrencies, tested it, adjusted, tested again, changed the parameters, etc. All with one goal: to identify “The Crypto Investment Strategy” that stops investors losing money. The strategic ideas and elements behind it, are part of this post.

As you might have learned: the cryptocurrency market is being constantly flooded with day traders and people who just gamble their Dollars without any solid or tested cryptocurrency investment strategy. They trust some tweets or viral success stories from investors who claim to have turned a small amount into a six to seven digits sums. These are the Lambo and Cryptomillionaires stories shared on Social Media. What’s missing is the other side of the coin. We miss the countless stories of people who lost everything because they made some simple beginner mistakes while investing in cryptocurrencies.

Avoid Beginners Mistakes in Cryptocurrency

In this guide, the CryoptocurrencyInvestment Team will show you how to avoid making crypto investment decisions based on emotions (FOMO), biases, missing research on fundamentals, and others. With the cryptocurrency investment strategy and the principles outlined below, you have better chances to turn your investment into sizeable profits and to achieve the capital gains you want.

The Guide is composed of several action lists, tips, and guides that will help you to not lose money, cash in your profits and investing into a strong crypto portfolio by removing emotions, greed, and other human psychological weaknesses.

Cryptocurrency Investment Strategy Improved Every Day

We have developed a very comprehensive cryptocurrency investment strategy, that we continue to improve every day. The strategic elements of the strategy will certainly support in making the most out of the current crypto market developments. Some consider the actual bear market as a catastrophic event, however, clever investors buy when there is blood on the streets and see the market as an exceptional opportunity.

Whatever your reasons are to invest in cryptocurrency: we assume that at least 75% of your motivation is to make money. If you are in for the tech only or because you need a small number of coins to use blockchain projects, the investment strategy doesn’t really matter.

CryptocurrencyInvestment is focusing on strategies that work long term (12-24 month). We don’t focus on day trading, technical analysis, short -term news trades.

Crypto Investment: HODL or Not?

One could say now: If you are in for the long-term, buy a portfolio of cryptocurrencies and HODL. This market is going to come back one fine day and you will be fine with the investment.

This strategy might be fine if you choose the right crypto coins. However, HODL-ing isn’t always the best strategy for an investor to follow.

The cryptocurrency market is still very young and the next Amazon, Netflix or Facebook might be listed in the Top 1000 of Coinmarketcap and you might even have some coins in your portfolio. But your Cryptocurrency portfolio can perform significantly better and earn much more with a tailored crypto investment strategy. Passive HODL, by the way, would not have worked, if you would have invested in the first dot.com companies. Neither Google, Amazon, Netflix, Facebook existed at that point in time.

Basics of the Cryptocurrency Investment Strategy

Cryptocoins are popular as an investment because they made many people incredibly rich in a very short period of time. Get rich fast is the main reason why most beginners and gamblers get into crypto.

Let’s be clear: the odds are not good at all and it is very unlikely to happen if you’re new and inexperienced with cryptocurrency and investing. The probability is significantly higher to actually lose your investment as a newcomer than to make a huge profit.

Understand Your Motivations for a Cryptocurrency Investment

Getting into crypto to secure your retirement or double your savings to buy a house, isn’t a good idea at all.

First and foremost, we recommend to invest only an amount that you are prepared to lose and you can live without, no matter what happens. Having some solid reserves and a good financial safety net to fall back on will help you to control your emotions (fear, greed). Emotions can kill the best investment strategy and can become financially lethal.

The best motivation to invest in cryptocurrencies is if you would like to participate in an emerging industry that is developing very fast and where everything is possible.

This motivation should be supported by some interest in the underlying blockchain technology, some basics how it works and why it’s special and exciting.

Additionally, you should be willing to spend some time of the week to stay updated. To follow your coins and the news and continuously learn about investing. This will give you over time a grip on the market and will help you to spot undervalued crypto coins.

However, if you just want to make short-term a load of money and get rich fast because you heard that other people got millionaires fast then you might end up massively disappointed.

Understand the Cryptocurrency Industry for Investing

A very important pre-requisite is that you only invest in a cryptocurrency where you know everything about the company, the token, the usability of the coin, whitepaper, and roadmap, the blockchain basics of the project.

