This is a "guide" to help you get started with crypto. I decide to break it down into digestible parts. Those are merely my thoughts and observations from experience when i first started dabbling with cryptocurrencies but more on why I decided to invest in crypto in another post.
Disclaimer, I am not a financial advisor, I am merely a helicopter pilot. Always do your own research and be extra cautious to where you invest your money.
Now that we got that out of the way, lets get started.
Part 1: Learn the basics
Bitcoin is king. Period. There are so many different cryptocurrencies and assets to choose from and it is only logical that you feel dumbfounded when you take your baby steps into this market. As a newbie investor the best thing you can do if you don’t want to mess with charts, news, technology and general analysis, the best thing to do is buy Bitcoin once a week, for starters. You don’t care if the price is up or down, you’re in it for the long haul because Bitcoin is a sound investment and a good hedge, in the macro scale of things. For now. Investing is an animal on its own and there is simply too many factors and information for someone that a) doesn’t care much or b) is new into the space. Given your budget you can increase the times you buy in the week and or the amount itself and that is called Dollar Cost Average, or DCA for short. Id suggest you get acclimated early with lingo and acronyms at least, in order for you to digest better the information you are reading.
You might be thinking now "but crypto goes up and down, why cant i buy the dip mr Binochet? haha ill just buy the dip, checkmate"
A lot of crypto newbies are fooled into believing they will time the market, or they will believe the words of a shitfluencer regarding that "This is the time to buy the dip". And herein lies the problem:
What if it keeps dipping?
Congrats, you went all in and the price dropped 3 more times. Now you're priced out, out of money to buy in lower valuations and most probably because of your lack of experience you will most likely capitulate and sell lower. The memes do like to write themselves...
So, what do?
DCA is the best investment tactic because no one knows what Bitcoin will do in the next hour or tomorrow. NO ONE. I will say this one more time so you can abolish the shitfluencers that try and play Nostradamus with a crystal ball. NO ONE KNOWS WHAT WILL HAPPEN IN THE SHORT TERM. Instead of trying to time the perfect time to buy, you now get an average price during the week/month timeframe and that’s all she wrote. It doesn’t have to be more complicated than that.
A thing to keep in mind is diminishing returns. Like everything in life, more doesn’t always mean better. Yes, you can break down the monthly amount you put in to 3-4-5, hell, you can buy every day in smaller increments if you’d like, but this is like having 3 screens in your PC to play vidya and having 33 screens. Diminishing returns, less is more.
The ideal for me when I first started was 3 times a week, and specifically I was buying on Wednesdays, Saturdays and Sundays. Historically speaking I observed that the crypto market has a proclivity to dump on weekends. This is not a fact, just a mere observation that it tends to dump more on weekends rather than weekdays. Nowadays I am not DCAing 3 times a week, I follow a different DCA strategy which is more “advanced” and it’s a topic for another article, this is intended specifically for crypto newbies.
When you start investing in crypto, it won’t be long before your need to diversify appears. All those shiny new gems, waiting for you to grab them before they give you those massive returns you keep hearing about in crypto. It is not a bad idea, in fact it is a great idea to have some portfolio diversification, however for the newbies I would suggest sticking to crypto “blue chips”
Blue chips are a definition pretty subjective but I will provide you a generally accepted list, which are the top 10-15 crypto assets in market cap.
For full disclosure, there are cryptocurrencies that are in the top 15 that I personally don’t feel they belong there. For example, Ada Cardano’s native token, IN MY OPINION, is super over valuated and offers zero application apart from an NFT market and a very bad transaction throughput and scalability.
A newcomers investment portfolio(very different from a traders portfolio) should contain its bigger sum into Bitcoin, and the less bitcoin you are holding the more volatile your portfolio will be from a macroeconomic perspective speaking. A good starting allocation for me would be 40% into bitcoin, 20% into eth, 15% into stablecoins (personally I prefer UST, PaxG, USDC and DAI) and 15% altcoins of your choosing. This is a “safe” portfolio so to speak, and albeit it wont produce crazy returns in the end of a cycle, you will definitely have more returns and a better hedge rather than having your hard earned money into a bank. A portfolio allocation can change depending how advanced you become and into what phase we are during a market cycle. Apart from bear cycles, and bull cycles (Bear = price goes down, Bull = price goes up) we have Bitcoin and Altcoin seasons, that can live within a bear and a bull market cycle.
***To sum up: ***
If you are trying to invest some of your money into an asset and you choose crypto, DCAing into the asset you want to buy is your best option. Because you cannot beat the market, and you don’t have to. Instead of imagining the market like an invisible enemy, take it as the friend who shows you the way. The DCA way
Your friendly neighborhood helicopter pilot, ₿inochet
Part 2 coming tomorrow.
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