crypto market

Тop 9 Bitcoin Trading Errors made by Beginners – 2021 Guide

The crypto market is different than any other you already know, and it’s run by different rules. So, if you have knowledge in financial management, accounting, banking, software development, and so on – it’s not valuable in the crypto market, and can easily lead you to make some mistakes, that the blockchain will never forgive you. The beginners have more chances to make these mistakes, because they are inexperienced, and they may join unverified trading platforms, that seem like they have the best offers and conditions initially.

Choosing a reliable trader is the first step every beginner should consider immediately. It’s worth checking bitcointradernow.com/login, to see if it’s allowed in your country, and if it is, then you can proceed to create your account, and start trading. But, you can’t do that today, especially if it’s your first time. Before you take any step, let’s see which are the most common and most dangerous mistakes a beginner trader can make:

1. Not estimating the possible risks

Source:hackernoon.com

You can’t jump into investing real money before you learn how things are done. Crypto trading is very different than the traditional offering and getting what you want. Many beginners consider it as a type of gambling, and that’s completely wrong, and can lead to catastrophe. Experienced traders will recommend paper trading first until you feel completely prepared to become a part of that market. Underestimating the risks is a huge problem, especially when the trader is too confident, and thinks he/she can do anything. But, continuous losing huge amounts of money is a big error, and maybe the top mistake every beginner will make. If you lose some amount of money while trading, you have to take a break and get back when you are ready for that.

2. Not calculating the profit/loss ratio

What’s the purpose of getting $1,000 if you’ve lost $5,000 before? This is a negative profit/loss ratio, and it’s surely not good for your trading career. You should check this ratio regularly, so you can estimate if there is a real gain, or you are just having fun being at zero-value all the time. Don’t miss doing this, even when you gain more experience, and you make real money from your trading activities.

3. Not studying the market on your own

You have to do this. No exceptions. Studying a risky market like this must be your priority, and never skip to read a lot of literature, blogs, forums, and social media posts related to this topic. You can’t get the idea to become a trader today, and go for it tomorrow – it’s impossible, just like you can’t become a doctor or engineer without years of dedicated studying. It’s the same about Bitcoins, and if you don’t manage to learn everything that is important about it, you will lose a lot of money, and you will be unable to manage and handle the whole situation.

Source:admiralmarkets.com

4. Investing more than you can afford

The point isn’t to be poor after a few tries. The art of successful trade performance is to be responsible with your money and spend the amounts you can afford. Don’t take loans and credits, because that loop is endless, and it can lead you to more mistakes.

5. Getting too excited and emotional

If you have success on the first try, it can make you too excited about trading, and sometimes the emotions can be pretty overwhelming for you. In many cases, they won’t let you see the risks behind your activities, and that’s why we recommend staying calm and patient, so you can do the things as they have to be done, without any fatal risks.

6. Not having a trading journal

This is so traditional, and it may seem outdated, but it’s the best way to keep track of what you are doing, and how you behave on the network all this time. Write down every mistake, every risk you detected, and try to see the things that lead to a big loss. Keep a record of everything you are doing, so you can improve your strategy for the next time.

7. You follow trading patterns

There is no pattern that should be blindly followed, and as soon as you realize that, you will be able to boost the strategy and performance. It’s always good to explore the market and see the indicators, analyze the charts, and make decisions based on the past, but the current situation is good to track too. Combine a few different approaches, and don’t make big steps, until you are sure what will work the best for you.

8. You don’t have a plan

You need to have a few plans, just in case. Beginners usually fail to create the plan, until they realize they really need it, so they can know what they are doing at any moment. But, some plans can fail at the first moment, and that’s why you need to have a few of them, so you can fix the small mistakes immediately, and then move to the next step.

9. Using margin trading

Source:businessinsider.com

This is a big no-no at the beginning. That means you borrow the money you don’t have so you can stay active on the trading network. Maybe you will get a profit, but you will anyway have to get back a significant amount of money to the person or company that gave them to you. So, if you don’t need it, don’t get into margin trading.

