By Levi Rasmussen
A potent recipe of Google bans, regulatory scares, and Mt. Gox dumps has cooked up a boiling pot of price drops over the past week. Hope you didn’t get burned. The crypto market may be down, but you know what they say – buy low, sell high.
The question is: how do you know when is low? How do you know when is high? In a market so new, so fragile, and so volatile, how do you trade with some sense of strategy?
Two Sides of every Coin
Many would say: you don’t. The cryptocurrency market has consistently faced harsh criticism from countless financial experts who claim there is no value in trading digital currency. This week, Wells Fargo CEO Tim Sloan came out against cryptocurrency, comparing its structural integrity to the short bloom of a flower (Read more here).
However, there are always two sides to every coin. Many big names in tech and finance think cryptocurrency is the future. Just this week at SXSW, crypto lovers and tech leaders threw a BYOBitcoin party embodying the energy and excitement fueling the crypto market.
Hopefully, if you’re reading this, you have at least some interest in the potential of the crypto market. The capital T-Truth is that nobody knows where cryptocurrency is headed. But, let’s look to some past successful strategies that could help you start strong on your quest to ultimate crypto-domination.
Buy and Hodl
Yes it is a strategy and no it’s not a typo (click the link if you don’t get the joke). Buying and holding can be an effective strategy for investors who are patient and willing to lose their initial investment. For instance, if you bought one Bitcoin in January of 2017 and held it until December 2017 you would have turned $1,000 into $18,000. Not bad, huh? Check out Ofir Beigel from 99 Bitcoins and his tips for buying and holding here.
Short term Trading
Short term trading is a strategy that naturally carries more risk, but in such a volatile market it can payoff very well with some knowledge and practice. Short term trading involves riding the waves of the market by buying low and selling high daily, weekly, or monthly. Thankfully, WSS provides an awesome platform to trade in the short term, with no monetary risk. So practice here, and when you’re ready to take your strategy out into the real world, I suggest reading some advice from Yuval Gov at CryptoPotato.
Possibly the most widely misunderstood aspect of cryptocurrency, mining is not for the faint-of-tech. Although it is not trading at all, no conversation about cryptocurrency investment strategy can be complete without discussing mining.
Mining is the method by which many cryptocurrencies control their own supply. Algorithmic processes, which involve computers solving complex equations, “mine” cryptocurrency by adding it to the circulating supply. I know, what a mouthful. If you’re interested in learning more, check out this LifeWire article.
We have really just scratched the surface of cryptocurrency investing strategies. Hopefully though, you learned something that will help you win that Ether come April 6th. May the crypto odds be ever in your favor – and look out for my next article coming soon!