What a year it has been!
Perhaps the best is yet to come?
With this blog post I am seeking to dive into the most common questions that I see on a regular basis. It is aimed at the beginner investor. Rest assured, there is no shame in being a "crypto noob" - we all started here at some point.
Why Buy Cryptocurrency?
Money is not real anymore. Currency proliferation for economic stimulus has begun an inflationary cycle. This is a positive feedback loop that requires increasing amounts of currency growth to sustain the current economic growth/status.
No politician or government will want to "hit the brakes" on this process. This would be the equivalent of raising interest rates. Changing interest rates is not an appropriate solution because our economy/market is bloated with cheap debt. It is this cheap debt that allows companies to survive, employ millions of people, and otherwise exist.
No cheap debt = no economy = no jobs
Cryptocurrency is limited in nature. It is because of this reason that it is gaining ground as an "inflation hedge". Dollars are unlimited. Bitcoin is limited.
Dollars decrease in value as they are expanded.
Bitcoin increases in value as dollars expand. This is because things get "more expensive".
Most important point of this section: cryptocurrency is not a get rich quick scheme. Rather, it is a "not get poor slowly" scheme because of its deflationary nature.
If institutions like Microstrategy, Tesla, Square, etc are buying at prices above 40k, surely they believe in the longevity of the asset overall.
How to Buy Cryptocurrency?
This is often one the most difficult questions to answer with confidence because it always depends on where you live. Here are my recommended exchanges:
- Binance Global is the world leading exchange, with opportunities to stake, access margin/leverage, and borrow crypto.
- Binance US is a platform aimed to comply with CFTC regulations.
- Crypto.com provides ability to exchange, stake, etc.
- Webull has access to both stocks and crypto - check them out!
- Coinbase is available in most/all countries. Fees can be high, but great starting exchange.
None of these work for you? Google "How to buy crypto in X country"
Buying crypto is only 50% of the work. Exporting to an external wallet (off exchange) is recommended when you exceed ~500 dollars in capital to mitigate risk of the exchange being compromised. We love our Ledgers!
When to Buy Cryptocurrency?
Bear Market? Trading > Holding
Bull Market? Holding > Trading
The upside to cryptocurrency bull markets is so high, you never want to be caught without upside exposure. It is for this reason that holding outperforms trading in the schema of a bull market. This is the kind of market we are in now, and the market we will be in until tail end of 2021.
Dollar Cost Average BUY:
- Buy small amounts (that you can afford to lose) on a scheduled basis. This removes emotions from the equation and allows for better management of the short term volatility.
- Develop a schedule/automated system and stick to it.
Dollar Cost Average SELL:
- When you have reached your desired sell points/financial goal, then it is time to sell. Same as you bought small amounts to enter, perform the inverse to exit.
- Selling portions of your account allows for maintaining upside exposure in light that it might continue to go up.
- Never feel bad/guilty for taking profits.
What Cryptocurrency to Buy?
Classic Disclaimer: Not financial advice, but here are some of my thoughts when evaluating what crypto to buy..
- Rising oceans elevate all ships. Bull markets are likely the most cyclical and largest financial opportunities we have ever seen. Most of the market will go up. Real projects will shine, and shit coins will pump.
- Don't get greedy with random alts from Reddit/Discord/Tik Tok. Stick to what you know, understand, and are able to explain. If you cannot reiterate what a project actually achieves, chances are you should not be investing into it.
- Bitcoin + Ethereum DCA will suffice just fine. You will still end up with insane gains, and have much less financial risk.
- The bigger the pump, the larger the dump. FOMO into alts works occasionally, but rarely is it a viable adequate long term strategy.
If you are looking for direct help/suggestions from the Performante team, consider Performante Premium! Through this subscription service, we shed insight into market dynamics, what we are buying/selling, and a full educational program to get you caught up.
I'm Not Rich Yet!!?!?!?!??!?!?!
Patience is a virtue. In life, investing, relationships, and especially in cryptocurrency. In my opinion, your success in crypto is always determined when you buy - sell points are relatively irrelevant.
Treat it as a game of accumulation. Digital real estate.
Consider buying on double digit red days.
Never go "all in" into an altcoin. Acceptable for BTC.
Remember, the best is yet to come. Institutions are FOMO'ing into high prices because they believe in it.