💸10 things every Crypto Investor Must know!!
Crypto investing is not for the “Faint-Hearted” & it is Volatile like Hell (not everyone can take a 40% drop in hours). This article presents some tips that will help you in your journey.
🚨Big Disclaimer: This is not investment advice. I am not an investment advisor. This information is meant to be for educational purposes. Please do your own research before you decide to invest your hard-earned money. If you are unsure seek help from a professional financial advisor who can understand the full breadth of your financial needs & commitments to advise you on what you should do.
CRYPTO is BACK!! BULL run in full swing
🔥With the Crypto market getting back to its May exuberance levels, there is a lot of renewed interest from Retail investors to buy in again. The dream of getting rich, buying a Ferrari, and the private jet and the island is back. Some of these include Retail investors who got burned in the crash of May/June, while others are new to the game or missed the boat last time around. They are now chomping on the bit to get back to Crypto Assets - 🚀Caution to the wind and all.
Let’s dive into the 10 Must know in full Crypto Humor using Memes to help us
1. Not for the “Faint-Hearted” & Volatile like Hell (not everyone can take a 40% drop in hours)
May to Jul ‘21 was a difficult period for the Crypto market with lots of FUD (Fear Uncertainty and Doubt). One minute the sentiment was super euphoric (everyone shouting Bitcoin to hit $250k) and then all of sudden - Crypto / Bitcoin was dead, every possible bad news was coming out and people were worried this thing was going to zero. Everything from China, to US Govt to Hacks - all thrown in with the Kitchen sink.
Then after a very classic “Wyckoff Accumulation” the market started to pick back up. Here are some good strategies to trade the “Accumulation Phase” (generally happens when large players look to shake out the small retail traders and take their money).
Below is a CHART of the total Crypto Market losing $1Trillion in Market cap as leveraged positions across various exchanges unwound in a matter of hours. Even as the price started to recover it was met with more fear, triggered by more people looking to get out. And in just over a month the market recovered most of its losses - climbing ~ 95% from its lows
This roller coaster has caused emotional turmoil among new participants. Many of whom lost a considerable amount of money through this process.
A month into the crypto crash cycle Your 21 year “Old” self is ready for anything
And if you were able to hold out the panic, fear, and uncertainty and hopefully held an unleveraged (10x or 100x) position you could be back to a pretty picture.
2. Understand your investing style - Day Trader, Swing Trader, Buy & Hold, Dollar Cost Average
Most people reading this article will not be active traders. If you are not glued to a screen most of the day and have a day job, then it is really important to understand your investing style - how much time can you devote to your trading / investing activity.
When do you do your research?
Do you need to set private alerts & triggers?
How do you determine when is a good time to buy etc.
📣The 24x7 nature of the Crypto market makes it really tempting to keep at it. It all seems easy when the markets are on an up-trend. Even “Blindfolded Monkey Beats Humans With Stock Picks” in this uptrend where the rising tide is raising all sails.
The key thing to know is - this party 🥳 will not get on forever. The market will go through its ups and downs - you need to have your exit plan, risk management strategy etc. planned out in line with your investing style. — Else you might find yourself suddenly going from “Trader” to “Long term holder” as prices crash (Those who have been through it, know what I mean 😂🤣)
3. Don’t FOMO in. There are many trains, each leaving every 5-min
If you haven’t heard - FOMO - Fear Of Missing Out. Ita basic human psychology. It happens to all of us and it drives many of us to make decisions to follow the herd mentality. And when the bus goes off the cliff you are left wondering - “I did see all the signs of this being CRAP, why did I still step onto this bus” OR. “Holy S#%$, someone pulled the rug from under me”
It is important to understand:
what you are buying?
why are you buying it?
what is a good price for this?
When the market is entering parabolic euphoria it is hard to control your greed (which is generally a good sign to take profits). I have come to realize, I can’t really predict where the market will go, what the price of a certain item will be (valuation and$ price can change overnight).
