Crypto investment strategy

For several years in a row, the topic of cryptocurrency investment strategies remained in demand. Payment instruments based on decentralized systems have entered the global economy, so buying digital coins is a popular investment method. It is pretty challenging to understand the details of all investment strategies, as it is a complex and multifaceted issue. Nevertheless, a lot of people become investors and make big profits in crypto. The main thing is to choose the right strategy in 2023.

So, today we are going to talk about investment strategies that you can use in 2023. You will learn more about ways of investment and understand how to analyze crypto properly. We provide helpful info on strategies for both experienced investors and beginners.

How to choose the crypto to invest in?

Investments in tokens can bring high returns. But where there is a high potential return, the risks of losing all funds are also high. Some coins will remain relevant in the future, but some may replace more promising digital assets. That’s why there are so many different things to consider when choosing crypto for investment:

  • Value. For instance, BTC has many clones that bring almost nothing new and do not improve the system. The same applies to ETH – it is not the only crypto that uses smart contracts, but it is the one that represents the most worth. For a crypto portfolio, you need to choose really valuable assets.
  • Relevance. Some projects may become obsolete and be replaced by new, better platforms with better bandwidth and almost zero fees. Pay attention to this factor when you make a crypto portfolio.
  • Creator activity. Creators must maintain the project and work on improvements. Otherwise, vulnerabilities will lead to the collapse of the ecosystem. Some crypto that was among the leaders in 2017 is now little known (for instance, LSK or Dash).
  • Events. External happenings, such as the news from creators, can raise the hype around a project and encourage investors to be active, resulting in an uptrend.

These are the main factors to consider when building a crypto portfolio. You need to catch the essence of what affects the rise and fall in rates, to get a return on your investment. But for a deeper analysis, you need to learn how to invest and use various strategies correctly.

What to do with investing in NFT and what strategies to use here? In general, with NFT everything is very similar to another crypto. In the case of NFT, you have to consider the cultural significance of the token, and its usefulness in the real world, the team, and the community.

How to analyze a digital asset?

Where to start? Before you apply any strategy, you need to analyze the asset. There are many forms of analysis and strategies that professionals use. But in general, experts distinguish two main ways to evaluate investments:

  • Fundamental is based on economic/financial factors. In the case of crypto, one looks at publicly available network data, sometimes referred to as on-chain metrics. This approach allows you to find out whether the coin is underpriced or overpriced at a given time.
  • The technical one relies on a second approach. Unlike the first, it does not seek to determine the actual worth of an asset on the crypto exchange. According to this analysis, past cost movements of a token (or another asset) can be useful in predicting its future changes.

So, which analysis is better? The answer is simple – it is best to combine both on a crypto exchange today. This will help you choose the most suitable option out of the many investment strategies. Most tools are effective only when combined with others, especially when you’re going to use one of the investment strategies for profit.

What are the most relevant indicators?

You should pay attention to the following types, especially in the initial stages of investment activity:

  • Moving average uses data for a certain period and calculates the average amount.
  • RSI compares cost movements to historical patterns to identify potential investment opportunities.
  • Bollinger bands are used to measure volatility and give an indication of cost trends.

Depending on your investment goals and risk tolerance, various indicators are appropriate.

What are various crypto investment strategies?

You may have a situation where you like crypto and maybe you’ve even analyzed it. But for lack of investment strategies, you don’t know when to enter. And when the asset grows, you experience the lost profits syndrome. All this comes not only from a lack of experience but primarily from a lack of strategy.

To begin with, you need to decide on the type of investment you want to make. To do this, you need to clearly understand the crypto investment horizon. Without this, you will not be able to determine a suitable strategy

So, how long you are ready to be in the crypto market? Based on this, you can choose a strategy that is appropriate for you. Either it will be short-term speculation, or medium-term, or you choose a long-term investment strategy. So, there are several basic investment strategies in the crypto market:

  • The first strategy can be called buy-and-hold. The idea of this investment strategy comes down to the fact that it is impossible to guess the exact moment, so the only way out is to invest for a very long horizon, from 3 years or more.
  • The second investment strategy is the exact opposite. Its idea is based on the assumption that crypto market movements are subject to statistical laws, and therefore a trading strategy with a positive mathematical expectation can be much more profitable.
  • The next strategy involves the idea that even among crypto assets there is a division into risky and protective. Therefore, in periods of rising trends, it is more effective to allocate most of your funds to classic currencies (BTC, ETH, and others). And in periods of a downtrend, go to stablecoins.
  • Another investment strategy is staking, where a purchased asset is freezing. This allows to keep the network running, and people keeping their funds in this way receive a passive income.
  • Also one of the popular investment strategies is copying whales. This is the name given to people with large portfolios who control most of the market. There are special tools like WhaleAlert that help track such deals.

There are plenty of strategies, especially considering that only the basic ones are presented here, so it is very important to choose the option that suits your portfolio and the current moment. 

Is it still profitable to invest in crypto?

Experts from various areas of the economy have already assessed the wisdom of investing in crypto today. Those who bought tokens and coins much earlier are already making a profit. All the more, a multitude of ways to buy/sell crypto gives a boost to its development. User confidence is growing along with the popularity of digital coins and tokens, and the scope of crypto is constantly expanding.