The Cryptocurrency Market – How to Invest Safely

Braving the Wave

Traditionally investing has been a cautious game for someone at any level. At least for the cautious investor, a small amount of weekly or monthly earnings were diverted into a portfolio consisting mainly of safe stocks and bonds. The aim was to invest into a reasonably safe selection, likely to generate steady returns. You would hopefully be able to forget about them for a year, and by then you would have made some solid profits to reinvest- or re-evaluate.

However the cryptocurrency market seems to bring a lot of people into a somewhat delusional way of thinking. The logic seems to be that because someone else on the media, or (because of it’s now widespread popularity) someone you or your friends know, gained a tremendous amount investing in cryptocurrency, that you stand to gain just as much.

This is the case especially for investors on the ‘crypto-is-the-future’ bandwagon that is taking the world by storm. Whilst this may be part of the truth, it is risky to put all your eggs in one basket. However, it’s hard to deny that it is a profitable time in Cryptocurrency overall. With the huge potential of many companies and the relative earliness in the global adoption of Crypto, we believe that by using safe investment strategies you can achieve sizeable financial gain. This is easier to see in the long term. In the short term, there are some indicators and valuable principles to stick by. They hold less fast in choppy waters, however even in choppy waters, there are those who choose to brave the waves!

How Not to Invest

Some examples of investors drawn in by this way of thinking are on frequent showcase around the internet, people who invested more than they could ever afford- at times sadly even money that was not theirs.

Investing of this kind is usually done at the peak of the bulls. At this point, the media hype is at it’s peak, and even the fabled shoe shine boy knows about it. It’s at this point that the fear of missing out (FOMO) is at it’s most gripping.

New investors tend also to be the worst at spotting and getting out of bear markets, and spotting the signs of a crash. It can often be a grueling few months before market sentiment recovers in the crypto world. The average crypto investor tends to spend a disproportionate amount of time refreshing Blockfolio, checks for updates frequently on Twitter and Reddit – but worst of all, invests disproportionate amounts of his money into unsound coins.

Your average joe is also more likely to succumb to countless cryptocurrency schemes, ICO’s built on sand and investor scams. This is how many shill coins, scams and schemes make it to top 20 coins, just to be dumped leaving regular investors baffled and frustrated.

The logic seems to be that because someone gained a huge amount investing in cryptocurrency, and it is still ‘early days’ in crypto adoption, that you stand to gain just as much. Some examples of this are frequently shown by the new investor who buys in before a crash, at the peak of the  FOMO (fear of missing out) market. By then the bulls are exhausted, and a crash or dip often follows.

In cryptocurrency investment as in everything, timing is half the magic. No-one can time the markets however, so the best you can do is protect yourself and pay attention to the obvious signals- if everyone or even the shoe shine boy as John Rothchild put it, is giving out free investment advice then alarm bells should be going off.

HOLDing- A Reliable Strategy for the Relaxed Investor

One safe strategy worth thinking about is the classic crypto meme strategy, or HODLing- (holding on for dear life). Although a meme, if you think about the basic principles underlying caution in volatile markets, they make perfect sense.

Fig. 1. A logarithmic chart showing Bitcoins price against time. chart begins at Bitcoins public trading inception in 2014.

‘Being a bubble market, the most effective way to guarantee your returns, is to hold over a long period. Bitcoins price does experience a great deal of turbulence, but it over a period of 5 years it shows considerable increases.’

First off, decide how long you plan to hold. Is it a 3 year hold, a 5 year hold, or a one year hold? You need to try and stick to this, because given the volatility of the cryptocurrency market you’re sure to have some doubts on whether or not to sell during the dips.

In a bubble market with a lot of long term potential such as the Bitcoin and Alt-coin markets, the safest strategy over 5-10 years is to buy a small amount and hold onto it. So long as you think your companies are sound investments, this strategy makes a lot of sense. It doesn’t require much checking, as you can purchase your coins, send them to your hard wallet (We recommend the Ledger Nano S – Cryptocurrency hardware wallet, or something similar). Paper wallets are the next best thing,  we like the free generator at https://walletgenerator.net. Once that’s done, store away your hard wallet or paper wallet and forget about it for the next few years.

When to buy?

Another sound strategy involves buying a small regular amount weekly. This spreads out your buys over a longer period, effectively meaning that you will purchase evenly throughout the peaks and troughs.

This is a great strategy for a new investor, looking to invest in projects that are long term near sure wins, for example Ethereum or Bitcoin. It ensures you never buy into the hype too brashly and always have some money left over to reinvest whether there is a market crash or a surge.

Where to buy?

Many exchanges offer the USD/GBP/Euro trading pairs in 2018. The most popular exchanges for buying cryptocurrency directly from the bank are ironically enough centralised exchanges that take fees, with the most prominent and popular being Coinbase (other exchanges are available). It  has insurance for its users funds, something many exchanges do not commit to (ehem, Cryptograil pig). As well as many other features including Euro and GBP withdrawals and deposits, 2-factor authentication for its web wallet to list a few.

Here you can register, protected by two-factor authentication which consists of an email, and phone code generator protection system. You provide banking details as you would on any other trading site such as Amazon, and receive in exchange for your cash a corresponding amount of Bitcoin, Bitcoin Cash, Litecoin, or Ethereum (take care to check prices on the day). A small commission is taken by Coinbase, which is worth taking note of.

Which coins to invest in?

Realistically nobody truly knows where the market is headed, and all shills are just that. There is principles for investing in coins that we will outline however, and it is up to you to spot which coins fulfil these criteria.

  1. Coins with reliable development teams

Check the main team members. A good indicator of whether or not a team is reliable, is when team members have been involved in successful and stable projects in the past. It suggests that the members are committed to making the enterprise work.
Check the ranks for any who have been involved in dubious projects, the Crypto world is laden with scammers even at the very high level. Entry scams and fake ICO’s have been known to occur, if infrequently and they tend to be missed by many.

      1. 2.

    Coins with working technology

This is a good indicator that the coin has a product that is being pitched, and is ready for adoption. Ethereum is a good example of a coin like this, it is often used by businesses on account of their smart contracts feature.  The smart contracts hold potential for use within many sectors, from medical, to finance to insurance. This is hugely appealing to new investors who wish for something tangible with real-world application as opposed to the potentially empty promises offered by newer companies. We’re not saying don’t put any small percentage of your stake into so called ‘Moon coins’. These have in the past managed to create substantial gains for investors, Iota is one example with tech is being tested by banks. Whilst it’s progression through its white-paper is early stages, it has managed to accumulate considerable interest. Venture funds and regular Joe’s flocked to it over December 2017 and brought its price from 0.30 USD to 5.20 within the space of a week.  Whilst moons like this are highly uncommon we should still expect to see them occasionally. Especially in this highly uncertain environment where interest, media coverage draw new investors all the time. We would advise that if you are committed to investing into some alt coins which a chance of winning you a lambo, that you devote only a small fraction of your total investments to this purpose. The majority of your Cryptocurrency investments should go into stable, and comparatively safe companies. To conclude, Cryptocurrency investment can be a lucrative business if you know what you are doing. By maintaining the majority of your investments in a high liquidity asset such as USDT, or GBP on exchanges that support it, you are better able to purchase Crypto steadily and with far less risk attached than one off, big splash decisions.     If you enjoyed this article and found it informative, please support us by ordering some of our hip crypto currency gear or share us below.

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