As someone familiar with the stock markets, but with only a few months of crypto experience under my belt, watching the crypto exchanges often makes me feel like the trading trends are formed a lot like the image above. While there is certainly a growth trend underlying all the coins backed by legitimate value propositions, the majority of the market movements on a day-to-day, and often even week-to-week, basis are pure hype and speculation.
This is a double edged sword:
On one hand, there is the potential for a downtrend to begin for no real reason, or because people just see a more profitable coin or token to invest in. You can go to bed with a crypto fortune and wake up to find half of that value missing.
On the other hand, crypto has become the Wild West of investing, where even very small sums of money have the potential to become significant fortunes in a relatively short timeframe when compared to mainstream investing in stocks, commodities or currencies.
What to buy?
With over 800 coins and tokens to choose from, how is anyone supposed to know which best fit their portfolio? For that matter, how would anyone be able to familiarise themselves with all the options?
The safest strategy here is to not try and game the markets, but invest in a variety of different coins, and then forget about them. There is no need to check on your investment every day, or to try and optimise your splits. An expert trader would probably benefit from this, when backed by a constant up-to-date knowledge of the cryptospace and its breaking developments. However, for the average Joe like me that is just not feasible alongside standard day-to-day commitments.
In case the wet and forget strategy does not have you convinced, lets run the numbers. Imagine that you invested USD$100 at the start of 2015 in a relatively random selection of coins. I am going to assume that you spent at least 30 minutes on each to make sure that they were not clear scams, which is to say they have an active community and dev team. They would also have to have a real goal or value proposition. We may have bought:
$20 worth of BTC = 0.063 BTC
$20 worth of BTS = 633 BTS
$20 worth of GRC = 5000 GRC
$20 worth of PPC = 18.9 PPC
$20 worth of POT = 10526 POT
I picked the last 2 at random and manually selected the first 3, but you will find the trend will hold for almost any totally random selection. The value of these coins now is:
0.063 BTC = $252
633 BTS = $101
5000 GRC = $150
18.9 PPC = $33
10526 POT = $1336
That means that out hypothetical $100 has now become $1872, which yields an 1872% ROI. Granted, that randomly selected POT coin I would probably never have bought if I was actually doing this, and we probably got lucky. If we ignore that outlier, we still would have turned $80 into $536, which is a 670% ROI in two and a half years!
No-one will ever play the markets perfectly, and there is no point getting worked up and stressed out trying to do so. Invest what you can spare, and come back in 2 years to reap what you sowed.
You'll probably be surprised.
Content credit:
Hype Train, slideplayer
Crypto Coins, Cryptomining Blog
Plot, Almaes
Footer, @me-shell
