The Best Crypto Investment Strategy

…or how to not get a heart attack on the way to the moon

Having been in the crypto space for some time I get asked frequently what the best investment strategy in crypto is. While there are many different strategies to apply as with every investment there is a specific one that I can recommend to everybody especially if you are not a professional investor. The main benefit of this strategy is that it takes away your stress level and keeps your focus on other things while you can still participate in the upside of the blockchain revolution.

Especially for newbies to crypto who have joined in the recent bull market and have witnessed the crash in May this strategy is highly recommended. If you are one of them the probability is very high that you panicked from the fast declining prices and sold your coins at a lower price than you purchased them. The probability is also very high that when prices will rise again you will start buying at a higher price than when you sold — Not the best way to make a good profit.

If you are one of these traders (most will not admit even though they are) you are a so called “weak hands” trader who lacks investment knowledge and/or conviction about cryptos future. Ideally one should sell when prices are rising and buy when they are falling most people do it the other way around. To be fair it is also hard to read the market for professionals especially in volatile crypto.

What most new joiners are not used to is high volatility because they entered in a bull market with constantly increasing prices. But historically high levels of volatility have been normal in the crypto market due to hypes, weak hands, leveraged positions and market manipulations. For professional traders high volatility is a dream as they can play the market but for retail investors seeing their portfolio increase and decrease by +25% in days it is a roller coaster of emotions.

Luckily when applying the below mentioned strategy you become indifferent to volatility and I will stop calling you a weak hands traders as it requires some mental strength.

Assumptions

Before I start outlining the strategy lets first start with some assumptions you need to agree upon when you want to follow this strategy. Generally as investments involve forecasting the future it is important to have a thesis to base your investment on. Many investor just invest because they read the news about rising crypto prices or a friend told them about his great performance. Many have no plan on their investment such as when to cash out, they just watch their assets increasing in price and then decreasing again and then sell in panic. So lets not do it this way and follow an investment thesis:

This strategy is based on the following assumptions:

  1. Blockchain technology will be the next big horizontal innovation having a similar (or probably greater) impact on our lives than the internet had
  2. Crypto will attract the mass market in the next 2–5 years as more and more users, investors and developers will enter the space
  3. Crypto will establish itself as a new asset class that will be accepted and regulated by traditional financial institutions and governments
  4. The majority of financial institutions will have crypto in their standard offering for their retail and institutional clients base
  5. Cryptocurrencies will move from being mainly a speculative investment asset to a useable good in their respective ecosystems
  6. High levels of volatility will continue over the next years driven by hype, retail investors, leverage and market manipulations

If you agree with the above assumptions you can follow this 6 step strategy.

  1. Open an account at a crypto exchange (such as Kraken, Binance, or Coinbase) and buy “blue-chip” cryptocurrencies such as Bitcoin, Ethereum, etc. (I would go for a selection of Top 15 coins)*
  2. Buy a hardware wallet(s)** such as from Ledger or Trezor and send the coins from the exchange to the wallet. Here is a great step by step guide from Ledger on how to do this: https://www.ledger.com/start
  3. Stake the coins that you can on the hardware wallet to generate a passive yield while holding them or (if you are less risk averse) stake them on an exchange
  4. Store the wallets in a safe place such as in a bank locker and make sure to keep the recovery phrase (to restore the access to the coins in case you would forget the password of the hardware wallet or the device gets damaged) in a separate save place
  5. Forget about it for the next 2–5 years (the hardest step)
  6. Send the coins to an exchange and cash out or start using the coins in their respective ecosystems as by then they will move from speculative asset to a useable good (already is to some extent but will be more in the future).