I am a true believer in crypto. I loved the technology and the communities and I am very hopeful for the future of web3.
So, I thought, this is it. I need to be part of it, financially. And so, I came up with an investment strategy using the concept of Goals & Systems.
And in this article, I am gonna talk about my investment strategy and at the same time, will reveal some actionable tips that can help you build your own investment strategy.
Disclaimer: This article contains information about my investing process but it should not be taken as financial advice and there is no guarantee that I’ll be profitable in the future. Always DYOR when investing.
My Crypto Investment Strategy
I can’t tell you what coins to invest in or how much money you should put on crypto because that depends on your financial situation, interest in crypto, and probably a lot of other factors.
And so, I am gonna walk through my investment strategy – The How, Why, and What part, the ultimate goals, and also the conditions/exceptions I’ve set for myself based on my financial situation and also on market conditions.
Let’s look at what each of those things means in detail:
Of course, the ultimate goal of any kind of investment is to make money.
But the question one should ask themselves is whether they are investing the money to get rich by tomorrow, or maybe in a week, or maybe in a decade.
My goal is to invest for the long term, instead of trading crypto regularly (buying and selling constantly). When I say long-term, I am talking about years.
And since I’ve decided to stay in the market for the long term, I only have one goal and that is to accumulate more assets for as much less price as possible in the long term.
How do I do that? By investing regularly. In other words, Dollar-cost averaging.
You know you can’t time the market. Especially crypto markets with all of their volatility, it’s almost impossible.
Ok, my goal is clear. Which is to accumulate crypto assets consistently for a long period of time for as low a cost as possible.
And to achieve that goal, I need a system that can rely on, instead of throwing money on a bunch of random coins.
As of March 2022, there are 18000 cryptocurrencies in existence and the number will only go up as we move forward.
Although most of these will be trash, it’s hard to grasp and stay updated with all the happenings in the crypto world.
And in the end, I’ve decided that I’ll go with only 10 cryptocurrencies in my portfolio. The system is based on the ‘How’, ‘Why’, and ‘What’ of these 10 cryptocurrencies.
‘The Why’ of My Crypto Investment Strategy
Why only 10 cryptocurrencies?
I got to know about crypto and NFTs in August 2021 and since then I’ve bought a few, traded a lot, made a few profits, and in the end sold a lot for losses to pay the taxes.
All this happened in less than 7 months and I came back to where I started. Yes, I made a lot of mistakes during that period.
And on top of that, India came up with new tax rules that aren’t supporting crypto investors well.
You know the famous quote, right? “Your losses. Our profits”. Well, that’s how the government of India reacted to that. And so I had to decide on some points.
- I chose only 10 cryptocurrencies because profits from one crypto can’t be offset with losses from another crypto. And that means more crypto means, more risk.
- I’ve decided to stop trading NFTs/making Defi transactions because 1% TDS on every transaction you make.
- 30% tax on capital gains. 1% TDS.
- Avoid ruin. Chasing high returns should never be the goal. That means I am ok missing out on 10x, and 100x on altcoins.
- Betting on the fundamentals should be important. The technology, the team behind it, and the tokenomics are the trifactor I consider rather than hype.
Ok, but what are those 10 coins?
‘The What’ of My Crypto Investment Strategy
There are a few conditions that I’ve set to figure out what will be those currencies.
- The cryptocurrencies should belong to these 5 Categories: L0, L1, L2, NFT/Gaming, and Data Economy.
- These 10 cryptocurrencies shouldn’t be new and need to have some use cases in the web3 world (unlike Bitcoin).
- These currencies should be listed on the crypto exchange that I am using: CoinDCX
So, based on these 3 conditions, here is the list I made (10 cryptocurrencies):
L0: PolkaDot (DOT)
Atl L1: Solana (SOL), Avalanche (AVAX), Fantom (FTM), Near Protocol (NEAR), Harmony (ONE).
L2: Ethereum (ETH)
Data Economy: Filecoin (FIL), Chainlink (LINK)
Metaverse/Gaming/NFT: Enjin (ENJ).
‘The How’ of My Crypto Investment Strategy
Ok, now that I have the list of coins, what’s the best strategy, or simply put how do I invest in those?
Well, here are the ratios I chose based on the categories. And I’ve decided to allocate most of my budget to a blue-chip crypto – Ethereum.
This is how I allocated my investing budget (in %s):
|L2 (1 coin)||70%|
|L1 + L0 (6 coins)||24%|
|Data Economy + Gaming/NFT (3 coins)||6%|
So, if 100$ is my investing budget, this is what the portfolio is gonna look like:
Well, now that I have the clear %s that I’ve decided to invest in each of these coins, all I need to do is every month allocate a certain % of my earnings to build a portfolio.
- While I plan to invest in all these coins in the first week of every month, I might delay if the whole market is green (going up). Long-term investors should love red.
- I’ll try to invest in the same coins and percentages every time. But I might make some exceptions and purchase a couple of these coins instead of buying all if I have some extra funds during the dips.
- The bear market is an exception. And that means I might overinvest during that time and reduce the investment amount/decide not to invest for the next couple of months.
- An ecosystem update is an exception too. For example, as of writing this article, the Ethereum’s Merge is closer and so I might be more biased towards ETH ignoring some other coins that I’ve decided to invest in the first place.
I’ll be updating my ROI here (roughly on a monthly basis) just so you can see how my investment is going on (ROI from my investment in all of the 10 currencies)
|April 4th, 2022||0%||First Investment|
|May 1st, 2022||-22.9%||Bought the dip|
|June 2nd, 2022||-24.02%||Didn’t invest|
|July 1st, 2022|
How To Create Your Crypto Investment Strategy
So you have decided that you are gonna put some % of your income that you earn into crypto. How do you start?
The first thing is to get into crypto. And that means focusing more on educating yourself before investing. Learn more about these technologies and tokens and stay active on Twitter.
Once you have some idea of what’s happening in the crypto world, decide on your goal and then create a system that you can rely on.
- Make sense of the crypto world: Educate yourself and try investing in a few coins.
- Decide your goals: Accumulate more $SOL by trading NFTs, Invest in Defi Protocols to earn some yield, Buy coins, and then lock up in staking contracts, etc.
- Create a system: What coins should you invest in, how much should you invest in, Is NFTs part of that investment strategy, Will altcoins be part of it so that you don’t miss on that 100x, etc. Ask more questions.
- Create some exception rules. For example, you don’t have to invest if the % increase of a coin that you are investing in the last 24 hrs is more than 5%. Create some conditions like those.
- And be patient.
Focus on the goals. Rely on the system. And stay in the game for the long term. You should be fine.