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by Alberto Guerrero
Photo by Andy Kelly on Unsplash
You’ve heard the news. The FUD and the FOMO. The critics and the fans. Although you understand there are some risks involved, you have decided to dip your toe in the murky waters of the crypto universe.
Now what?
How do you actually buy a coin? How much of it do you buy? Which one do you choose?
This is my take on it.
What to buy?
Obviously, the star of the show, the first, the most decentralized, and the most scarce. Bitcoin.
It also has the biggest network, the first-mover advantage, and the brand name.
During a bullish market, Bitcoin leads the way and during a bear market, it usually drops less than the other Altcoins.
Out of $1000, I would put at least $450 into BTC.
It’s still volatile so don’t invest for the short term. HODL for 5–10 years at least. Don’t look at the price and you’ll be fine.
For the 12 years since its inception Bitcoin has appreciated at 200% a year on average. And no, it’s not a bubble, it’s a pristine asset and a revolutionary technology.
The runner-up. Although at first it was just a bitcoin copycat, it has now developed into a whole new ecosystem. Not only it’s a good store of value but it’s also the platform for smart contracts, DeFi, tokens, Dapps, DAOs, and NFTs.
If you don’t know what all these terms mean, don’t worry, it’s just programable money that can decentralize many financial processes and has the potential to chip away at Wall Street and the banking industry.
The potential for ETH to grow is huge, some even say that it could topple bitcoin.
Also, ETH2.0 is about to be released with all the promises for a faster, cheaper, and more efficient Network with improved capabilities.
I would buy $350 worth of ETH.
There are many interesting projects out there with solid fundamentals. I particularly like Solana, Polkadot, Polygon, ChainLink, AAVE, and Cardano.
So the rest of my money will be divided equally among those 6.
Altcoins go up faster than bitcoin but they also go down further. Therefore keep in mind the risks involved and be prepared to sell your altcoins when the bull market is about to end.
To buy your coins you have two options. On one hand, there are money apps like Revolut, Square, Paypal, or Robinhood. On the other, there are the proper crypto exchanges like Kraken, Binance, Coinbase, and FTX.
Money apps are easy to set up and use. For small amounts, it’s probably the best choice for beginners. The caveat with these platforms is that you don’t own your crypto so if you want to transfer your money out, you have to convert it into Fiat (dollars, Euros, Pounds, etc) first.
With the proper exchanges, to open an account, you have to go through KYC (Know Your Customer) procedures and in general it’s a bit more intimidating than using a cash app.
But in general, it’s not too bad. Once you have opened your account you can transfer money and start trading. These exchanges are very safe and allow the transfer of coins into a cold wallet, another exchange, or as a form of payment.
Let’s say you bought your $1000 worth of crypto, then in 5 years, it goes 10x. Then you should start considering moving it to cold storage.
A cold wallet is basically a specialized USB stick where you can store your seed phrase which gives you access to your crypto. Since it is offline most of the time, it’s out of reach from hackers.
The main danger with cold wallets is yourself. What if you lose it, forget the password, or accidentally damage it? Then you lose all your money unless you have set up some form of backup beforehand.
When you move it into cold storage (and eventually you should) you have to design a bulletproof strategy to avoid mistakes. It sounds scary but once you learn some basic principles, you’ll see it’s not rocket science and your crypto will be very safe.
The best moment to plant a tree was 20 years ago, the second-best time is now
Right now, at $30,000 it’s a screaming bargain. Will it go lower? Possibly, but even if it does it will bounce back very quickly because there is a lot of demand waiting to get in.
It has lost some momentum since its All-Time-High of $64,000 in April. It has been under attack by whales, FUD, governments, and China. Despite all that, it’s holding pretty well, it’s still 3x from last year.
This is the best-kept secret about investing. Buy low, sell high. Most people do the opposite. When the price was at ATH everybody was eager to buy, now at a 50% discount, only the wise investors and strong hands are getting in.
We are irrational creatures, we get triggered by the emotions of greed and fear. In order to avoid those, the best strategy is to avoid timing the market.
Decide how much you want to invest, divide by 10 for example. Then buy $100 of crypto on the 1st of every month for the next ten months regardless of the price.
During this period the price will oscillate up and down but your average cost will be better than if you try to time the market. It’s a proven strategy that works well and also gives you peace of mind.
This way you automate the system, get rid of the emotions, and avoid the FOMO and the FUD.
Never. You should never sell bitcoin. Buy and Hodl. The moment you sell, it will go through the roof.
And the same goes for any asset with strong fundamentals like gold, real state, or blue-chip stocks.
When was a good time to sell Apple, Amazon, or Google? Never.
You buy and hold it forever, that’s what the rich do and that’s why they are rich. When you need money just borrow against your asset and use it as collateral.
This is especially true for bitcoin. With the scarcity and the amount of demand coming in, it would be silly to sell. Back in the day, some people sold bitcoin when it got to $1 thinking it was already too expensive. Imagine that.
There are many objective reasons to believe that BTC could reach $1 Million before 2030 so stay put.
With altcoins, the scenario is different. If we hit a bear market they can not only go down but also disappear, at least some of them. It’s probably more sensible to hold them until you see signs of a clear downtrend.
I will never sell my bitcoin. This is not just out of loyalty and conviction, it’s also due to the strong probability that it’ll go to the moon.
Bitcoin is the best asymmetric bet of our lifetime. Missing out on it would be a shame.
With ETH, I’ll probably keep most of them depending on how this new ETH 2.0 upgrade goes. I don’t anticipate selling more than 20% of it if anything.
With Altcoins, I’ll probably sell most of them by the beginning of 2022 and then use the proceeds to buy more BTC.
One thing I will never do is to sell crypto to buy Fiat money (Dollars, Euros, etc)
Soft money is only good to buy hard money but not the other way around.
Besides, we are hitting high inflation now. According to the FED is already 5.4% (if you believe what they say) More realistic figures are around 15–20% keeping in mind the trillions that are been printing every month.
Cash is trash, according to Ray Dalio and he is a legend in the investing world. Get ready for what’s coming.
Buy Bitcoin and Hodl.
With whatever you have left, buy other cryptos.
Be patient, don’t believe the FUD, and DCA.
There is a lot of negativity coming from the media, the banking industry, and the government. But this is to be expected. Some of them are misinformed and the rest have an agenda.
They have been enjoying unlimited power and wealth for decades and now they don’t welcome the competition. Plus, this FUD helps to bring the price down so they can get a bargain.
Here’s an example of what’s going on.
JP Morgan is warning investors not to buy Crypto and at the same time, it’s setting a crypto fund for their wealthy clients. It’s quite obvious they want their poor clients to sell their bitcoin to their rich clients. This is the kind of sharks we are dealing with. Don’t believe a word they say.
Buying bitcoin is risky but not buying it is probably riskier. Whatever you do, don’t hold too much cash since inflation will eat it away.
Do your own research. Be very skeptical about everything and make your own mind. Your future is at stake.
