Crypto Investment Strategy - In Depth Research Guide for 2023

Cryptocurrencies are a volatile asset class, and you don't need to be an expert to recognize that. Anyone investing in cryptocurrencies assumes significant risks because of the market's inherent volatility. Choosing a crypto investment strategy is just one step in the procedure. Additionally, you'll need to locate a platform that enables you to effectively implement your plan.

However, every investor will select a different risk management strategy. Do not worry if you are unsure of the method that will best serve your financial objectives. Let's investigate the top cryptocurrency investing plans to see which one is right for you.

9 Best Crypto Investment Strategies

Just purchasing a large quantity of cryptocurrency is one thing. However, using a crypto investment strategy when you invest is a very new game.

An investment plan is just a collection of instructions. It can assist an investor in making decisions regarding the asset classes to purchase, the timing of investments, and the amount to invest.

Your portfolio will be the sole factor influencing your plans. Still, we've selected some of the most popular and successful methods for you to use.

1. Investing in ICOs

Initial coin offers (ICOs) are a popular way to raise capital for products and services that are frequently related to cryptocurrencies. It is considered one of the best crypto investment strategies. ICOs are typically used to raise money for a cryptocurrency project by selling their native token to early backers at a very low price, frequently in popular coins like BTC or ETH.

Long-term benefits may result from taking advantage of this early chance. For instance, the 2014 ICO for Ethereum raised several million dollars during the initial round. However, watch out for fraud. Millions of dollars have been lost by several ICOs. For instance, Modern Tech's ICO profited $660 million despite giving investors virtually nothing.

One approach to spot potential scams is to read the whitepaper. Examine the document's specifics and look for any discrepancies. To protect your assets, do some research on the company's founders.

2. Finding Airdrops

When a cryptocurrency project gives away free tokens to its supporters, it is known as an airdrop. The project will provide many free tokens to persuade users to utilize its cryptocurrency. It resembles a complimentary sample from a cosmetics store.

Airdrops allow cryptocurrency investors to expand their portfolios without paying any money. A typical airdrop involves following a specific social media account, signing up for a platform, or making a transaction on a specific blockchain to receive a free cryptocurrency.

A crypto airdrop offers the chance to make significant gains. Airdrops are a tactic worth pursuing if you're interested in developing a cryptocurrency portfolio without having any cash on hand.

3. Buy and Hold (HODL)

One of the best crypto investing strategies is referred to as a "buy and hold approach." Several cryptocurrency speculators call this tactic "HODL."

Most people believe that this is a mistake that has become more popular with time. Others, however, insist that HODL stands for "hold on for dear life.”

HODLing is the practice of purchasing a digital asset and keeping it in your digital wallet for a considerable amount of time. You won't be trading cryptocurrencies very often if you opt for the buy-and-hold strategy. Simply purchase coins and save them.

The HODL strategy is probably going to be a good fit for you if you don't anticipate ever selling any of your assets. It will be fantastic, especially if you're trying to create a savings account for the children in your life.

The best course of action is to set up service providers when it comes to buying cryptocurrency to store for a child's future.

4. Dollar-cost Averaging (DCA)

A cryptocurrency investment approach called dollar-cost averaging focuses on making regular, fixed investments in cryptocurrencies.

This technique is based on the idea that timing is challenging because the cryptocurrency market is prone to volatility. Theoretically, you should be able to reduce your risk while increasing your market exposures by consistently making relatively smaller investments.

Dollar-cost averaging essentially spreads out your investments over time to protect you from sharp price changes. That implies that the cost of your investment will eventually average out.

5. Value Investing

The cryptocurrency market can benefit from the value investing approach. You can search the market for cryptocurrencies that you believe are underpriced and purchase them while they are at a discount.

Let's imagine, for instance, that you crunch the numbers behind a specific coin and discover that it ought to be worth more than it is now selling for. That presents a chance for value investors to buy an asset for less than it might eventually be worth.

A coin's worth can be calculated using a variety of measures in the background of a cryptocurrency. The potential for real-world applications, the credentials of the team behind it, the scalability of the underlying blockchain network, and the number of unique users are all things a value investor can consider.

Value investors don't mind devoting a significant amount of time and energy to assigning a token a value. It can be a more complicated strategy, but for some investors, it can be profitable.