What problem is this crypto project solving? What industry or consumer group is it targeting? Who is the team behind the project and how qualified are they? Are there any 1st class investors behind it?

Without this due diligence and own research, you face a very high risk to lose your investment.

Considerations for a Crypto Investment Strategy

Just like any other type of financial investment, there are some different strategies to cryptocurrency investment. There is no right or wrong in this. Some day traders focus on very rapid buying, selling, and active trading of cryptocurrencies. They might go long or short and get a thrill from the very high volatility of the market.

Other investors prefer a more mid/long-term, hands-off approach to their investment. Means they are buying crypto coins and then not selling or trading them away for months or years, HODLing, with the expectation to turn the investment into profit.

Our key assumption and the basis of our core cryptocurrency investment strategy is that cryptocurrency coins are unstoppable forces in a new industry. We believe that crypto will have a mass adoption over time and will be used in daily life by billions of people.

Our considerations are based on an active investment strategy with a targeted approach to buying low and selling high that will continuously increase the value of the portfolio. No short-term trading, but following the big up or down waves or trends of the cryptocurrency market in a relaxed way.

We don’t have a crystal ball on our tables and we don’t even try to predict any short-term development. Therefore short-term movements of 5-10% will not make us nervous at all and will not trigger any reaction. The crypto market is incredibly volatile, 2-3% from the stock market translates into 10-15% in crypto and the sooner you accept this and learn to ignore it, the easier and better for your long-term portfolio performance.

In a nutshell: Our cryptocurrency investment strategy focuses on the big market moves and within the market on the big moves of individual crypto coins. It’s a quite long-term strategy with options to react mid-term.

To execute this strategy, perfect market timing is less critical. Even the most experienced investors aren’t able to consistently buy at the absolute bottom and sell at the peak. That’s all legends or wishful thinking. Long-term, a few percentage points don’t really matter.

Your Crypto Investment Strategy: The Enemy is You!

Cryptocurrencies are an extremely volatile market. In July 2010 for example, the value of Bitcoin (BTC) grew 900% over 5 days. On December 22, 2017, Bitcoin (BTC) dropped -23% in value within 24h hours.

How do you manage this rollercoaster emotionally?

The biggest risk when investing in cryptos is you: your fear, greed, beliefs and your emotions in general. A solid investment strategy tries to remove the investor as much as possible from the equation and the plan.

The markets are only in theory rational; in reality, they are not. Investors and traders are driven by FOMO and panic-selling. They rarely have the patience to wait for a strategy to develop and quickly jump on or off the train.

If you cannot manage your emotions, better not invest or trade. Big money and steady hands will always beat you if you don’t accept these cold hard truths.

Common Mistakes in Cryptocurrency Investment

A quick overview of common mistakes made by investors and traders in cryptocurrency:

Buying something you don’t really understand.
You might recall Warren Buffet? (“Never invest in a business you cannot understand.” – Warren Buffett)
Not diversifying your investment and going too big into one single coin.
Trading versus investing. Jumping in and out of trades, reacting on short-term ticks and developments.
No exit possible: Investing a large sum in illiquid small coins, with low trading volume/market cap.
FOMO: Ask yourself whether you’re making a rational decision or simply rushing because someone sold you the dream of the next 500x gain.
Do not FOMO based on hype.
Using high leverage and trading on margin.
Emotionally attached to a crypto coin or community.
Thinking that the market is wrong and is just acting weird.
Unfortunately, the market doesn’t really care about what you think or about how you feel.
The market is the market and does what it does.

How to Research Cryptocurrency Coins to Invest in?

Sometimes, fomoing in on a project is not the worst idea if you’ve done in-depth own research and you realize the potential of a cryptocurrency is real.

Long-term cryptocurrency investing is all about the fundamentals.
The keyword is “Do Your Own Research”. And it doesn’t make a difference, whether you’re a newbie or an investor veteran: Research remains the most important aspect of every cryptocurrency investment strategy.