As you can see – it’s not too complicated to get to know the trading market better, but at the same time, it’s not the simplest thing you will meet in your life. You must calculate all the potential risks when you starting a business like this. You can even go for safe trades until you gain enough experience to fight against the “beasts”. But, never forget that the whole concept of cryptocurrencies is virtual and as it grows the value every day, it’s quite possible to be ruined over the night. So, be careful, and always have a plan for what to do next.

6 Podcasts Every Crypto Trader Needs to Follow in 2021

Cryptocurrencies are getting more popular in recent years, which is not such a surprise considering the rise in values of some of the most popular options. This model of virtual money represents the future of transactions and offers many benefits when compared to the current financial system. For example, a high level of security and anonymous transactions cannot be intercepted or controlled by any authority. Also, you can avoid high fees that you have to pay in the banking system, which is especially good when you want to transfer the money to someone from another country. The ability to use an e-wallet for payments is especially useful for online services.

On the other side, one of the main reasons why blockchain technology and cryptocurrencies are so attractive to investors is because of the high volatility on the market, and many of them might bring them huge profits over time. The best example is BTC, which is reaching new records in 2021 with the current price of over $45,000. If you bought it only a year earlier, the profit would be ten times bigger now. If you are interested in trading with Bitcoin, visit btcloopholepro.com.

Source:afnor.org

Moreover, besides the BTC, there are many other trading options with great potential to provide you with profit over time, such as Ether, Monero, Dogecoin, and more. There are over 2,000 available units on the market. However, it is not so easy to select the right one since only some of them will continue to grow in the future. Also, you have to be aware of various factors that are affecting the prices of cryptocurrencies like supply and demand, efficiency, speed of the system, and global events like recession, official regulations, and more. Therefore, the best way to learn more about the whole market is to read analyses from experts or to listen to their podcasts. Here are some of the best podcasts related to the crypto market in 2021.

1. Hash Power

While most people have already heard about blockchain technology, many of them are not so familiar with this system and how it works in practice. A lot of people would choose to invest in popular trading options, but getting advanced knowledge about them could make the trading more efficient. Therefore, if you don’t know much about this system, we suggest you check one of the first podcasts related to this topic, the one lead by Patrick O’Shaughnessy, where you will get the basic knowledge about the technical details.

2. BTC Audible

Since Bitcoin represents the most popular option, we assume that you will be looking for a podcast that will explain to you more about the first digital asset. In that matter, you should look for Guy Swann and his Audible, where you can learn more about the advantages that you can get from using an e-wallet as a standard way of payment. The main advantage of this channel is that you can learn more about both technical specs and global factors that are affecting the future of this virtual currency.

3. The Pomp

Source:coinpedia.org

The host of this channel, Anthony Pompliano, will introduce you to big names who began to invest in the crypto market. The most interesting part is that you will find out about some successful people who were claiming that this market will never become stable and that investing in Bitcoin and other digital assets is not effective in the long run. However, many of them have changed their opinion. The most recent example is Elon Musk.

4. What Bitcoin Did

Source:blog.btcbox.jp

In this series, you will learn more about the rise of BTC and how it affected the whole market of cryptocurrencies. The main reason for creating the blockchain system was to find a way to avoid the banking system that was collapsed under recession in 2009. This topic is especially popular these days since there is a high chance for another recession caused by the lockdown measures during the pandemic.  Also, you will hear some examples where people managed to determine the right time for investing that brought them high profit. Peter McCormack, who is the host of this podcast, is also interviewing many successful people in this branch.

5. Unchained

Source:beincrypto.com

This is a great option for people who just started trading with coins and tokens. Laura Shin is a well-known expert, and she is interviewing many people with a lot of experience in trading. The main advantage is that you might find out more about some factors that might determine another crypto to have the same success as Bitcoin. Many people are looking for that option since there is a chance that some other unit could become even more popular in the future, and you should determine the right moment to invest in it.

6. The Breakdown

Since this podcast is brought by Coindesk, which is one of the most popular trading platforms today, you can get reliable information and the most recent news about the regulations, changes of value, predictions, security, and more. You should follow this channel more often since it is sharing all of the most important data about the crypto market. The host of this podcast is Nathaniel Whittemore.

Last Words

It is essential to get more information about any trading asset because that might improve your chances to select the right one and become more efficient as a trader. However, there is a big issue related to the crypto community where you can hear all kinds of stories. While some are predicting the crash of this market, the other ones are claiming how some digital currencies will reach some huge prices in the next few years.

