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5 Things You Need to Understand in Order to Successfully Invest in Cryptocurrency

  1. 1. – The Cycle is Everything! – For its entire history and most likely for another 10+ years the crypto market operates on an extreme cycle. People get excited, bid the prices up, everyone thinks crypto is going to take over the world tomorrow and then when it doesn’t everyone declares it “dead” or “stupid” and prices come back down. The diehards keep at it, build new things, projects grow and change and then after a while people start getting excited again. This cycle has literally happened at least 5 times, each time getting exponentially bigger. What does that mean for an investor, you need to play the cycle, when things are down and out you need to be brave and start adding, and when things are awesome and you and everyone else are sure the price will keep going up, you need to be selling! Have predetermine places where you will start to get out of your positions, and just nibble away on the way up and way down. You don’t have to be all in or all out, you can be adding when things go down, and selling when things go up, this has served many people very well over the last decade.

2. – Participation Pays – Most people don’t realize that Crypto is sooooo much more than Bitcoin. There are thousands of active projects in the space. And if there is one thing I’ve learned is that being an active participant, experimenting, trying out new and different tools can get you richly rewarded in the future. As projects gain traction, many times early adopters are reward with perks or tokens for taking the chance and being a trail blazer. Now that being said, there are a heap ton of scams in the crypto space, so buyer beware in all circumstance. It may not pay to be the very first one to do something 😉.

3. – It’s the Frosting not the Cake – For any normal person’s portfolio Crypto should be considered the frosting not the cake of their portfolio. Crypto is high octane crazy volatile and risky, it the sugary topping for your otherwise well diversified boring cake of the rest of your portfolio. The amount you put into crypto should be related to how secure the rest of your financial life is. I’ve seen way too many people taking a flyer on crypto thinking its going to make them rich, when they can’t even pay their normal bills, not a good plan.

4. – Hype doesn’t = Profits – Hype may actually mean losses in the crypto space. Unless you are deep into the weeds on what is new and trending, if you hear about the next great thing, its possible you are at the end of the road and that opportunity is about to turn into a bust. A much better plan if you don’t want to spend half your day researching items is find the projects that seem to have sticking power and invest when the market is down overall.

5. – Diversifying costs you less than you think – There is a general idea in crypto that you have to pick your favorite crypto and root for it and hiss at the other projects. There are many “Bitcoin Maximalists” that will literally say that everything else that is going on in Crypto is a big scam, and Bitcoin is the only real project. Ridiculous in my book, but it does speak to how you build a crypto portfolio. Bitcoin Maximalists will only hold bitcoin, and in general that has done okay for them (and extremely well the further back you go). But what if they are wrong? What if Ethereum in the end becomes the king that the world builds most of its infrastructure on? Or Polkadot, or Solana, or Cosmos? If you are only holding the one true chain and your wrong, long-term that could be a massive problem. Diversify, be humble and spread your bets. The nice part about crypto is that for now, when things go up, almost everything goes up the same. Over time there are difference but overall, you may not miss out on much upside if you diversify while we all wait to see what the future holds here.

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