Before buying a new cryptocurrency you should do your homework and check at the very least the following:

Who is behind the project? (Website, Social Media, Twitter, Telegram, LinkedIn)
Is the whitepaper a marketing brochure or a clear and understandable concrete paper?
Do you understand how the project should technically work?
Is this a real problem they are trying to solve?
Do they need blockchain or a coin to solve the problem?
What is the exact use case of the crypto-coin?
What industry does the project target?
Who trusts the project?
Are there any big partnerships?
Are there any well-known investors/advisors involved?

Crypto Investment Strategy: Do your own research!

Simple research should start with the whitepaper. It’s sad to see how many people invest high amounts into crypto projects without studying the whitepaper. Or even worse: invest in projects that don’t even have a whitepaper. Don’t be afraid, if whitepapers sound too technical. Make sure to read them at least once. Sometimes, it can be enough to spot potential bullshit.

The second step in research could be a background check on the team. The best idea in the world is worth only something if there is a strong team behind it. When you research the project team, focus on their previous experience, technical and managerial expertise, network in blockchain or similar.

Third, research the problem they try to solve and the solution. Many companies create fictional or theoretical problems only to justify the existence of their ICO and coin. Most projects don’t need blockchain or a coin. Therefore you shouldn’t invest in cryptos that have no adoptable use cases.

As a conclusion from your research:

If you don’t understand the blockchain industry, the technological solution of the issue, the use case of a coin or token, stay out and don’t invest.
Don’t fall in the trap of shilling or Social Media buzz behind a project. Social Media and all the news and shilling should never be a reason to invest in a specific cryptocurrency. Only your own research should be.

Investment Strategy for a Balanced Cryptocurrency Portfolio

When you start thinking about a portfolio of cryptocurrency coins, diversification should be the first point on your checklist. A balanced crypto portfolio mitigates your risks on the one side but also limits your maximum gains on the other.

Setting all your money on one or very few cryptocurrencies is more like buying lottery tickets. It’s very hard to predict which cryptocurrency is going to make you rich in the future.

Every cryptocurrency has at least one competitor targeting the same industry and uses case. If you found a niche where only one player is active, competition will follow in the second, when the business segment becomes relevant.

How to balance a cryptocurrency portfolio

The reality is, some of the great crypto ideas with solid teams behind them might still fail. This is why you have to diversify.

In CryptocurrencyInvestment we use two ways to balance our portfolio. One is to set up a portfolio by investing in several individual cryptocurrencies. The other cryptocurrency investment strategy to set up a crypto portfolio is based on the types of cryptocurrencies.

Following types of cryptocurrencies are available:

Transactional coins / Payment coins (e.g. Bitcoin BTC, Monero XMR)
Platform coins (Ethereum ETH)
Security tokens
Utility tokens
Asset-backed tokens

What are Transactional Cryptocurrency Coins? (Payment Coins)

The original cryptocurrency, Bitcoin was designed to be used as digital money in exchange for goods or services. The intention of its founder was to create a digital, decentralized currency where no intermediaries are involved and the parties do not need to trust each other. The transaction envisioned should be secure, final (means you cannot withdraw your transfer) and with low fees. Very much comparable to online payments in Fiat, with several advantages (no intermediaries, cheaper, secure, decentralized, somehow anonymous).

Transactional cryptocurrency coins of this type can buy an item online, book travel, pay for a cup of coffee in a shop or coins can be sent to friends and family across the world. In the meantime, there are even ATMs to buy and exchange transactional coins for fiat currency.

Bitcoin is the best example of a transactional coin or a payment coin, but there are many other coins providing similar services like Monero, Zcash, Dash, Litecoin, and others.

The future of transactional coins is still unknown. Existing coins might develop into the leading position worldwide, new coins might enter the segment. However, we believe that Bitcoin will remain the dominant transactional cryptocurrency. For sure Bitcoin is a basic “must have” in every cryptocurrency investment strategy.

What are “Platform Cryptocurrency Coins”?

Platform cryptocurrency coins have a special use case within the specific blockchain only. They are tied to blockchains that allow for the creation of applications, like DApps, smart contracts, etc. on them. Examples of platform crypto coins are Ethereum, EOS, NEO, Tron, IOTA, Cardano, and many others. The underlying blockchain platforms of these cryptocurrency coins create an actual need and use case for the coins. They power the applications on the blockchain.

