How much are Americans really earning from cryptocurrency investments? GOBankingRates recently surveyed 1,037 Americans across the United States to learn if they invest in cryptocurrency. Twenty-five percent of respondents surveyed said they have made over $5,000 on crypto.
How can you join them and target $5,000, or more, in cryptocurrency earnings? Here are some of the investment strategies employed by crypto investors.
DYOR: Do Your Own Research
Cynthia de Wolf, marketing lead of DeFi startup Bright Union, has been a crypto investor since 2017. While de Wolf’s personal portfolio decreased by 50% since the last All-Time High (ATH), de Wolf’s total profit is still over 100%.
One of de Wolf’s recommendations to cryptocurrency investors, new and existing alike, is to do your own research, or DYOR.
“Projects based on shaky tokenomics, cheap tech, flashy marketing and unsustainable incentivization should be ignored,” said de Wolf. “The focus should be on serious projects that actually solve problems and deliver value to users in a sustainable manner.”
Buy and Hold ‘Blue-Chip’ Cryptocurrencies
Marlon Williams is the founder of Atlanta Blockchain Center, an incubator designed as a co-working space and learning center providing blockchain companies with the tools and resources to grow and scale launching in Atlanta next month. Williams recommends buying and holding “blue-chip” cryptocurrencies for at least four or more years.
“Blue-chips are established cryptocurrencies belonging to projects that have paved or are paving the way for the industry through unique innovation,” said Williams. A few examples of these projects include Bitcoin, Ethereum, Polkadot, Chainlink and Solana.
“As a new, highly speculative and volatile asset class, buying and holding cryptocurrencies over a number of years have been proven to yield the most effective result,” said Williams.
In cryptocurrency lingo, this acronym stands for “hold on for dear life.”
“Be patient and embrace the volatility,” said de Wolf.
Ignore the FUD
FUD is another crypto acronym that stands for “fear, uncertainty and doubt.”
“Ignore media topics that induce fear, uncertainty and doubt,” de Wolf recommends. “Go long. We are in it for the tech.”
Much as you would diversify a traditional stock portfolio, don’t put all your eggs in one basket when investing in cryptocurrency.
“Forty percent to 50% of your portfolio should go into low-risk investments like BTC and ETH,” said de Wolf. “Thirty percent may go to medium-risk investments: blockchains or protocol with a huge market cap that proved themselves.”
Williams also recommends investing in less volatile cryptocurrencies, like USD Coin, and deposit into reliable yield-generating decentralized lending protocols, like Aave markets, Nexo or Celsius Network.
“These services accept deposits and lend them to other users seeking loans, charging a yield that is then shared with original depositors,” said Williams.
Buy the Dip
“Buy the dip” is defined as the principle based on the assumption price drops are temporary aberrations that correct themselves over time, according to Forbes.
If you’re not sure if it’s the right time to buy, de Wolf recommends checking the Crypto Fear & Greed Index.
Find and Invest In Small-Cap Cryptocurrencies
This is a risky strategy, but Williams said investors may try to find and invest in small-cap cryptocurrencies with the potential for astronomical returns in a short period of time. A good example of this is non-fungible tokens (NFTs).
“While this is not a recommended approach, some investors have seen massive returns by essentially gambling away their hard-earned funds with risky cryptocurrencies,” said Williams.
Never Buy at an All-Time High
This is a rookie tip from de Wolf who said never buy at ATH.
Protect Your Financial Future
There are certain types of DeFi insurance aggregators that can help mitigate risks and provide protection against hacks or stable coin de-pegging. Do a bit of research to determine which cover you should invest in to protect protocols or exchanges and manage any active covers in your crypto portfolio.
While there isn’t a surefire way to guarantee earnings in cryptocurrency investing, following some of these strategies may allow you to target $5,000 or more in crypto earnings over time. Williams recommends never investing more than you are willing to lose and to enter the crypto market with a little bit of capital, discipline and patience.
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