6. Earning a Yield

"Earning a yield" is another popular method of investing in cryptocurrencies. With this method, you purchase cryptocurrency and keep it for a specified period to earn a profit.

Earning a dividend is different from keeping your cryptocurrency for the long term because you only keep it for a short period. To purchase your coins at one price and then sell them at a greater one is objective.

This investing technique has the advantage of frequently generating passive income while holding assets, similar to how a savings account pays interest on the balance that is currently held.

7. Copy Trade Whales

Whales are investors who have huge holdings and who dominate the market for a certain cryptocurrency. By simply replicating the transactions of profitable investors, you might be able to sidestep the difficulties of learning how the market functions in the cryptocurrency arena.

The effectiveness of copy trading depends on who you're imitating. The crypto whale may occasionally make a trade that is unsuitable for your portfolio. But occasionally, you might strike it fortunate when a key participant in the cryptocurrency industry makes a profitable trade.

Unsure of the copy exchange process? Investigating the blockchain is one method. You can learn the transaction sizes by examining the data. If you notice a large transaction, a whale has just completed a significant transaction.

The good news is that you are not required to conduct this analysis alone. Tools for tracking whales can be quite helpful in identifying the biggest cryptocurrency investors. Visit eToro if you want to automate your copy-trading approach. Their platform makes it simple and convenient to replicate trade successful investors.

8. Growth Investing

Growth Investing is the following approach in our guide to cryptocurrency investments. It entails investing in nascent cryptocurrencies that are predicted to increase in value over time. Research is necessary because this might be a dangerous activity to undertake. Different growth levers that influence the price of different cryptocurrencies may have an impact. This is it if you're seeking a long-term investment horizon with high returns. You must invest some time in research to be able to recognize such an opportunity and select the appropriate cryptocurrency.

9. Technical Analysis

An investment strategy based on technical analysis is a great choice for investors who have the time, drive, and inclination to regularly monitor the cryptocurrency market.

If you choose the technical analysis strategy, you must feel at ease delving into the specific financial details related to the digital asset. The objective is to accurately comprehend the mathematical indicators related to a token. This quantitative analysis of the market can be used to place trades. The details are written below.

How Do You Buy Crypto

Crypto investment strategies are useless if you do not have crypto in hand. There are two ways to purchase or sell cryptocurrencies. You can do it through a broker or a cryptocurrency exchange.

Brokers of cryptocurrencies are among those who act as intermediaries in the financial sector. Usually, they would charge an extra fee. If you're dealing with substantial sums of money, cryptocurrency brokers are a far better option. Trading with them is much safer than doing it on a platform for trading cryptocurrencies.

You will be able to transact with other users directly without the need for an intermediary. However, using the platform will have a little fee. Given that the environment is less secure overall and depends on more or fewer gentlemen's agreements, it is not a substantial change, nevertheless.

By using trade, a person is only able to fulfill their wants by using the money they currently have. It is appropriate for little amounts of money and is essentially the traditional technique of trading.

Users of cryptocurrency brokers are allowed to fund their trades and deposits with any available funds in the broker's account. In essence, brokers will select the most advantageous buyer or seller for your deal so that you and the other party can get the currency you want. Brokers will almost always be the best option; no other person will be involved.

It is common to register for each separately. Because brokers tend to be more official, registrations and transactions should be more difficult. In certain situations, it can even be necessary for you to make a video call.

On the other hand, how you exchange cryptocurrencies will depend on the platform you utilize. Your ID and proof of residency will frequently be required during the registration process. It won't be as difficult as registering on the cryptocurrency broker's site, though.

Crypto Investing Strategy - How To Analyze Crypto

Cryptocurrency analysis is a fundamental crypto investing strategy. It takes a long time to accomplish. The investor must research reviews, critical metrics, and other sources available online. However, you must be certain in your study on cryptocurrencies or you risk losing money. Before making a cryptocurrency investment, thorough research is advised.

Here are a few crucial elements to think about when examining a cryptocurrency.

Founder

The founder plays a significant factor in whether you should trust the currency or not. Learn what he has promised. Determine if he is or will be able to keep his obligations. Since you're researching cryptocurrencies, I'm sure you know a few reliable sources. See if they have faith in the founder.

