Crypto VC Thoughts: Defense Crypto Investment Methods

By xuanling11 | Crypto Learning | 22 May 2022


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Crypto investment is very risky because you have no control over its development and do not have enough information to determine its valuation 🎢. 


Many people made crypto investment mistakes because they traced the market too close to losing their minds 😱. 


The market is an environment that influences crypto assets. It is an amplifier to push further when the market is up and press intensely when the market is down. 


It has nothing to do about the cryptocurrency itself. 


Like investment collectible, its valuation solely depends on supply and demand. The higher the price is because people are willing to pay such price, not because such collectible has a fundamental value to support its price.


The same argument applies to cryptocurrencies. People are willing to purchase at a higher price because they can afford it, not because cryptocurrencies are unique to reflect their valuation. 


The only reason that cryptocurrencies are valuable is that people continue to speculate their price will go higher no matter what. It is a continuation of the speculation cycle that will carry out once the market is uptrend again. 


Should you ride with the wave and avoid becoming a bagholder before the downward trend happens 🥺? 


How do a regular investor like you and I see the wave of crypto and avoid becoming a bagholder eventually?


Here are some of the insights I believe can help each investor to access their own portfolios:


1️⃣ Don't day trading crypto


Day trading crypto is just not sustainable in the crypto investment. You will lose the ability to join the extreme upward trend and become a highly likely a bagholder because you are regretting the previous trend. 


You will be lost because psychologically and emotionally, impulse trading rather than proper investing in crypto. 


2️⃣ Don't try to predict the market


You will waste your time predicting the market. The market can only provide feedback for investors' short-term decision makings. It does not give you long-term feedback. Such asymmetrical feedback increases your chance of losing in the long term, even if you got several short-term winnings. There is no real bottom or really top if your investment is long-term. 


3️⃣ Don't sell easily


Don't sell your positions even if the market is down by 90%! Yes, if you do not sell, you do not lose anything. 


4️⃣ Always be skeptical


Crypto is risky because of its nature of speculation. Always be skeptical about the crypto market. 


5️⃣ Passive investment strategy wins in the long term


Don't try to beat the market! Invest less emotionally and keep caution about your portfolios while consistently investing is a key to survival in the long term.


6️⃣ Investment is a survival game


Thinking about how you will survive with limited food and water on the isolated island. This is how crypto investment should be. You are managing to survive each time when harsh weather conditions hit the island. Your goal is to survive and to prepare for the next harsh weather to come.



You may think, yeah right, all chicken soup ideas cure me shortly, but how am I going to invest in the crypto market in the long term? 


Here are some of the suggestions:


1️⃣ Dollar-cost averaging


Yeah, it is super boring, and everyone knows the idea, but only a few consistently follow the strategy. Be more specifically, invest the money you are willing to lose rather than over-investing to create an emotional burden.


2️⃣ Don't be creative


You heard me. Everything you came up with may have already been tested and proved to be a fail. Otherwise, such a strategy will be widely used and successfully beat a market a long time ago. Try to become as boring as possible to investing in crypto.


3️⃣ Don't invest ideas


Many crypto projects just sound so wonderful to resolve every issue like a silver bullet. Don't invest! You have no idea about the project at all because you did not work on it. Buying an idea is to buy an empty check with a promise to pay off god knows when.


4️⃣ Don't feel at a loss, don't invest


It is better to enjoy the drama than invest in the drama. Investing if you will lead to losing the whole investment.


5️⃣ Plan to invest for the next 30 years


All investment that people share in media is a short-term successes. You should prepare to invest at least 30 years while continue educating yourself to learn more about everything else that people share through media. 


🤝 Should you even trust my suggestions?


I will laugh at you if you do believe me to tell you what to do for your own money! Becoming cautionary is a key to survival in the crypto market!

Note: the post was shared on multiple platforms here.

You can refer my previous article lists here and here
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