OPINIONS

Cryptocurrency: The surmountable Hill of Investment

The recent crypto crash has instilled fresh fear in the market. Is it another opportunity to capitalize?

Changteck

29 Jun 2021

Social Media Manager at Hodlnaut

Note: This post contains affiliate links. I will be earning certain bonuses if you click through the links, and I aim to be very transparent by letting you know what I stand to gain.

Many of us are wishing that we bought in on the unstoppable train that is of Bitcoin when it was first released in 2011 at 1 BTC = USD$0.30.

I wished that I had spent $100 placing a bet on Bitcoin as well instead of those fancy running shoes that saw me complete my 1st full marathon — but I am letting bygones be bygones.

But this article isn’t about ‘I should have done this’ or ‘what could have been’ — it’s about how you can start the very first investment that can potentially see you beating rising inflation rates & cost of living.

Below is a quick summary prepared by myself on how you can start investing based on the method I learnt & referenced from The Woke Salary Man (thank you for changing my thoughts on money!) instead of placing heavy speculation and wishing that you boarded the ‘get-rich’ train in the past.

Hopefully, this would help you in finding out what will be the next Bitcoin!

LEVEL 1 — Make sure you have at least 6 months of emergency funds to tide you through hard times or to be crude, ‘when sh hits the fan’.**

Make sure you have at least 6 months of emergency funds to tide you through hard times. Determine what makes up your emergency funds. Is it going to be 6 months of your spending? (e.g groceries, transport, entertainment) or is it going to be 6 months allowance/salary worth?

Personally, I have suffered from cancer twice and 6 months is not enough for me. I cannot be insured by companies, therefore, I have at least a year of emergency funds to act as a cushion.

Sorry to bore you, but with risk comes prudence. Please focus on building this up first and not ape into something you do not fully understand. You hear of the 1 person that made a fortune overnight from $1000, but you haven’t heard of the thousands had $1000 turn into $0.1.

LEVEL 2 — Start small and easy. Passive investing to build that sweet passive income.

Passive investing in the ‘blue chip’ coins like BTC and ETH are good to go. This is also called DCA (dollar-cost averaging) and because of the volatility of crypto, you either average up or down. $50–100/month is a great start here!

I have the Crypto.com Visa Card and it gives me a 100% rebate on my Spotify Premium every month, allowing me to use the rebate to DCA easily into projects with potential! Free music and crypto? Why not?

You can also diversify your portfolio in other investments like ETFs, bonds and the like. You can continue to allocate more once you have a higher earning power. Can be more, it is subjective to one’s life at the moment (I have house renovation payments coming up).

LEVEL 3 — Once you have built up your passive investment portfolio, you can look at active investing.

Once you have built up your passive investment portfolio, you can look at active investing. It is crucial to have the first 2 points mentioned above so that you do not crash and burn. Again, start small, allocate a maximum of 10% of what you are willing to risk into active investing.

You can start looking into ICOs, new coins and even crypto interest-earning platforms to earn a yield on your crypto. For diversification sake, look into CeFi solutions like interest-earning platforms like Hodlnaut, Nexo, Celsius, Anchor Protocol, YouHodler Avalanche.

Or owning a masternode by staking 32 ETH. You can even look into doing leverage trading with your crypto. These are all middle to high-risk options and you must be willing to lose them in case sh** hits the fan. My strategy is to save up for 6 months, and take for e.g, 5k worth to invest with BTC in let’s say into an interest-earning platform and watch as it does its thing while earning interest! It doesn’t matter if I lose this because I already built a foundation in step 1 and 2!

FINAL LEVEL — This is the peak of investment, and might take you years to come.

This is the peak of investment and might take you years to come. You can then start looking into higher-risk investments like DeFi Protocols. The latter is a pretty insane mechanism that can return more than 100% APY in farms, pools but note that these liquidity pools are subject to this risk called impermanent loss. Allocate 1–5% of what you’re willing to risk. E.g, Pancakeswap, Bakeryswap, Apeswap are some protocols you can look into!