Opportunity

If the currency is unstable, examine the market's size and the opportunity's reach over the next 5-7 years. How fast is the market expanding?

Usability

Before investing, test the product out for yourself to determine its worth. Recognize the product's surrounding community. And what its opinions are of the project's current state.

Traction, Timeliness, and Token

Follow the project's expansion and development to determine its traction. On-chain information regarding the project may be found in active wallets and Total Value Locked (TVL) data. Analyze the project's timeliness. Analyze the ecosystem's potential benefits of the token. Evaluate growth loops, issuance rates, release timetables, and lockups.

Competitive Analysis

Analyzing the rivals is another thing you should do. Make an effort to identify the main opponents. So that you can determine whether your currency will be able to withstand the competition.

Yes, we are aware that this process might be draining. Sad to say, the analysis doesn't ensure financial success. You still have a chance to lose some money. However, the likelihood of losing may be reduced.

How to Choose Cryptocurrencies to Invest In

Crypto investing strategies won't be effective until you pick the best cryptocurrency for you. Since this market is growing in popularity, there are more currencies available. According to Crypto Space Statistics, there were more than 20268 cryptocurrencies accessible as of July 2022. Data from CoinMarketCap shows that as of September 2022, there were 526 exchanges worldwide with a USD 934.23B market cap for cryptocurrencies. Given these figures, it is simple to become confused while selecting cryptocurrencies. Here are four crucial elements.

Total Coin to be Mined

Check to see if a particular cryptocurrency's supply will be controlled. The number of coins that are currently in use should also be taken into account. For instance, mining only 756190 blocks can increase the total supply of Bitcoin. As more and more individuals start investing in it, the demand for bitcoin is rising every day. But there is a finite amount. The price of bitcoin rises as a result of rising demand and a shortage of supply. Therefore, before choosing, you should consider the total supply and the amount currently in use.

Market Capitalization

The market capitalization of a cryptocurrency is a metric that assesses its overall worth. Market capitalization is used by investors to evaluate the value of cryptocurrencies and convey a more complete story. As a crucial number, it can show whether a cryptocurrency is safe to acquire in comparison to others and its growth potential. Ranking cryptocurrencies based on market capitalization is one way to decide which ones to invest in. The market value of bitcoin is about $322B. (as of 19 December 2022). It makes sense why it's the most well-known. Ethereum is the second, with a $144 billion market worth. You have the option to allocate a portion of your overall cryptocurrency allotment to one of these two.

WhitePaper

Every investment in cryptocurrencies has a white paper. A cryptocurrency whitepaper can be used by projects to inform consumers about their goals and offerings. Although projects are free to choose what kind of material they desire to provide, whitepapers frequently include an explanation of the project's objectives, tokenomics, goods, features, and information about the team.

Over time, it will become clear if the white paper's purpose is being accomplished in practice. If so, it will show that the coin's value has increased. In light of this, you might decide to increase your bitcoin investment.

Use Cases

The white paper makes critical notes of the use cases for the coin. It is one of the crucial components that will determine how well its users accept it. New cases could develop over time. There are additional use cases as the coin becomes more widely used and as its value increases.

The chance that the coin's value will decline and it won't survive will be increased if the coin's use cases decline. To choose the finest cryptocurrency to buy, you should take into account the use cases of the coin.

Crypto Investing Strategies - Mistakes to Avoid

A significant aspect of crypto investing strategies is avoiding errors. Making mistakes is not necessary for learning. Here, we've outlined several typical blunders that people make and why they're dangerous.

❌ Over-diversifying crypto profile

Investors must have a diverse portfolio, which is a well-balanced assortment of several cryptocurrencies. This is so because those assets function as a unit to lower the overall volatility of a portfolio and the danger of permanent loss to an investment. The cost of diversification is a corresponding decrease in a portfolio's potential return on investment.

There can be too much diversification, too. Over-diversification happens when the expected return on each additional investment in a portfolio is lower than the corresponding decline in risk. An investor may own so many investments that, in a sense, they have "di-worsified" their portfolio rather than diversified it. Because there is no further benefit to the incremental investments purchased above a certain threshold, their portfolio is worse off. Choose a sufficient amount of coins to enable you to keep track of them. This entails staying current with news and price movement. My advice is to only purchase a total of 10 cryptocurrencies at once.

