To all the readers, finally, I’m about to share how I pick projects and my strategy to invest in so-called risky assets. Please note, I’ll keep updating this piece of content on a monthly basis, and this isn’t any financial advice. Everyone reading this is free to change it based on their own requirements.
Before starting, I’ve divided this article into two parts. One is for long-term investing & the other is for short-term trading. The latter is risky and might not always turn profitable. Taking leverage could be a thrilling experience but it is not something that I would recommend to a newcomer.
Solid Bets (50-60%)
This is the foundation for anyone’s portfolio who’s a long-term investor. Getting this in the right combination already drags down the risk of losing it all over during a crash.
Remember, trading isn’t the only way of making money in Crypto. Once someone has a certain amount of assets, they can lend them to generate a passive stream of income & I look at it as the end goal of anyone’s investing journey. Maybe that’s not possible for you in case you’ve just started but over the course of 4-5 years, I feel it’s achievable.
Can be considered as one of the safest investments in the Crypto World. Early adopters of Bitcoin have reaped hefty profits & even I believe it’s still not late to join the Bitcoiner Club. The finite supply of Bitcoin makes it an excellent store of value.
Bitcoin imbibes the property of Gold and Fiat Money. The best part is, no one single entity can create more Bitcoins as per their wish. The best way to start accumulating some Bitcoin is to buy it in parts every month on a fixed date irrespective of the market & the price of bitcoin. SIP is the single best strategy that distributes risk across time, averaging the cost of acquisition for satoshis.
Although the price of a single Bitcoin is above Rs 40 lakh, you can buy it for as low as Rs 100 from WazirX.
Ethereum leverages the use of blockchain technology beyond just sending and receiving wealth. It’s the second-largest cryptocurrency by market cap after Bitcoin. Developers can also use Ethereum to build Web 3.0 based apps and smart contracts for protocols.
Investors should follow the same strategy of investing in Ethereum on a month-to-month basis. I’ve also seen people getting free ETH after flipping NFT’s on Open Sea. In short, Ethereum is like a currency for the Decentralized Internet.
Market Leaders (15-20%)
Once someone has secured 60% of the portfolio, the remaining could be used to take calculated risks and bet on some market leaders in the Metaverse. You can feel weird since everyone tells Crypto is risky & I’m telling you 60% of your funds are safe. Well, I’ve taken Impermanent losses under consideration.
Even if the market crashes, Bitcoin & Ethereum can be solid long-term bets. All you need is to hold them for as long as possible maybe even years.
Now, let’s come to Market Leaders. Who are these projects?
Defi isn’t limited to only Bitcoin or Ethereum but it also includes projects that allow people to bank on Defi or to flip NFT’s. Projects like Matic helps in scaling Ethereum to process hundreds of thousands of transactions in a second. Others like UniSwap being the largest Decentralized Exchange allows people to swap their coins in a second.
How do find these projects?
It is fairly easy now to spot these projects. Defi Pulse has an interesting page that lists all of the known defi protocols which people use. Anyone can use that list to find some innovative new Defi projects.
How do buy these projects?
Trust me not all the projects will have their coins listed on the platform that you use for trading. Chances are most of them will be listed but not all. If that’s the case with you, try watching our Blockchain Basics playlist. I am making a dedicated tutorial for anyone who’s interested to buy tokens from a DEX.
If the coin is listed on the platform you’re using, then you can buy from there. Now let me share some of my favorite picks.
Aave – Allows users to lend assets and earn interest or borrow from the pool.
UniSwap – Largest DEX. Probably the biggest on-chain protocol that allows people to trade using Liquidity Pools.
Matic – L2 Scaling solution for Ethereum. Strong team & Fundamentals.
The list goes on, DyDx, bZx, Compound, Curve, Airswap, Injective Protocol, etc.
These are the projects which aren’t big yet but are trying to solve real-world Web 2.0 problems and shifting them to Web 3.0. I’m a fan of these projects although most of them could eventually fail that’s the purpose of either picking a multi-bagger coin or a shitcoin.
Same question comes, how to find these?
Go to CoinMarketCap and start playing around with the filters. Essentially these are the projects which have less than a $1 billion market cap or if you’re willing to take more risk less than $100 million.
Quite obvious that they will be volatile by nature and might go up or down by as much as 20-40% in a day. I won’t bet short term but it is better to keep buying them as long term bets if the team and project are active & have project has real-world use-cases.
Assuming that you’ve bought 10 such coins, chances are 4-6 will fail terribly, 2-3 will just do decent & the remaining 1-2 will be your gems. That’s the general purpose of these coins. Buy them only if you’re confident about the project after going through their GitHub, Twitter, TG Communities. I’m not asking to throw a dart in the dark.
Shitcoins (Whatever is left)
Every made Rs 40,000 from a Rs 3,000 investment in a couple of weeks? Yes, I’ve made lol!
It is an optional portion that may or may not be required. Shitcoins are not for new investors. I’ve had experiences where newbies get on board just to buy Shitcoins because somewhere they saw about Shitcoins and then they buy it in bulk.
Don’t trade Shitcoins in the hope of making long-term money. I mean a coin with Unlimited Supply or maybe a Quadrillion tokens can never reach even $1.
Thanks for reading.