Therefore, it is very important to follow only reliable people with a lot of experience with blockchain technology. In that matter, listening to these podcasts will help you to understand the potential of the blockchain system, what is causing the rise and fall of prices, and what can we expect in the future when it comes to this advanced method of payment.

5 Bitcoin Hacks and Secrets Every Trader Needs to Know

Getting double or triple your investment never seems bad to anyone. Who doesn’t like easy money? Of course, many do that. Therefore, the urge to get rich with a little investment has increased public interest in Bitcoin. This is also the major reason for the popularity of cryptocurrency trading. Furthermore, several success stories on the internet motivate more and more people to get into cryptocurrency trading. For example, Eddy Zillan, a crypto millionaire.

Source:in.news.yahoo.com

Only because of the amazingly true success stories, the verified users in the crypto market reached 1 million in 2018. This is proof of the truthfulness of Bitcoin and other digital currencies. But most of the people are not aware of the basics and get into this market with a little knowledge. Thus, gets in trouble and lose all of their money. Therefore, you must get to know about the hacks to get success in Bitcoin trading.

Ventsmagazine.com tells you about the purchase of Bitcoin without much investment. You can go to their Website to learn about the use of Amazon gift cards for the purchase of Bitcoin. Yes, you don’t have to use your own money if you have the gift card from amazon. So use this card to become rich.

But wait, you still have to know some secrets about Bitcoin trading. So here are the hacks that you can use;

1. Plan your Game

You might think that you already have a plan, you will do this and that and finally get success. But ask yourself how many times have you stick to your plan? Having a plan is a different thing and sticking to it is the thing you have to do. Now, to do so, you need strong will power.

Source:bitcoinexchangeguide.com

The important thing in Bitcoin trading is the time of purchase and selling. If you have bought the currency during the low time, you need to set the criteria to trade. So irrespective of the market performance, stick to your plan. But don’t just casually sit there. Analyze the market and make your move accordingly. After some time you will learn how the market works and when is the best time to sell your coin.

2. Consolidation of your portfolio

As the market goes up and down, so do the different coins. Some coins have long term potential (if you don’t know about it, you will learn that with time). The Crypto market is also like trading in the stock market. The worth of the coins can be determined through the market performance just like companies.

Source:coingape.com

For example, you have shares in a Robotics company and any cinema. So if you have to sell the shares of one of the company what will you do? Of course, the cinema because robotics has a long term benefit. The future is all about technology. Old themed and design based cinemas will no longer be there.

Similar is the case with Bitcoin trading. You have to analyze your coins and get rid of the one that does not have a long term benefit. So when you observe that the market of certain coins won’t be going up in the future, you can sell them. In this way, you will always play safe. Otherwise, the dead weight will only drag you down.

3. Never stay within the crowd

Yes, you have to cut the noise around you and should make your plan. In this way, you will move by your policies. Although it might seem that you have made a loss by staying away from the crowd that will be a short-term loss. If you want long term profitability, you have to remain in your plan.

Source:currency.com

Either remain ahead of the others behind them. For example, most of the traders are going for a certain market, but you are not sure about its performance. The best solution at such times is to stay behind the crowd and observe the trend. But if you are a trader with high market assessment potential, you will know which coins will go up.

People who work in larger groups fail to make true assessments. This is because, with more chefs, the dish will definitely get spoiled. Gossips began to start and people make wrong decisions only based upon the gossip. Therefore, keep this thing in your mind. Never follow the crowd blindly. Make your plan, your assessment and your criteria to manage investments in the business.

4. Make your own team

As mentioned above, the more the team members the gossipy it will become. But that doesn’t mean to work alone. Building a team and working along well can be a better choice. The only thing that needs accuracy is team selection. Therefore, the best way is to start with a short team, a team of 2 to 5 members.

Next is your game plan. You must ensure that all the team members get and provide information from authentic sources. Therefore, it is essential that all the team members have at least 2 or 3 subscriptions to primary authentic sources. In this way, you will be able to stay away from gossips and get the right information.

