I am a longtime marketer and successful internet entrepreneur. In addition to diversifying your portfolio, avoiding MEME coins, and investing smaller amounts over time, I recommend. You should limit your exposure to cryptocurrency to 5% of your net worth or less.
Cryptocurrencies are all around us. While it has reached the mainstream, it still has a way to go. Crypto is held by less than 0.98% of the world's population. In contrast, there are about 7.9 billion people on the planet and 78 million crypto wallets. Investing in this company may be a once-in-a-lifetime opportunity.
A lot has changed since I first invested in Bitcoin in 2011.
The number of coins and altcoins available for investment has also exploded. There are now more altcoins than Bitcoin will ever have (only 21 million BTC will ever be in circulation).
Almost any coin or token can be invested in. Fancy owning a piece of virtual land in Decentraland? Take a look at MANA. How about investing in Defi (decentralized finance)? Look into SOL or ETH. Web3 is accelerating at warp speed, and there are an infinite number of cryptography applications. In history, there has never been a time when you could get so rich in the middle of the night by simply clicking on your phone.
However, you are probably aware that crypto markets are extremely volatile.
Minutes can make or break a fortune. Scams abound. Recently, SQUID, a token marketed as an invitation to a game based on the Netflix show Squid Games, was actually a "rug pull," when a token's creator cashes out and disappears. Investors lost over $2 million in this case.
What is the best way to invest in crypto?
Despite my enthusiasm for blockchain technology, I think it's too early to invest heavily in cryptocurrencies unless you are a rarity and know what you are doing.
Crypto investing accounts for too much of the net worth of many investors. Every week, I get emails from people who have taken out loans, second mortgages, or leveraged their crypto holdings to buy more crypto. I think this is dumb and dangerous. The risks involved in this investment are too high.
Some will become wealthy, but would you bet your financial future on a coin flip? I believe in taking risks, but they must be calculated risks.
You shouldn't invest more than 5% of your net worth in crypto - and even less if you're just getting started. Invest most of your money in more historically predictable asset classes like stocks, bonds, and real estate.
You can invest more of your net worth as you learn more about crypto, but you must feel comfortable with the risk. Do your crypto holdings keep you awake at night? Could you lose everything in your crypto portfolio? I have, but for most, if so, then you have probably invested too much.
Diversify between traditional and alternative cryptocurrencies.
Humans are incapable of predicting the future. Most coins and tokens will have little or no value within the next few years. In the same way that 90% of investors cannot beat the stock market, it will be difficult to predict the long-term winners of crypto. Diversification is crucial. It is best to have a diversified portfolio of traditional coins and altcoins, not just a few cryptocurrencies.
MEME coins are a dumb investment.
Investing does not involve gambling. Investing in meme coins is gambling at this point, and I do not recommend you do so.
Believe in the founders and projects you invest in.
It's important not to lose sight of the fact that underlying crypto is a decentralized blockchain's exceptionally simple, and beautiful, concept. Over the next few years, this concept will disrupt many industries on the planet.
Don't invest in anything you don't understand, just like any other investment. No matter whether you have a background in technology or computer science to understand some projects, learn about their mission and founders before investing.
Listen to their podcasts, join their Telegram group, read their work, and visit their Reddit page. Not just coins that you have a hunch will double overnight, but in projects and founders that you believe in.
Your investments should be cost-averaged.
Dollar-cost averaging your investments over time is similar to traditional stock investing. Rather than investing all of your money at once, you invest smaller amounts over time (weekly, monthly, etc.).
You are able to buy the asset both at a low and high price over time, effectively averaging your cost and protecting you from a big price drop right after you buy.
If you have a bucket of money or want to invest some of your paychecks, consider dollar-cost averaging your investments. Most crypto trading apps have this feature to make it easier to automate.
Remember, investing isn't gambling.
Investing and living at this time is great, but I urge you to be careful and never invest more than you can afford to lose. A new opportunity arises every day, and if you miss one, another is always around the corner. Investing in crypto now puts you in the top 1/10 of 1%, and that's one of the best things about it. It's going to take a long time for everyone to catch up. Be patient.