The crypto market is in perfect shape for a massive bull run. However, if you have been sitting on the fence since the crypto winter, you might feel a little left behind. The anxiety of FOMO is indeed high, and surely you may come under pressure to hastily re-enter the market. But you need to exercise some self-control and strategize.
Besides crypto investing, crypto holders also play casino games to win real money using crypto. These games take advantage of the growing cryptocurrencies and provide an opportunity to enjoy gaming and earn sizable profits. Hence, before venturing into the volatile crypto market, you should consider these games as alternative investment strategies.
Strategic planning is all you need to avoid decisions that could harm your investment. If you’re still keen on crypto investing, here’s a walkthrough to help you get ready for the imminent bull run.
1. Make an Investment Plan
The reputation of cryptocurrency regarding volatility and unpredictability is real. Resist the temptation to make a big market move by investing all your money at the first sign of a possible rally.
Instead, take time to develop an investment plan or vision that will guide your investments. Analyze your position regarding how much you are willing to invest in the market’s prominent tokens, especially Bitcoin and Ethereum, then altcoins.
Altcoins should be evaluated separately regardless of the sector they operate since portfolio diversification is necessary. For instance, you can assign 10% to layer 2, 10% of your portfolio to AI tokens, 30% to Real World Assets, and the other 30% of your assets at your discretion.
Besides that, you can also decide on dollar-cost averaging. Here, you acquire some assets when the market is down to increase your position over time.
2. Make Decisions on Proper Research
Not being driven by hype or fear of missing out (FOMO) can be very beneficial when it comes to investment choices in the cryptocurrency market. One of the key features of cryptocurrency is transparency, as every transaction is recorded in a public blockchain that everybody can access.
Transparency allows you to access various tools and data to keep you well informed. Here are some free tools you can use:
- AI: Input the chosen address to get a statistical review of all transactions, distribution, and volatility of assets in this portfolio.
- Arkham Intelligence: A blockchain virtualizer that allows you to view wallet relations and display them in a user-friendly manner. It could be instrumental in highlighting suspicious transfers or ensuring that no Sybil attacks are possible during airdrop farming.
- Crypto-fundraising.info: This tool tracks all the venture capital funding for newly launched crypto-related projects. It informs on the companies involved and the exact amount given to such projects.
- Fi: As a “safety measure” for the fair crypto world and smart contracts, it scans for the attempt of the rug-pulls and recognizes critical errors in the smart contract code.
Use the selected tools to thoroughly research the project’s fundamentals, team, and market strategy. Perform a Clifswot analysis to reveal the strengths and areas of improvement within a project.
3. Set Profit Targets and Follow Through
The biggest mistake many investors make in investment is not knowing the right time to take profits. This is a significant oversight in the crypto space where social media, emotions, overnight trends, and greed greatly influence the markets.
Set specific profit-taking goals and stick to them religiously as the prices become more inflated. Employ a disciplined approach that emphasizes long-term horizons and defends you against short-term market dips. If you are hesitant to exit, try using the dollar-cost averaging method to scale out.
4. Diversify your Risk
Generally, Bitcoin and Ethereum are considered top cryptocurrencies, with investors looking for riskier, significantly higher profit-and-loss ratio altcoins. Unlike these prominent cryptocurrencies, altcoins are associated with higher risk.
Therefore, keeping your investment in altcoins to a minimum is essential. Besides the excitement of more significant rewards, exhibiting control counterbalances and offsets speculative exposures. This protects your portfolio against radical swings to the downside.
The fact that various altcoins might be the subject of sudden gains should not be taken as a sign they offer the opportunity for a long-term position. Many of them are not suitable for holding.
Altcoins tend to fall out of favor when the markets are down, usually experiencing a drop of as much as 95% between market cycles. As a result, a well-defined exit plan with pre-specified exit points is crucial before any trade operation.
A diversified altcoins portfolio that blends high-cap cryptocurrencies with high-volatility altcoins can be used to achieve balance. This blend helps to reduce the risks associated with high-volatility altcoins.
5. Risk Management
Efficient risk management is the foundation of strategies that a beginner in the trade should acquire. But the fact is, no one thinks of the options until they have already struggled with it.
Firstly, identify how much of your investment you can risk without stretching beyond your financial limit. Next, specify the amount you’re ready to possibly lose on every trade and stick to it. You can do this by setting a stop-loss order that protects you from substantial losses when market conditions change drastically.
To solidify these risk management approaches, avoid being emotionally driven and make predetermined target entry and exit prices part of your investment plan to avoid surprises. Constantly applying these approaches will make you comfortable dealing with the unpredictable price swings in trading.