5. The need for Tools

You can provide someone with food, but it will only feed him for some time. On the other hand, if you teach someone skills to earn, he will be able to get food for a lifetime. Therefore, the need for tools is inevitable. The digital world isn’t that different from the real world. That is why you will need tools to work there.

So here we have a list of the best tools used for Bitcoin trading;

Source:icoholder.com
  • Trading view (Pro)
  • com
  • com

Conclusion

Trading isn’t child play. Although it seems like easy money, but it is not. This market is stressful. Therefore, prepare yourself to work hard. But without the right tools and knowledge, you might face failure. So equip yourself with the best tools and make your strategic game plan and there won’t be anything stopping you.

Top 5 Bitcoin Investors

The Bitcoin investors are a crucial part of this market, because they are experienced in this field, but also invest their own money in making the blockchain network more safe and stable. These people also invest in cryptocurrencies in a way that they deposit fiat money funds and get crypto coins in equal value. They are helping the network to develop and attract more potential investors, miners, and traders.

Bitcoin investing also includes:

– Buying and selling cryptocurrencies

– Making the whole network safe and stable

– Helping the beginners to learn more about Bitcoins

– Investing in crypto servers and cloud services

– Funding the development of the network and currency

– Helping the developers establish safe and trusted exchanging platforms like bitcointrader.site

– Making the digital wallets safer

These people also are holding meetings and crypto events, sharing their knowledge with those who are interested in mine, and earn with Bitcoins. They always follow what is new and try to bring that information to everyone who is included in the investing process.

What do you need to become a Bitcoin investor?

Source:pinterest.ca

Your knowledge, interest, and enthusiasm are enough at the beginning. No one wants to invest money in something that is not worth it. Before you invest even a cent in the blockchain network, you need to perform deep research on every aspect.

Investors can directly influence rates and values. You will also need to choose your mentor from the list of the most popular and influential Bitcoin investors, so you can learn from them and see what had they done for the currency. Inexperienced investors and miners are those who are trying to make a quick profit, but you must understand that you need to have deep knowledge in this field to reach that goal. It’s possible to earn cash from Bitcoins only if you follow the rules of the market.

How Bitcoin took the leading role in the crypto market?

No one can give an exact answer to this question, but maybe the secret of its success is hiding behind the massive promotion and the fact that Bitcoin is the first digital currency that conquered the world. People reacted emotionally and enthusiastically to it, wanting to grab more before they realized it’s not that simple. Many of the initial investors already gave up on this idea, but there are a lot of people who are still willing to invest in Bitcoin’s development and helping it to keep the role it has.

Here are some of the top Bitcoin investors of all the time:

  1. Barry Silbert

Source:bitcoinexchangeguide.com

He is the founder of Digital Currency Group. His goal is to help with the development of the global financial system, by supporting the Bitcoin and altcoins. He already invested in more than 70 cryptocurrency-related businesses. His company is also an owner of Genesis and Grayscale, which are focused on investing and crypto trading. Silbert also owns the Bitcoin Investment Trust fund, which is responsible for tracking the changes in Bitcoin’s price.

  1. Blythe Masters

Source:crainsnewyork.com

She is one of the most recognizable names in the crypto market. In the past, she was executive at JPMorgan Chase and CEO at Digital Asset Holdings. She is trying to find appropriate ways to implement the blockchain technology to Wall Street. After she opened her Digital Asset Holdings, JPMorgan Chase became their biggest client. Together they are testing how to make the crypto transactions quick and safe.

  1. Dan Morehead

Source:bitcoinexchangeguide.com

He is the founder and owner of the company named Pantera Capital. His company is the first to invest just in cryptocurrencies, including, of course, the Bitcoin. Pantera’s crypto fund is one of the biggest in the world. Morehead also invested in 43 cryptocurrency companies and funds, helping them develop and establish a strong trading base.

  1. Michael Novogratz

Source:bitcoinexchangeguide.com

He is a billionaire who invested almost 30% of his money in cryptocurrencies. Novogratz is a crypto enthusiast too. He started investing in cryptocurrencies back in 2015 and he already gave more than $150 million of his personal savings. He developed a crypto fund, expecting the other companies to help him invest in the Bitcoin. He is also known by his expectations back in 2018 when he was expecting that Bitcoin will be worth more than $40,000 per one coin.

