As 2018 clearly shows, the crypto market is still a very dynamic ecosystem. Others, especially those who lost money because of that high level of volatility would probably name it differently, but the fact remains that in crypto, changes happen fast. This is an understatement because often, the movements that occur are in the two-digit domain and they happen in less than 24 hours.
This is why so many people are both drawn to the crypto market and terrified by it. Yet, it appears that the lure is stronger than the trepidation for a lot of individuals, as well as companies. This is one of the reasons why more and more parties of every type start investing in crypto assets.
The regulatory push that is apparent in many nations is a clear sign that the governments are worried about more and more of their citizens putting money in this industry. Most government officials would advise that no one does it, but is the crypto market really a boogeyman.
The show answer is that it is not, but only when the right approach is applied to the crypto investment possibility. The same approach also comes with its risks, but thanks to the fact that it uses the advantages of the crypto domain, these can be mitigated to a point where they are not a threat to any serious investor. Here is an overview of this long-term investment strategy and what are the necessities that the investment party needs to have for it to work.
No Free Lunch
First, the bad news – this strategy is devised to leave an investor inside of a profitable zone in the long run. In this case, long-term means years, possibly even five or more. This is not something many investors want to hear, especially when it comes to individuals who want to see an ROI as soon as possible.
Sadly, for them, this process of investment simply is not a good fit and likely never will be. The best way to perceive this strategy is to look at it as a betting strategy in an online BTC casino. There, like in any casino, the players can take big risks or small ones. With big risks, the payout is big as well, but also includes a high chance of loss. With a small risk approach, the payouts are smaller but so are the chances of losing it all.
The long-term strategy in cryptocurrency means that the payout will come after several years or in a gradual manner that does not include a big payday. Some might find this as too much work and capital lock-in for an end goal that is too far in the future.
However, this approach is the same as the one behind having a savings account. Both ask their users to set aside a sum of money that will then eventually become larger. Of course, this is not the only possibility for an investor, but other options have shown themselves to be less effective for the wider investor group.
Choosing the Right Cryptocurrency
The first step in the long-term cryptocurrency investment is to choose the right digital currency in which to invest. It might seem odd, but a lot of newcomers to this domain have very little knowledge about blockchain and the cryptocurrencies it supports. This is the so-called weekend trader mentality and it is drawn to the basic concept that there is money to be made. For the weekend trader, it makes little difference if they are putting their money in Forex, crypto or commodities. The profit is important.
For the long-term cryptocurrency investor, the profit is important as well, but their bet is not on the price, but on the technical potential of a particular cryptocurrency. For example, ethereum came about in a period of time where most were dismayed by its presence. To them, it looked like it does everything bitcoin did, so why have a new network.
These people did not realize that the same network is actually one of the biggest tech leaps in blockchain at that point thanks to its smart contracts. Today, the world has ICOs that are in general based on ethereum. Back then, this knowledge would be a crucial element that allowed an investor to recognize a long-term potential and buy ether.
Today, nothing has changed in this regard. There is a widespread misconception that anything can become the next bitcoin, but only individuals who know nothing of the crypto space can think this way. Any potential long-term investor has to have a deep understanding of networks and where they can be in one, two and five years from now.
This does not include the technical knowledge of the actual code or its operation, but a clear sense of the cryptocurrency potential. Once the right network is found, the investment part can begin.
Putting in the Fiat Investment
The fiat investment should be perceived, once again, as an amount of money the person investing is comfortable with losing. In a way, it is like a game, for example, eSports – either wins or loses, the process should be interesting to the participant. Of course, nothing is given in life, but still, the investor has to have the mentality that this money could be lost. Any investment of money that is otherwise needed would likely distort the long-term potential of the same process.
So, with his money, the same cryptocurrency should be purchased. The amount is irrelevant, but the investor should be satisfied with it, whatever it might be. From that point, the same crypto amount should be transferred from a digital currency exchange to a secure wallet provider.
Once that is completed, the hard part arrives. After the storage is completed, the investor should simply leave it alone. As time goes by and the cryptocurrency does not encounter any major roadblocks on its development path, its price will rise.
At that point, they only need to figure out how much they want to take out a profit, similar to any regular savings account. With this, the investor will have a successful strategy that is completely independent of the day-to-day price changes.