What you want to do is set your own risk limits, do your research, and operate within the boundaries of the investment style that fits your profile. This would mean that sometimes certain Tokens may be too extended to purchase but you would just have to wait for a market correction to buy those gems when the price makes sense for you. With 11,000 tokens in the crypto market and more being minted every day, I am sure there is no dearth of opportunity.
Ethereum Chart below shows that it has hit the price of $1,800 multiple times since the start of this year.
4. This is about Dreamers using new Technology to change the world
Crypto and Blockchain has definitely moved beyond its first use case setup by Bitcoin for peer-to-peer payments and potentially a store of value (hedging against inflation). Early adopters have taken Blockchain technology and are now spreading it from various walks of life and bring to life more and more uses cases.
From new Blockchains to Layer 2 solutions to Parachains and Oracles to NFTs - if you don’t understand what these technologies enable and why people are going crazy about them you may just see this all as a scam.
Just like the Early days of the internet in late 1999/2000 - the boom and bust cycle produced the technology giants of today like Amazon, Google, Facebook. If you want to make money investing in crypto you need to get your hands dirty to really understand which technology or projects have the potential to change the world and how their teams are executing against that vision.
5. Don’t over-engineer things. You just have to “Ape in”
Ape (aping) In the cryptocurrency scene, ‘aping’ or ‘to ape’ refers to entering a position in a coin. It’s a slang term used a lot in chats and on Twitter. For example ‘ What coin are you aping into?’ would mean ‘ What coin are you buying?’
While you can do a lot of research, read many blogs, and watch lots of videos, there is no better way to get in, than buying your first crypto token. And that is when the real roller coaster begins. You change from a bystander to someone on the roller coaster.
Of course it is important to ease into the world of crypto slowly. Don’t bet the house and the farm just yet. Start with small amounts of money that you can afford to lose. The fractional nature of crypto is such that you can get into it and buy a few $ worth to start getting to understand it better.
6. No one went broke Taking profits along the way
Always take profits along the way. It is hard to do because it seems like something that is going up will keep going up and you don’t want to have stepped out too early in this process. But it is even more hard seeing all your profits evaporate and have a very profitable investment turn into a loss. Also, as you take profits and stash them away for future buying opportunities when the market dips you are improving the chances of higher returns over time
7. If you are not a Tourist, learn the language
This world has developed its own terminology and if you really want to understand it you need to learn the language and what they mean
HODL: Cryptocurrency investors developed the term "HODL," which stands for "hold on for dear life." The acronym originally came from a misspelling of the world "hold."Digital currencies can be highly volatile, so when they start experiencing significant price fluctuations, some market participants state that they should simply "HODL."
Moon/Mooning: When a digital currency moons, that means it rises sharply in value. For example, a crypto trader could talk about how an altcoin is going "to the moon!"
Whale: The term "whale" is used to describe a trader who makes sizable bets. This term is a good one to know because market participants with the ability to execute very large transactions can potentially manipulate the market—or "make waves in the ocean."
8. Take your time to learn the ropes
This is your hard-earned money we are talking about! You worked a long job 8-10-16 hours to make this money. You have made choices of not buying yourself an expensive gift or taking a holiday to save up this money. Don’t get caught into a get-rich-quick mindset through all of this without taking time to understand this space.
9. There are lots of Scams; Do your own research
When there is so much many to be made and information asymmetry, there is an equal share of SCAMS. Please be extremely cautious. When you are starting off stick with the known & trusted platforms and avoid high
Scam #1: Social media con artists
Scam #2: DeFi rug pulls
Scam #3: NFT scams
Scam #4: Altcoin pump and dumps
Scam #5: Viruses and malware
10. Enjoy the ride - Learn, share and give back to the community
The whole ethos of Crypto is centered around community-led build. There is a lot to learn from extremely passionate people. Along the way find a way to give back and share your learnings with the community. This is not a get-rich-quick scheme, it is an opportunity to be part of the most disruptive change of our lifetime.
I guess this newsletter is my effort to share what I learn and help other along their journey.
Pictures Taken at the height of the last crypto market bull run in 2017 and then just after the market crash in 2018 (FYI. This is meant to be funny)