Prices in the crypto market have been fluctuating recently. This is not just crypto-specific, the Nasdaq tech index has lost more than 20 percent since the start of the year. Interest rate hikes are now priced in the stocks and crypto market.
Price volatility in the crypto market has been decreasing over the years, and I think crypto is an extremely attractive asset class. Still, the fact that the price of certain coins has halved compared to New Year's Eve is a bit of a concern. For example, Hive's performance is better than many coins of a similar scale but has lost 45% since the beginning of the year.
So, what kind of portfolio should we create so that we are less affected by possible price drops and benefit from the unique return opportunities of the crypto market. I write down 5 principles that come to my mind.
- Build a substantial crypto portfolio.
- Act with a long-term investment perspective.
- Invest in valuable crypto assets.
- Do not sell any coins, including those obtained through airdrops, just enjoy the returns.
- Allocate a certain portion of your portfolio to stable coins.
- Invest in crypto when crypto is not on the agenda, for example, today.
Some inexperienced investors expect miracles from the crypto market. For example, getting a return rate of 100x in a few months. Of course, someone wins the jackpot in the lottery, but we know that the lottery is unlikely to hit us. When we have a significant crypto portfolio, a price increase of 5x, which is quite common in the crypto market, can also improve our financial situation. The crypto asset class has now reached maturity where we can put in a significant proportion of our savings. It would be in our best interest to give ourselves this chance.
We know that prices in the crypto market are increasing exponentially. We also know that the surest way to benefit from price increases is a long-term investment. If we start measuring the value of our money in Bitcoin, Ethereum, or Hive instead of dollars, maybe we will be more comfortable with price fluctuations.
Investing in truly valuable cryptocurrencies is one of the most challenging tasks we undertake in crypto investing. We will invest with a long-term perspective, and today's favorite coins may become obsolete in the coming years. For example, only six of the coins that were in the top ten three years ago are still in the top ten. Still, it is advantageous to invest in coins with large market caps. Bitcoin Cash, EOS, Litecoin, and Stellar, which are out of the top 10 list, are still in the top 50 at least. We can also invest in cryptocurrencies that we are familiar with. We have the advantage of getting to know the relevant community members when it comes to investing in coins like Hive, HBD, Leo, SPS, Bee, Cub, and PolyCub.
I got my Hives via airdrop 2 years ago. I currently own LARYNX and DUAT coins as I didn't sell my Hives but keep them. These coins are currently worth about one percent of Hive. But what value will they reach after two years? It is difficult to say for sure, but I can predict that they will become much more valuable than they are today. Thanks to the Atom tokens I have staked, I have claimed 3 new Cosmos ecosystem tokens in just 2 months, and there are 3 coins that I am entitled to airdrop. The names of the cions I claim are Meme, Assetmantle, and Cheq. I'm happy to have new coins via airdrops, even though they're worth around one percent of my Cosmos coins. Most of them will gain value over time, and a few of them will do very well. Coins owned by airdrop can give occasion to earn other coins via airdrop. In the Hive example, we all experienced this together.
While the staking returns of coins are lower than the DEFI liquidity pool returns, staking is a safer option as it is done on the blockchain. Power-up transactions or HBD deposit transactions on the Hive blockchain can also be considered in a similar category in terms of security. In the meantime, DEFI can also become safe when necessary precautions are taken, but the level of financial literacy it requires is a bit higher and it requires closer attention than staking.
We bought our cryptocurrencies to hold for a long time. They provide us with an annual staking return of between 5 and 20 percent. Because we invest in coins with low inflation rates, we get real returns. We use that return to meet our needs, and we are getting wealthier year after year thanks to the increasing value of our coins. What could go wrong in this scenario? We may come across a protracted bear market or an extraordinary event such as Covid19 or the Russia-Ukraine war, which causes the coins to lose their value rapidly. Bear markets don't last forever, and prices that fall due to extraordinary reasons will one day rise. Even though we know this, we may be uneasy about the depreciation of our portfolio. If, for example, a third of our portfolio consists of stable coins, we will experience less value degradation. We have an attractive opportunity to earn a 20% return on HBD.
Unfortunately, most retail investors make their first crypto investments near the top of the bull rally. I and many people I know made our first crypto investments in 2018. Many new investors entered the market last fall. However, it is necessary to invest in crypto when no one is talking about it. Or with the dollar cost averaging method, we can buy cryptocurrencies with a portion of our income every month.
Conclusion
Crypto investing is an activity that requires patience. If we act knowing that time is working in our favor, the probability of losing is almost negligible. As a general principle, it seems to be a strong idea not to sell our coins, but only to take advantage of the return. Crypto is a high-yielding financial instrument. When the compound returns effect is added to this, things become more enjoyable.
Cryptocurrencies have undertaken an important function such as encouraging people to save. Even if the astronomical returns to date have dwindled, saving is a good thing in itself. Especially during bull rally periods, the joy of crypto investment increases much more. However, it seems that the market needs to accumulate a little more power for this to happen.
Thank you for reading.
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