Of course, these coins can be used to transfer value (money) too. Sending someone 100 ETH is very similar to sending someone the same amount in BTC. Still, platform coins are different from transactional payment coins, as their use case goes far behind payments and store of value only.

Platform coins are the innovation in the blockchain industry. While transactional coins have a limited use case, platform coins might have an unlimited one. We cannot imagine today what might be possible in the future and where the tokenizing of the world and creating blockchain platforms might lead to. These coins have exceptional growth potential if the blockchains manage to attract the right developers and implement the game-changing use cases.

Platform Tokens are playing an important role in our cryptocurrency investment strategy.

What are Utility Tokens?

Utility tokens were created with the intention to serve a purpose or a utility within a blockchain project. They were not created as a security or investment vehicle. Utility coins primarily provide access to a blockchain, a product or service.

That means the value of the token is based on the services/products that the token gives access to. If the utility token gives access to membership in a club or whatever, the value of the token will be derived from the demand for that membership.

Based on this an investment into utility tokens is direct speculation on price development of the products or services, the token is based on. So, you might buy utility coins because you believe the product or service is going to be the next hot thing in blockchain and the value will therefore increase. The risk of course, if the service doesn’t catch on or the project isn’t well-run and the coin gets no adoption, the value of your utility token will decrease or never take off.

A legal perspective on utility tokens

From a legal perspective, utility tokens can be generated on a blockchain and sold to raise money for whatever a company wants to do. This is more comparable to a pre-sale of potential services or products that in most cases do not exists yet. The creation of utility tokens is called a Token Generation Event (TGE). After the sale of a utility token, they might have future value when the products or service promised become functional and available.

With all risks involved, because many blockchain startups will never get off the ground. The few ones that might hit the jackpot, can have a major payoff for early investors. Therefore they do play a role in a balanced cryptocurrency investment strategy.

For investors, utility tokens are very risky. The blockchain industry is still very young and we do not have the technology ready yet for mass adoption. Think of all the scalability issues, the speed of confirmation, costs of execution, etc.

Based on this its difficult for an investor to buy a utility token, not knowing what platform will actually win the race and will become the most popular blockchain platform for the tokenized future.

What are Security Tokens?

Trying to keep this simple: To understand what security tokens are, it is crucial to understand securities.

Generally speaking, securities are tradable financial assets such as shares or stocks, bonds, options, and others. And by owning a security e.g. an Apple share, you own a part in the company and you participate in the business development, earn dividends, have voting rights, etc.

Securities are the main instrument of companies and governments to raise money from capital markets and investors. And based on the regulation of the securities, the investors are promised a return on their investment in the form of dividends or interest rates or share of the company’s profit in some form or other.

Digitalizing such securities on the blockchain means that you create a “Security Token”. Summarized: security tokens are digital crypto tokens that have some sort of dividend payments, profit sharing, interest payments, or other methods to generate profits for the security token holders.

Advantages of Security Tokens

The big advantage of crypto security tokens is, that they are programmable and can automate the processes related to owning “standard financial security”. This could be automatic payments of dividends, governance control, quick transfer, worldwide liquidity, etc.

From a legal point of view, a token is called a security token, when the following apply:

Investment of money or money like funds
In a common enterprise or project
With an expectation of profits or other participation in business development
The success of the company and token depends on the efforts of other people and not on the efforts of the investor

Based on these a security token behaves like a stock and typically represents a share in the company who issued it. For this reason, security tokens are also sometimes called equity tokens.

Differences between Security Tokens and Utility Tokens

This quite pedantic distinction between utility tokens and security tokens is important. In reality, the major difference between utility and security tokens comes down to one major fact: security tokens are much more heavily regulated by law than utility tokens (SEC).

For investors, the security tokens are similar to shares and they don’t have a direct use case for the blockchain or the project. They are issued by a company to raise funds and allow users to participate in the growth of the value of the company.

Security tokens are still in a very grey area in terms of regulations, and the discussions have not yet been finalized.

