Crypto Asset Management and Trading Strategies
Tags: Cryptocurrency, Crypto, Bitcoin, Cindx

The awareness around cryptocurrencies and blockchain technology has increased in the past few years, especially after a growing number of early investors have made a killing from their Bitcoin investments. Take the Winklevoss twins for example — the twin investors became the first Bitcoin billionaires after the 120,000 Bitcoins that they bought in 2012 at a value of $120 per coin became valued at $18,500 apiece in 2017. Although Bitcoin’s value has fallen since then, the two investors remain a perfect example of how cryptocurrency can make investors extremely wealthy. (Source: https://www.cbsnews.com/news/winklevoss-twins-bitcoin-billionaires-investment-price-surges/)

However, today’s investors aren’t as lucky as the early adopters. In part, this is because the value of cryptocurrencies has become unpredictable in recent times. Bitcoin, the world’s most popular cryptocurrency, is one of the most volatile coins. Its price fell as low as $6,127.21 since the currency crossed the $20,000 mark. (Source: http://markets.businessinsider.com/currencies/btc-usd)

This means that investors must adopt smart strategies if they want to reap the benefits of crypto investment. Investors can decide to trade or invest in cryptocurrency. For the purposes of this article, investing means buying and holding of cryptocurrency over a longer amount of time with the aim of building wealth. Crypto trading, on the other hand, is the buying and selling of cryptocurrency in order to generate returns.

Here are some of the smartest investment and trading strategies that can help investors in gaining some profits from cryptocurrency.

Investment Diversification

For those who want to invest in cryptocurrency, the best advice is to diversify. Putting your eggs in one basket is risky. This is especially true in the cryptocurrency markets, which are characterized by volatility and lack of regulation. Diversification helps to reduce risk by preventing a total loss that could occur if one crypto price fluctuates below one’s inital investment.

For example, Bitcoin’s value went as high as $19,500 in 2017. Since the beginning of 2018, Bitcoin’s price has at times fallen below $7,000. This means that some people have experienced severe losses, especially if they bought the coin when it was valued at its highest. At the same time, there are those who have earned from this fluctuation — those who bought it when at its lowest and sold it after its recovery. Source: (https://www.statista.com/statistics/326707/bitcoin-price-index/)

Therefore, choosing another altcoin to invest is a good idea, since other currencies may not be as volatile as Bitcoin. One of the best altcoin to invest in at this moment is Ethereum. Although the currency has also experienced some fluctuations in the past few months, it is not as volatile as Bitcoin. There are also possibilities that the price of Ethereum will rise in the long run and generate some good profits.

Be a Wise Trader or Investor

Apart from diversification, any crypto trader or investor needs some good information and education about Bitcoin and the entire crypto market before investing or trading. In fact, this information is necessary before making the decision to be a trader or a long term investor in the first place.

An investor should be more interested in the long-term market performance while a trader should be interested in short-term market performance. This is because an investor believes that the investment will grow over time, while a trader is interested in maximizing their gains from the short-term market performance.

Whether their gains are vested on long or short term performance, both investors and traders should be keen about the overall market performance.

However, the investor shouldn’t care more about the short time price fluctuations, but should look at other market characteristics such as a growing user base. In contrast, a trader must be vigilant in her observation of short term trends.

“Buying the Dips”

Another strategy that is working for most crypto investors is the “buying the dip” strategy. This involves buying a currency when the price goes below the average, and later selling it at a profit when the price rises again. When taking such steps, it is good to be aware of the short-term as well as long-term market trends so as to avoid losses. Source: (https://cryptocurrencyfacts.com/crypto-investing-strategy-buying-dips/)

Invest in an Initial Coin Offerings (ICO)

Instead of buying and selling Bitcoin or the already established coins such as Ethereum and Ripple, one can make the decision to invest in an Initial Coin Offering (ICO). This involves contributing a certain amount of cryptocurrency to get another amount of a new token. This has often proven to be a good investment strategy. For example, Ethereum that started below $10 and has now gone above $600. This means that those who invested in the Ethereum ICO have gained much more than they gave.

However, even though this has proven to work with some currencies, it is always good to take care since not all ICOs get such returns as Ethereum. There are also many examples of fraudulent ICOs that steal their participants’ funds.

Reallocate Your Investment to Match the Crypto Market

The crypto market has been changing, and will continue to be subject to change in the near future. Therefore, any currency can take a negative or positive turn depending on a number of different factors, including the buyer and seller behavior. Therefore, an investor should be ready to re-allocate his or her investments based on new developments in the crypto market. Just like other strategies, this one needs some serious study of the market before making any decisions.

Other Strategies

Apart from these main strategies, there are others that can help in earning profits and avoiding losses in this new market. One of them is coming up with clear and solid investment goals before investing or trading.

Another piece of advice that a trader or investor should take home is that it is good to put some of your investment in the most stable coins in the market, such as Bitcoin and Ethereum. Lastly, it is always good to start small and learn while growing. However, all of these decisions are dependent on the risk that one is ready to take when investing.

About CINDX

CINDX is an investment platform that allows individuals to combine several crypto exchange accounts into one trading terminal, and gives them the option to connect to the best managers without having to transfer their funds. Moreover, implementation of blockchain-based transactions will allow the trading history to be saved, and a rating system will be used to differentiate the successful managers from the less successful ones.

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