  1. Satoshi Nakamoto

Source:youtube

We can’t complete this list without mentioning the creator of Bitcoin, who is known as Satoshi Nakamoto, but no one knows his real identity. It’s estimated that he owns around 1.1 million Bitcoins. People believe that he is not using his crypto savings for anything because if he does that, the price will drop immediately. Knowing that he is the creator of this widely accepted cryptocurrency, we can be sure that he invested a lot of his time and money to develop something that is this worth, but controversial at the same time.

Of course, there are a lot more names that deserve to be on lists like this, including Tyler and Cameron Winklevoss, Chris Larsen, Roger Ver, Charlie Shrem, Tim Draper, Dave Carlson, and Tony Gallippi. A lot more investors are also dedicated to the other cryptocurrencies.

Why invest in this cryptocurrency?

Source:hackernoon.com

There are a lot of reasons to choose Bitcoin as your starting point in the crypto market. Just like the gold for real money, Bitcoin is a safe-haven for all the cryptocurrencies. If it goes down, every other currency is going down too.

But, at the same time, it has a leading role in the market. Bitcoins have pretty high rates compared to the other currencies, and that is why people are choosing to invest and trade with it. If you own some pile of Bitcoins, but you don’t like the current rate, you can always store them in your crypto wallet, and wait for the better times and higher exchange rates.

Many people, companies, and whole countries are starting to clearly see the possible benefits of accepting the Bitcoins as a regular payment method. Even though a lot of people find it controversial, it’s a fact that a lot of them are at least curious about how does the Bitcoin works.

The 5 Biggest Trends in Cryptocurrency for 2020

Most important about the trades in the market of cryptocurrency are speculations. The position on the market and the value of some cryptocurrency is determined by interest and speculations about it. Today, the crypto market has a lot of ups and downs, especially because there are lots of pyramid schemes that are affecting the market and potential buyers to be more careful when they decide to buy some cryptocurrency. However, trustful cryptocurrencies have a strong back-up in blockchain technology, which prevents a possible scam.

The year 2020 will be important for this kind of market, mostly because a lot of companies are considering if they will use this kind of monetary system, but everyone has to be sure about the consistency of values of some popular cryptocurrencies like Bitcoin, Ethereum and more. In this article, we are going to present to you the best five trends about the cryptocurrencies that we expect to happen in 2020.

Libra

Source:france24.com

During 2019, the Facebook company has introduced us with their plan to get on the crypto market with its currency, with the name Libra. It is going to be available in the summer of 2020 when they finish everything about the regulations. This new coin will have a back-up from some big companies like Vodafone, Uber, and other companies that are interested, such as eBay, PayPal, MasterCard, and more.

Libra has a big potential because there are a lot of people interested in this new cryptocurrency, only in the United States there will be around 170 million users. The biggest potential lies in the fact that there are millions of Facebook users, that maybe never seen or heard about the cryptocurrencies, will now use Libra to pay for some services like a phone bill, or drive with Uber.

Consolidation of the Market

There was a fall in value for most of the cryptocurrencies in 2019, but it is estimated that there will be more than 2000 new types of crypto in 2020. However, only a small amount of them has a trade that is bigger than 100,000 dollars per day, and most of these coins have a very small amount, a lot smaller than the value of one cent.

The value of most crypto coins remained still in 2019, and in 2020, it is estimated that more companies will get into a trade of this currency. Also, with the bigger interest of big companies about investing in the crypto market, it is expected that there will be a bigger consistency of most popular coins on the market, with less turbulence in values.

The Bitcoin Halving

Source:zerocrypted.com

There will be an important event about the Bitcoin in May of 2020 when they will reduce the rewards that people get from mining this crypto. The value will be reduced from 12.5 BTC to 6.25 BTC. This already happened twice, because Bitcoin increased its value rapidly from 10 dollars to more than 10,000 dollars in 10 years.

However, the people who were mining this cryptocurrency continued because there is still a great chance for big earnings, mostly because of its big value, that in one moment was near 20,000 dollars. Also, a lot of people are investing in this coin because everyone is expecting it to be money in the future. Also, you can check bitcoineras.com for more info about the value and trends about the Bitcoin.

