With a single Bitcoin now worth over thirty thousand dollars, a lot of people feel as though they've missed the boat when it comes to crypto investing. What they don't realize is that the blockchain space is just getting started, and there remains an abundance of opportunity.
Compared to traditional markets, crypto is a different beast entirely. Locating promising projects and holding on to them when they skyrocket in value can be challenging indeed.
With that said, here are my five keys to investing successfully long-term in the crypto space:
1. Keep an open-mind
In the wild west of crypto, being open-minded is crucial to making successful investments. You must be willing to put money into projects that your friends, family, and society in general will think are stupid. "What!? You purchased a digital pet?" "You paid hundreds of dollars for a digital piece of land? Are you crazy!?". You must be willing to go against the grain and put your money into obscure and unpopular projects in order to make significate profits.
Also, consider that this industry is nascent. We still don't have a clear picture of what it will look like in five to ten years, so you have to be able to adapt. When Ethereum first launched, many people dismissed the utility of smart contracts and ERC-20 tokens. Most people also thought Crypto Kitties and Crypto Punks (NFTs) were foolish ideas at first, but now these digital collectibles are selling for millions of dollars worth of ETH.
The longer you stay in the space, the more you realize how important it is to remain open-minded to new projects so that you don't miss out on opportunities.
2. Take risks
You must also be willing to take risks, and accept the fact that some investments you make are going to fail.
If a project you've invested in does fail, consider it a learning experience, and remind yourself that the knowledge you've gained from the experience will lead you to making better investment decisions in the future.
Also, it's easier to take risks if you have faith that a few of the investments you make will more than make up for any losses you have along the way.
3. Diversify
One key way to mitigate risk is by diversifying your portfolio.
If you explore the crypto landscape you will find an abundance of projects with solid roadmaps and motivated teams. You can increase your chances of picking a gem by diversifying into a wide variety of projects.
Diversification also helps to keep your emotions out of any one project. If a project that occupies only 1% of your portfolio gets hacked or the team rug pulls on everyone, you feel far less upset than if 50% of your portfolio were in that one coin. At the same time, the fact that you had a little bit of skin in the game causes you to learn from the experience.
4. Be patient
Patience is key to managing a diversified portfolio.
When you plant a seed in a flower pot you don't stare at it for a few hours and then get angry that it hasn't sprouted. You need to give it days, weeks, and months to grow. In crypto sometimes it takes years of patiently waiting before a project's token finally "blossoms" and bears fruit.
At the point that it finally does blossom, you may be tempted to sell it, and crypto is notorious for people selling too early. A lot of people sold their Bitcoin when it went from $1 to $2 thinking they made fantastic ROI, and now it's worth over $30,000. You need to be aware of the potential for massive growth in the projects you're investing in and avoid the temptation to sell everything too early.
5. Stay up to date
You should be constantly learning about and staying up to date with the projects you're invested in or are considering investing in.
A great source of information is Twitter, where each crypto project has an account and regularly updates the community. Find time every day (or at least a few times per week) to catch up on your Twitter feed and read the blog posts that each project puts out. If you spend more time doing this than staring at price charts and you will become a much better investor.
In summary, opportunities still abound in the crypto space, if you're willing to put in some time, take some risks, and keep yourself in the know. Those who are patient and diversify their portfolio into a variety of promising projects are increasing their chances for financial success in the coming months and years.
