Vladimir Gorbunov, Founder and CEO at the crypto firm Choise.com.
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After the crypto summer was replaced by the crypto fall, most coins tumbled by 50% and even 90%. But does that mean you can’t make money on crypto today? No, it absolutely doesn’t! A successful investor has the ability to profit in the long run. Anyone could earn in the crypto summer, but it definitely takes effort to preserve and increase wealth in the crypto winter.
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Vladimir GorbunovVladimir Gorbunov, Founder and CEO at the crypto firm Choise.com.
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You didn’t have to be an expert to earn on crypto back in 2021. Most of the coins were surging by 10X, 50X, and even more. The total crypto market cap grew by 300%: even if you’d blindly invest in a few coins, you’d most likely get a good profit.
In today’s market, such a strategy would fail you. After the crypto summer was replaced by the crypto fall, most coins tumbled by 50% and even 90%. But does that mean you can’t make money on crypto today?
No, it absolutely doesn’t! A successful investor has the ability to profit in the long run. Anyone could earn in the crypto summer, but it definitely takes effort to preserve and increase wealth in the crypto winter.
Today, as the market is showing signs of a revival, it’s a great opportunity for you to invest in crypto and be ahead of the masses. Let me explain why – but first, I’ll start with the opportunities to be especially careful with.
IEOs, IDOs – High Risk, But High Yield? Not Necessarily
Participating in IEOs and IDOs can certainly help you find some coins profitable in the long run. But the problem is there’s too much left to chance. It takes really (really!) a lot of knowledge to separate the marketing buzz from the real value.
IDOs and IEOs can reward you with a few Xs indeed, but I would recommend giving it not more than 5% of your portfolio. The thing is that many successful crypto projects don’t even launch offerings – but those who do, start them by selling tokens to private investors. The mass audience usually gets a very reduced opportunity to earn from IEOs.
However, I expect the number of profitable offerings to grow as crypto summer approaches. But it’s worth considering the conditions of entry: if there’s a long lockup period, I would carefully think about how much I believe in the long-term success of this coin.
Trading – Please, 10% of a Portfolio Max!
I will say an unpopular thing – a successful trader outside the crypto summer (which is the case now) is a professional trader only. Purchasing coins during hyped events is likely to bring you losses, and playing with margins will drain your balance quickly with a high probability.
Trading is done successfully by professionals who operate with 3-5 coins that they know inside and out. They understand how these coins’ prices behave, follow all related news, and even communicate with the project’s team. A skilled trader has access to much more detailed data.
That’s why I would recommend this tool to professionals only. However, if you do want to trade, use the sum that you can afford to lose – say, not more than 10% of your crypto portfolio.
Investment – HODL Strong
Now, to the positive agenda! During the 13-year history of crypto, long-term investing and the HODL strategy have always yielded great results if used correctly – when you buy low and sell high, but in a 2-4 year perspective.
When is the market low? When no one believes in it. All coins are plummeting in the crypto winter, and it’s natural that most people lose faith. But if we zoom out, we will see that the best crypto projects survive and grow in the crypto summer. That’s just how market cycles work.
It proves profitable to practice the HODL strategy – enter the market in the low phase and hold your position for as long as you can, avoiding the temptation to sell when the coin drops. Now is a great time to invest – we’re in the bear market with the signs of reversal. Historically, the market has been booming within a year after Bitcoin halving, and the next halving is scheduled for 2024.
In the HODL strategy, it is common sense to build a diversified portfolio of a few cryptocurrencies that you find most promising. One way to pick such coins is by doing your research and analyzing their historical data and fundamental value. Another way is to invest in index tokens such as BitDriven. Index tokens represent the joint value of multiple coins that are expected to bring the maximum yield after Bitcoin halving. Investing in an index token is equal to investing in a diversified portfolio composed by professional cryptocurrency researchers.
This strategy works well with a portfolio where 50% are the coins from the Top 10 and the rest is spread across some top blockchains’ coins, crypto exchange tokens, and tokens of the leading DeFi and web3 projects.
Crypto Investment Funds
There are funds that accept crypto for trusted asset management. They either allocate money in crypto protocols for stablecoin yields or in particular coins. Some of them also invest in IEOs and IDOs – if you want to profit from these, I would certainly recommend using asset management funds because they have much more resources to do due diligence and enter offerings at good conditions.
The main thing before you start with a fund is to distinguish a professional one. See who the founders are, how long they’ve been present in the market, what projects it has invested in, and what the outcomes were. Zero gains during the crypto winter is not necessarily a bad sign because the fund might have invested in a long position that has not brought gains yet.
Leverage the Decentralized Market
DeFi protocols offering stablecoin yields (5-20% APR) or profits in specific tokens (up to 200%) are generally good investment tools. However, they should also be treated with care – I wouldn’t allocate a big portion of my portfolio in DeFi.
The key risk to be aware of in this market is impermanent loss. The token can bring you a 200% profit in a 1-year span, but if its price drops 4X, you may ultimately lose. And it’s worth looking at how credible the pool is – usually, the amount of funds locked is directly proportional to the security of this pool.
The Patient Ones Will Win
YouTube videos made by investors using rented Lambos and private jets show a little bit exaggerated picture of crypto gains. Cryptocurrency is not easy money, especially during the crypto winter.
However, there still is a way to profit. Establish your own strategy and remember that long-term investment is the most reliable method to earn – and now is a good time to invest because the market is in a low phase. Those who invest with patience and HODL will be rewarded.
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