Based on this unclear regulation, there is a high inherent risk for investors, that the SEC might shut down projects or companies who have issued security tokens without proper approvals, risk information and investor protection. Right now the SEC’s is hunting roughly 80 cryptocurrency companies to understand the issuing of the tokens. Companies like Bitconnect have been shut down. Nevertheless, once global regulatory bodies have created a clear regulatory framework, investing in security tokens will become an attractive option.

In our Cryptocurrency Investment Strategy, we avoid Security Tokens with a high-risk profile. This in order to protect investors from losing their funds invested.

Learn more about security tokens.

What are Asset-Backed Tokens and Stable Coins

Asset-based tokens are the newest creation of the blockchain industry. This type of cryptocurrency is definitely on the rise and will significantly impact longterm the financial markets. And they will play a pivotal role in the Cryptocurrency Investment Strategy going forward.

Asset-based tokens as cryptocurrencies represent the value of an underlying asset such as a real share, a real estate, gold, a commodity, money (fiat currencies), etc. It’s the digital “copy” of a real asset. Asset-backed tokens are by definition worth exactly what they are backed by. So a representative token that corresponds to a real-world asset such as a unique share of a company (e.g. Ford) is effectively valued at a 1:1 ratio necessarily.

Stable coins are asset-backed tokens if they are linked and backed by real Fiat currencies.

The development of asset-backed tokens is 1:1 of the underlying asset and the risks are 100% same like the underlying.

Interested to learn more about asset-backed tokens? Link to Youtube Webinar

Investment Strategy for Your Portfolio

How could an investment strategy für your cryptocurrency portfolio look like?

There are of course several possibilities, depending very much of your risk appetite and your investment amount. Larger investment amounts (e.g. over $10,000) can be diversified to 5-6 cryptocurrencies. Smaller investments can be split to 3-4 coins.

Cryptocurrency Investment Strategy for Larger Portfolios

A larger portfolio in crypto could consist of:

40% platform tokens
40% transactional tokens
20% utility tokens

Looking at this split in real cryptocurrency coins:

Bitcoin: 15%
Monero: 10%
Ethereum (ETH): 20%
Cardano (ADA): 15%
EOS (EOS): 10%
Zilliqa (ZIL): 15%
Binance (BNB): 15%

Cryptocurrency Investment Strategy for Small Portfolios.

40% platform tokens
40% transactional tokens
20% utility tokens

With a split like:

Bitcoin (BTC): 20%
Ethereum (ETH): 25%
Cardano (ADA): 20%
Zilliqa (ZIL): 15%
Binance (BNB): 20%

Please note, that these are just examples, and you should always do your own research and create your own portfolio based on your risk/reward matrix or with the help of a professional advisor.

Cryptocurrency Investment Strategy for the Bear Market

Since the beginning of 2018 Cryptocurrencies entered into a downward trend. The bear market continues into 2019 and might last further on. For investors with lower risk appetite, we recommend keeping at least 60% of the portfolio in stable coins like DAI or USDT. Learn more about Stablecoins in this video.

An Important Must: Additional Strategic Components to an Investment Strategy

To set up a portfolio is the beginning of a cryptocurrency investment strategy.

Further elements ensure that your portfolio always stays balanced and you manage it with discipline.

An investment strategy is worthless, if not monitored and managed actively. Consistent discipline and fix routines remove your emotions from the strategy and create the biggest growth potential.

Take note: Nothing goes up forever! Once you achieved your targets, you have to adjust and re-shuffle the portfolio.

How to Implement the Cryptocurrency Investment Strategy?

Pick a fixed day per week on which you monitor and evaluate your crypto portfolio. Make it a routine and pick a day/time, where you have a free head for this task.
Use a trustworthy portfolio tracker. We are using Cryptocompare.com, however, you can use every other portfolio tracker too.

Create a buy-in schedule to use cost average. This ensures that you invest your money over a period of time to cost average the entry prices.
You earn money when you’re selling a portfolio position. Therefore set a profit-taking strategy. You must be crystal clear on when to sell, in order to keep your emotion under control.

Take profit strategies can look like: every 20% a cryptocurrency rises, you sell 10%.

Depending on your risk appetite again, you can exit your investment by selling your crypto for Bitcoin or Stable Coins (e.g. USDT, DAI). Note that if you sell your investment and exit into Bitcoin, this will increase your BTC exposure.

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