One of the most popular Google search queries around the world are: “How do I invest in cryptocurrencies?”, “How can I start investing?”, and "What should I be investing in right now?". The Cross Finance IR team shares their investment secrets.
You will find out how to detect potentially growing assets and unicorn projects, what is the golden rule of investing, what investment strategies work with cryptocurrencies, and much more.
1. Balance risk and return
Finding the right risk-return balance is crucial. Investments always involve a certain level of risk but under right management, they can also bring substantial returns. Successful investors always emphasise the need to prepare for the possibility of losses.
Another crucial aspect is diversification – the spreading of investments among different kinds of assets to mitigate risks and create a sustainable portfolio. Spreading by “baskets” is no less important. With crypto assets, it makes sense to spread among different wallets. Storage diversification helps to reduce theft and technical-related risks.
Conservative investors prefer to allocate a small portion of the portfolio, around 5-10%, to crypto assets to shake up the portfolio and get access to high returns.
2. For starters, follow liquidity
Newcomers are advised to start with liquid instruments. It will allow an easy exit and getting back investment in case of a need. Another way is to choose a reliable broker who is going to take your assets under trust management.
3. Leave emotions behind
A golden rule of investing says no to emotion. Emotions can seriously damage the investment process, especially in the crypto market. Be ready for market volatility, and avoid rushed decisions under the spell of price spikes. Experienced investors always follow their investment strategies with emotions intact. Both euphoria and panic can lead to devastating results. Donald Trump once said: “Sometimes your best investments are the ones you don’t make”.
For example, dramatically growing curves are better to be avoided due to the high risk of experiencing FOMO (fear of missing out) and consequent losses risks. Sometimes it is wiser to bet on a correction or downward trend.
4. Get a holistic view of the market
Market trend predictions demand comprehensive analysis of various drivers such as product demand, market size, industry trends, new tech emergence, consumer behaviour changes, regulatory updates, and macroeconomic shifts. Only the combination of all factors leads investors to well-informed decisions on spotting investment opportunities.
At the same time, the black swan can hit at any moment. For example, the majority of the investment banks predicted the best times for share acquisition before the COVID-19 pandemic which led to a lasting market crash.
5. Invest long term
Strategic long-term thinking is one of the key principles of successful investing in crypto. Many follow a “buy and hold” strategy and focus on long-term investments in assets with high potential. Short-term gains often lead to collapse.
This being said, diversification helps here too. Liquid assets like BTC and ETH call for higher stakes. New tokens that seem high-risk and high-return must be processed with caution.
6. Turn off intuition
"Maybe you have learned to trust intuition. Intuition doesn’t work. Experience and savviness work. Investing demands constant education and development"
CrossFi IR Team
Even the most experienced and successful investors actively constantly seek new ideas and ways to improve strategies: reading more, broadening the mindset, experiencing things, experimenting, and making mistakes. The best investment is in your own education and professional development. Such an investment can lead to great dividends in the future.
7. Think ahead
Data shows that the majority of investors invest in high-risk assets before the age of 35 while later they prefer high liquid and safer assets.
The digital assets market is not operating in isolation. Digital assets tokenization is likely to affect traditional stock and commodities markets. That is why CrossFi works in the field of synthetic assets. The planet experiences a seismic shift: fiat is leaving, CBDC is coming. CrossFi is building this new financial world.
"To spot something new and extraordinary, one must be curious. When have you become blockchain savvy? In 2013? In 2017? Or in the 2020s? Do you see what I am getting at? The earners spot opportunities before everyone else"
CrossFi IR Team
Now you know what to do!
This material is intended for informational purposes. It is not to be seen as a legal, tax, financial, investment, regulatory or other kind of professional or expert advice. Please seek professional advice from consultants before making any decisions.