❌ Lack of Diversification

One of the fundamental principles of investing is diversification, which considerably reduces the risk of a portfolio. Your chances of losing money can grow if you don't diversify. A client's portfolio lacks diversification if it doesn't include a variety of various investment kinds with varying levels of risk, putting the client at risk of substantial losses. You may have noticed a correlation between particular coins, whereby when one goes up, the other goes down. If this is the situation and you like the futures for both coins, invest in both. It will be considerably safer to invest.

Own at least 5 cryptocurrencies, in my opinion.

❌ You Don't Research Properly

Do Your Research, or DYOR is a term that cryptocurrency enthusiasts frequently employ. The goal of DYOR is to slash the proportion of ignorant cryptocurrency investors. It encourages them to learn more about cryptocurrencies before investing so they can explain in detail why they are purchasing that currency and supporting that particular project.

Shilling, when users promote their cryptocurrency holdings to drive up the price, is a widespread practice in the industry. Quite sometimes, it can be challenging to tell a shill post from an objective one. Before investing in any cryptocurrency, it is important to conduct your research and not rely solely on recommendations from others.

❌ Not Owing a Hard Wallet

Bitcoin may be purchased, stored, and sent without a hardware wallet being in your possession. However, hardware wallets can greatly enhance security by lowering the likelihood that your bitcoin will be stolen. Offline hardware wallets were created so you no longer have to rely on software on your computer to retain your private keys, unlike software wallets, which are susceptible to security flaws and hackers. Your private keys are kept on a physical device with specialized firmware in hardware wallets, making them impossible to access.

Bitcoin private keys are a target for certain viruses, which transfer the keys to hackers after identifying them. Since these viruses have been around for so long, they have become more advanced. Hardware Bitcoin wallets are a fantastic deterrent against this kind of attack since they are made to prevent your private keys from ever leaving the device.

❌ You Don’t Cut Your Losses

It's simple to be adamant. But in the end, the market moves regardless of how you feel. Holding a coin you no longer believe in is improper.

Always ask yourself: "Would I buy this coin right now if I hadn't already purchased it?" Be truthful to yourself. Things changing is acceptable.

When using a cut-loss technique, you close your cryptocurrency position to stop further losses. A cut-loss strategy is created to lessen the likelihood of a position losing money. The term "cut loss" refers to closing a trade to prevent a loss from growing if you believe the market will remain in the red after crossing a particular point.

Furthermore, regardless of how you are feeling at the time, cut losses by 15% if that is what you planned to do. Don't convince yourself that it will go up; instead, reduce your losses and stick to the plan.

❌ Not Using 2FA

The crypto sphere is a lawless frontier. Full of possibilities, but quite risky. Strengthening the security of your cryptocurrencies is a vital step in developing a cryptocurrency investment strategy. The most crucial habit you should develop to ensure the security of your accounts is to enable 2FA on every sensitive website.

When logging in, there is an additional layer of protection known as 2FA. The majority of cryptocurrency exchanges, wallets, and services include 2FA functionality. You must install an app on your phone, such as Authy or Google Authenticator, and sync it with the exchange or wallet via a QR code to enable 2FA. It's incredibly easy.

You will need to enter your login, password, and the passcode that the 2FA app displays the next time you log in to the exchange or wallet. Someone would also need your phone to hack into your account because the passcode changes every 30 seconds.

Portfolio Tracker - A Proven Crypto Investment Strategy

Using a portfolio tracker is another fantastic crypto investing strategy. In the past few years, many brand-new cryptocurrency platforms with a wide range of services have appeared. With all of these new exchanges, DeFi protocols, and wallets, there is a bigger demand than ever for cryptocurrency portfolio trackers that can help you keep track of the value of your digital assets.

UnBlinked is unquestionably among the greatest cryptocurrency portfolio trackers out there. It is a highly accessible, data-driven crypto storage facility. You do not need to use a pre-made portfolio tracker in this case. Designing your analytical tracking tools is possible. Therefore, you are free to utilize this in whatever you see fit. We raise the bar for excellent data analytics simply, creatively, and technically so that all bitcoin traders can have a notable impact on their trading.

