Cryptocurrency Investment Strategy 2019: Guide and Action List

Cryptocurrency Investment Strategy 2019: Guide and Action List

Cryptocurrency Investment Strategy 2019: Guide and Action List 1600 1014 CryptoInvestResearch

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 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 companies. Neither Google, Amazon, Netflix, Facebook existed at that point in time.


The basics of a cryptocurrency investment strategy design


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.


top 9 mistakes cryptocurrency investment strategy


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.


cryptocurrency investment strategy top 10 portfolio and tips


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:

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


develop the cryptocurrency investment strategy now


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:

  1. Investment of money or money like funds
  2. In a common enterprise or project
  3. With an expectation of profits or other participation in business development
  4. 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


Cryptocurrency Investment Strategy for Larger PortfoliosA 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.

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, 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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