Also, the mining process is near its end, because there is a maximum of Bitcoins that can be on the market, and that number is 21 million of these coins. When the process is finished, this coin will no longer be available for mining, and it will only exist on the market as a strong cryptocurrency with is value-based by speculations, popularity, and a number of people who are using it for payments.

Regulations by the Government

There is a big awareness by the governments of many countries about the safety of using cryptocurrencies. Also, there must be some new regulations that will determine how will people who are using these coins to pay the taxes. Because now, there are no regulations about taxes from using any cryptocurrency in the world.

However, with better regulations of using the crypto coins, there will be fewer fluctuations in the value, and it will influence the market to be bigger and safer to invest in. While some countries are welcoming the introduction of crypto on their market, some others like China or the United States, who want to regulate these coins with taxes. Also, there are some speculations that says how many people are using crypto for black market, so there must also be some solutions for preventing this too.

Source:forbes.com

Fintech Companies

The market of all sorts of cryptocurrencies is on a big rise in recent years, where millions of people are investing in blockchain technologies and trading with the coins. The introduction of Libra has set up some new tendencies in the crypto market, and maybe there will be some similar currencies through social networks soon.

However, there are still a lot of important questions about how will everyone regulate the massive usage of these virtual currencies, and how are they going to implement them in the economies of countries, IMF, stocks, and much more. The biggest advantage is going to have the Tech Companies, who already are investing in this type of currency for a long time.

There is a lot of Fintech companies who are interested in investing in cryptocurrencies like Libra, and maybe developing some similar to that one. Some big Fintech companies like Chime got their investments from big finance companies like Goldman and Sacks, who see the value in investing in developing and trading in the crypto market.

The conclusion is that the crypto market will only get bigger next year and that there will be even more companies that will invest in the crypto. If the countries come up with some good regulations and determine the way of how will people pay taxes while they are trading of paying with cryptocurrencies, we can only expect even bigger interest from everyone to replace today’s money with this revolutionary way of payment.

Bitcoin and the Stock Market: A Simple Investing Strategy

“Should I buy bitcoin?”

This is the question everyone is asking. Is it a good price? Will the bitcoin price go up in the future? If so, by how much?

No one can predict the answers to these questions, because blockchain-based investments like bitcoin are a new asset class. We simply don’t know the rules.

Source:bitcoincryptocurrency.org

But we do know the rules for investing. They were laid out in 1949 by the Columbia economics professor Benjamin Graham in his classic book The Intelligent Investor. Graham’s strategy is called “value investing,” and it built the fortunes of great investors like Warren Buffett and Sir John Templeton.

Though there are many types of value investors, what they have in common is investing in great companies at a discounted price, companies whose stock price is a great “value.” While many investors look to “buy low and sell high,” value investors use disciplined analysis to find the “lows” and “highs.” This involves betting against the crowd.

The classic value investor also keeps a portfolio of both stocks and bonds to hedge against risk. Since bond prices generally go up when stocks go down, and vice versa, holding a mix of both — and periodically rebalancing that mix — provides safety against wild market swings in either direction.

But which stocks? Which bonds? In the modern update to The Intelligent Investor, the Wall Street Journal financial columnist Jason Zweig suggests holding the majority of stocks in a total stock market index fund, to diversify across the entire stock market. For bonds, he suggests a total bond index fund.

Source:investors.com

He does allow, though, that a portion of one’s stock holdings can be used for “mad money,” i.e., picking individual stocks, or precious metals, or even alternative investments. Thus, The Intelligent Investor portfolio today might fall somewhere between these two bounds:

It is in the slice of the pie called “alternative investments” where we can enjoy a taste of bitcoin. Bitcoin is the alternative investment that has seen magnificent returns over the past several years when most financial advisors did not even know what it was.

The approach here is to consider bitcoin (and cryptocurrency) as a slice of the investment pie. Of course, investors should not put more into bitcoin than they are willing to lose completely — and if they do, they see it as “tuition paid.” On the other hand, most can afford to lose a small slice of the pie. Visiting bitcoinprofitpro.com. you can learn how to earn money on bitcoin.