UnBlinked compiles all cryptocurrency information in one place. even DEX, Defi, and CEX. To keep track of all your previous transactions and balances, use UnBlinked's cryptocurrency portfolio tool. Use a single dashboard to analyze your actual profits and losses.

A thorough revenue report is yet another benefit that UnBlinked may offer. The Revenue Report Dashboard has gathered all of your information in one location. Dashboards for revenue report intervals of three hours, a day, a month, and a year are all available.

In the time option, you can choose the time and the currency. BTC, KRW, and USDT* are the supported currencies. For the data, the statistics convert the currencies. We bring the conversion rate for the data to convert it to a certain currency. We make several conversions to arrive at the price if there is no price listed for it.

FAQ

What Are the Best Small Cryptocurrencies to Invest?

Little cryptocurrency refers to currencies that are inexpensive when compared to the USD. Since minor price changes can produce disproportionate gains, low-cost cryptocurrencies are perfect for active traders. Smaller cryptocurrencies like XRP, Dogecoin, Taro, Calvaria, Solana, etc. are the best to invest in.

A low market cap is sometimes associated with small cryptocurrencies. The top cryptocurrencies include Meta Masters Guild, Fight Out, C+Charge, RobotEra, Tamadoge, and others. Investing in low-cap coins is regarded as riskier. Investors must therefore conduct an extensive investigation.

What is Buy and Hold Crypto?

"Buy and hold strategy" is the most popular cryptocurrency investment method. Several cryptocurrency speculators call this tactic "HODL." Most people believe that this is a mistake that has become more popular with time. Some, however, insist that HODL stands for "hold on for dear life."

HODLing is the practice of purchasing a digital asset and keeping it in your digital wallet for a long time. You won't be trading cryptocurrencies very often if you opt for the buy-and-hold strategy. You only purchase coins and store them.

Can You Lose Money Investing in Crypto?

Unfortunately, yes. Every investment carries the potential for financial loss. There is no difference with cryptocurrency. Therefore, it is advised to only invest money that you are willing to lose. Yet, you may lessen your chances of losing all of your money by sticking to the basics of investing. What are the foundational principles? Maintaining a portfolio, diversifying your portfolio, using proper strategies, staying up-to-date with the updates and news, etc.

What Are the Best Coins for Short-term Investment?

Beginners do well with short-term cryptocurrency investments. They don't have to put a lot of money into it. Day trading is a type of short-term investment. Ethereum (ETH), Ripple (XRP), Binance Coin (BNB), Tron (TRX), EOS, Tether (USDT), Fantom (FTM), Solana (SOL), Cosmos (ATOM), Dogecoin, Shiba Inu, and XRP are popular cryptocurrencies for day trading. You can also invest in Cardano, and Chainlink.

What Are the Best Cryptos for Long-term Investment?

A cryptocurrency with a value that increases over time and meets your investment objectives is a good long-term investment. You have complete control over your portfolio when you make this kind of investment. So, there will be lower expenses and easier access to your investment. Every cryptocurrency with a good reputation is suitable for long-term investment. Such as Bitcoin, Ethereum, Cardano, Polkadot, and Chainlink.

What Are the Best Future Coins to Invest in?

While looking for the finest new cryptocurrency to purchase in 2023, it is vital to make informed choices. Before investing, you should carry out your own independent research and due diligence on a new cryptocurrency. A top future cryptocurrency launch can be found through presales, CoinMarketCap, and social media. Reddit is an excellent place to start because it has a ton of crypto-focused subReddits that have millions of subscribers. In addition to Reddit, Twitter is another well-liked platform. Love Hate Inu, Fight Out, C+ Charge, RobotEra, SOLA-X, LEND, LunaFi, Humanoid AI, and DeFiNet, are new cryptocurrencies available for investment.

Final Word

Cryptocurrency investing is not recommended for those with weak stomachs. Your patience may be tested by the volatility and the months of a downward trend. However, if you adhere to your crypto investment strategy, you can gain profits. Many investors who decided to HODL despite seeing their portfolio in the red have ultimately made large profits over time. You can take many other approaches to make wise cryptocurrency investments. Dollar Cost Averaging, HODLing, Buy Low & Sell High, etc. are a few of them. Before making a coin investment, one must always do their homework on the coin's fundamentals. Strong investment is a result of strong fundamentals. We hope this essay will help you understand the cryptocurrency industry better.