In the past couple of days, the entire crypto market has taken a pounding. The price of bitcoin dropped on the morning of Saturday, plunging by more than 20% to $42,000 with Ether following suit, falling as low as $3,500. The drop has been brewing for a while now and gathered steam this week after the coming out of the latest Covid-19 variant, Omicron, and the comments by the Federal Reserve that monetary support for markets is soon going away. The Fed’s move would mean less money flowing into bonds, which would lower bond prices and lift their yields, making them less attractive to own. Some are using this drop in crypto prices as an opportunity to “buy the dip.” The president of El Salvador, Nayib Bukele, announced his country had “bought the dip”, buying another 150 BTC at a price just over $48,000. Today, bitcoin’s price bounced back but remained under $50,000. Since the beginning of 2021 bitcoin is up 63%. What are you planning on doing in 2022? Will you be buying crypto?
Ilias Louis Hatzis is the founder and CEO at Kryptonio wallet. Please participate in our Crypto Wallet Survey, we could use your help. It’s seven simple multiple-choice questions about crypto wallets and you should be done in 60 seconds. The survey is completely anonymous.
After reading Satoshi Nakamoto’ white paper, it was clear to me why bitcoin was created. While cryptocurrencies are fascinating, because of their technology and decentralized nature, the market is still very nascent, filled with challenges and traps. Today, there are thousands of coins, and sorting through the noise can be difficult for any retail investor.
I’ve been working in this space for the last five years, mostly building tech with the aim to improve the crypto experience, but I’ve also dabbled with investing. By no means, would I call myself a professional investor, but I’ve been buying different coins, mostly choosing them based on what I think of their long-term impact.
Normally, I buy every month, investing in the coins I already own or in new projects that I find interesting. My strategy is simple. Buy and hold.
Like anyone else, I look at the price and I try to get in as early as possible or buy as cheap as possible when dips happen, but beyond price, I select coins based on other indicators: market cap, trends in the market, coin utility, technology adoption, and traction, what VCs are investing in and the project’s longevity.
Today I hold 27 different coins, which I bought at different times. For each of these coins, I have purchased a minimum of $100. Some were before Dec 6, 2020, and others were purchased during 2021. Since the initial investment on each asset and depending on market conditions, I have followed with more investment, watering the winners.
You can find all the coins I own here.
Not all crypto investments will be winners, but doing your homework to find the right ones and being patient, could produce a good return.
Everything is in the red right now, but investing $100 in each of the 27 coins in my portfolio, twelve months ago (Dec 6, 2021), each would be worth today:
1) Bitcoin (BTC): $252 (+$152)
2) Ethereum (ETH): $703 (+$603)
3) Binance Coin (BNB): $1,850 (+$1,750)
4) Solana (SOL): $9,595 (+$9,495)
5) Cardano (ADA): $900 (+$800)
6) XRP (XRP): $136 (+$36)
7) Polkadot (DOT): $526 (+$426)
8) Dogecoin (DOGE): $4,710 (+$4,610)
9) Avalance (AVAX): $2,307 (+$2,207)
10) Shiba Inu (SHIB): $219 (+$119)
11) Polygon (MATIC): $10,263 (+$10,163)
12) Algorand (ALGO: $524 (+$424)
13) Litecoin (LTC): $183 (+$83)
14) Uniswap (UNI): $427 (+$327)
15) Chainlink (LINK): $142 (+$42)
16) Bitcoin Cash (BCH): $154 (+$54)
17) Stellar (XLM): $164 (+$64)
18) Decentralnd (MANA): $331 (+$231)
19) Internet Computer (ICP): $6 (-$94)
20) Tezos (XTZ): $163 (+$63)
21) Iota (MIOTA): $367 (+$267)
22) Maker (MKR): $496 (+$396)
23) Basic Attention Token (BAT): $504 (+$404)
24) Dash (DASH): $127 (+$27)
25) Compound (COMP): $141 (+$41)
26) 0x (ZRX): $203 (+$103)
27) Bread (BRD): $2,014 (+$1,914)
Looking at the performance of the coins in my portfolio over the last year, a $2,700 investment and holding on to it for a year, would generate a 13x return, $34,985 in total.
Most people who made millions on crypto took extreme risks by investing large sums of money during times when the market was not as good as it is now. So to put things in perspective, you’re not going to turn $1,000 into $1,000,000 in the next 12 months.
But the crypto market has a lot of room to continue to grow. We are at the stage the Internet was in 1997. So if you think about how the Internet has evolved since, and it should be clear that a lot is going to happen in the crypto industry.
When you think about your investment goals you need to answer two important questions: How much money do you want to make? When do you want to achieve this goal? The more money you want to make, the more you will need to invest. The longer you’re willing to hold the assets, the less you need to invest.
Here are the basic rules of thumb that I follow:
1. Try to stick to the 1%. Make sure that the smallest position in your portfolio is never less than 1%. So if your portfolio is $10,000, then do not invest less than $100 on an asset.
2. Do your homework. It may impossible to be knowledgeable about every chain, but think about investing in a coin, just like you would in an early-stage company. What problem does it solve, how big is the opportunity, what kind of adoption/traction does it have, how long has it been around, whose is the competition, why is the team the right team to solve the problem and grow the project?
3. Invest only what you can afford to forget or even lose. You shouldn’t be sacrificing your quality of life just to buy crypto. if you are, you probably have the wrong mindset to make rational decisions about your investments. Start with investing as little as $20 every time you’re paid, no matter what the price is. This is a traditional investing strategy called dollar-cost averaging, which helps manage risk.
4. Don’t focus only on price. Crypto can create great wealth from modest starts, but if you focus only on price, I guarantee that you will make bad decisions, become a victim of scams, and in the end lose your money.
5. Be patient. You’re not going to turn a thousand bucks into a million overnight. You might as well play the lotto.
6. Become volatility proof. Crypto is characterized by huge price swigs. In the last few days, bitcoin went from $57,000 last week to $42,000 on Saturday and back up to $48,000. on Sunday. Can you keep your cool and not panic? If you’ve done your homework and picked good projects, then you can expect that they will survive a bear market and be much stronger when the next bull market comes.
If don’t already hold crypto it should be something you consider for 2022. What I’m doing and how I approach things might not work for you. Some people think that cryptocurrency is a shortcut to wealth, I don’t. I don’t believe in shortcuts or free lunches. Unless you’re a professional trader or someone who’s looking at charts 24 hours a day, I would keep things simple. Use your common sense and think about what you want to buy and why and how much you want to invest in a coin. No matter how you invest, it’s important to make informed decisions and keep a cool head, without getting caught up in the hype.
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