Including a bit of bitcoin within an investment portfolio allows the investor to learn about this new asset class, and potentially enjoy enormous gains that bitcoin has seen since starting at just a few pennies in 2010 and growing to over $5,000 today.

Source:smartasset.com

Another advantage to this investment strategy is that bitcoin is not correlated with other investible assets like stocks, bonds, precious metals, and the like. In other words, while bitcoin does experience wild price fluctuations, they are largely independent of other markets, making it a diversification tool.

The biggest drawback is that bitcoin cannot be purchased through traditional online brokerages; you can’t buy bitcoin at E*Trade yet. The investor needs to purchase bitcoin through online blockchain exchanges like Coinbase or bitcoin lending platforms like xCoins.io. The intelligent investor, then, might hold in his or her portfolio:

  • 45% total stock market index fund (like Vanguard Total Stock Market Index, VTSMX)
  • 45% total bond market index fund (like Vanguard Total Bond Market Index, VBMFX)
  • 10% bitcoin
  • One who puts his money in stocks only;
  • One who puts her money in stocks, bonds, and 2% bitcoin (the “conservative” portfolio above);
  • One who puts his money in stocks, bonds, and 10% bitcoin (the “aggressive portfolio above).

Here is a chart showing their three-year returns from September 1, 2015, through September 1, 2018.

The “aggressive” portfolio nearly tripled the value of the stock-only portfolio. Even the “conservative” portfolio outshines the stock market over the past three years. It also hedges risk by holding half stocks and half bonds.

Beyond Bitcoin: Diversifying Blockchain Holdings

Source:techcrunch.com

The easy way to invest in cryptocurrency, as we’ve shown above, is to simply buy and hold bitcoin. However, the intelligent investor may want to further diversify his or her alternative investments into other cryptocurrencies.

Let’s take the 10% “alternatives” of the Aggressive Portfolio and now further diversify it into the top three cryptocurrencies: Bitcoin (5%), Ethereum (2.5%), and Ripple (2.5%). The new allocation looks like this:

After just three years, the portfolio has multiplied an astonishing 9x. That $10,000 has grown to over $90,000—while still being protected against risk!

This assumes a one-time investment in 2015, then patiently allowing the gains to accumulate. This demands that investors wait out the huge roller coaster swings of the crypto market, avoiding the temptation to buy at every new high and sell at every new low. It requires patience and confidence.

To hedge against this psychological risk, there is another approach that is proven to deliver even bigger returns: investing the same amount every month, or dollar-cost averaging.

Dollar-Cost Averaging: The Easiest Way to Invest

Source:nohoartsdistrict.com

Let’s use a simple stock market example (no bitcoin). Instead of a one-time investment of $10,000, imagine the investor splits that $10,000 over 36 months, investing a fixed amount of $833 per month in the S&P 500. This is invested like clockwork, regardless of what the market is doing; it’s on autopilot.

After three years, that $10,000 one-time payment has grown to a little less than $15,000—but nearly $30,000 if split into monthly installments.

This technique is known as “dollar-cost averaging,” and it is the best approach for most investors for a few reasons:

  • You put the same amount in each month, sometimes buying more (if prices are low) and sometimes buying less (if prices are high). In this way, you end up buying the “average.”
  • This avoids you making a one-time investment when the market is high (and you never know if the market is high until later). You don’t have to worry about “timing the market.”
  • It also easier psychologically. When prices are low, you have the satisfaction of buying more—and when prices are high, you have the satisfaction of prices being high. It’s a win/win.

Combining the Dollar-Cost Averaging strategy with the Aggressive Portfolio above, then, you might take $500 per month and invest it like so:

  • 65% ($325) into a total stock market fund (like Vanguard VTSMX);
  • 25% ($125) into a total bond market fund (like Vanguard VBMFX);
  • 10% ($50) into bitcoin (or a basket of cryptocurrencies).

The intelligent investor would have these investments set on autopilot, transferring to an investment account and crypto wallet at the same time each month (say, on the 1st or 15th) via automatic withdrawal, if possible.

Today’s “intelligent investor” looks similar to the intelligent investor of the past. He or she is still focused on long-term reward while hedging against risk.

But isn’t it a bigger risk to sit out the crypto investing revolution entirely? This approach allows investors to balance risks with the rewards of bitcoin.