When it comes to crypto investing, there're no universal rules or an all-fitting best way to do it.
Everyone has to develop their own investment strategies based on their unique preferences.
In this post, I'm going to share with you my crypto investment rules.
And how I use them to determine what, why, when, I buy and sell.
Buy only on good fundamentals
Invest in people (team)
Avoid impulsive buying and selling
Watch and track or get surprised
Avoid escalated commitments
1. Buy fundamentals not hypes
The first thing I do before investing in any project is to run it through my fundamental analysis checklist. To determine, how the coin or token derives its value. And if this value can be sustained and increased with time.
Some of the questions I will be looking for answers to are:
What problem(s) is the project trying to solve or solving?
Is there a market for its product(s) or solutions?
How big is this market?
Do they have competitors?
How good is the competition?
What is their core advantages over the competition?
What are the use cases of the native token or coin in the project's ecosystem?
What is their tokenomics?
Is there a working product or still in development?
Do they have relevant partnerships that can help the project expand its market?
As a buy and HODL investor, fundamentals are more important to me than the short-term price movement.
As long as the team keeps building and developing its product and technology. I wouldn't be too bothered about the immediate price movements, whether up or down.
2. Invest in teams, not just tokens
You can trust a great team to turn a bad idea into a profitable business than an impotent team with a brilliant idea.
That is why the people behind a project can sometimes be more important than the project idea itself.
Because even if the idea is terrible, you can trust the team to improve on it and turn the fortune of the project around for good.
But an incompetent team, even with a brilliant idea cannot be trusted to deliver.
So before investing in any project I like to know:
Who are those behind it? The founders, private investors (individuals or institution), advisors, etc.
What are their experience and track records?
How relevant is their knowledge and experience to this project?
Is the team anonymous? Are there people I trust that are associated with the project?
The more competent the team, the better chance of the project succeeding.
Some team behaviour that turns me off include:
Team or their admins talk too much about token price. It makes me feel they're just sampling market sentiments to know how to effectively pump and dump on you. I may be too paranoid, but I hate teams talking too much about token price. I mean, there are more important things to talk about right?
The team or their admins takes all contrary opinions personally and are always defensive. I mean, what are you being defensive about? How can you improve without feedback and if all you want to hear is me hyping your lousy project, what's there to improve?
Team and their admins argue rather than answer questions. They would rather classify you as a fudder, "weak hand" (really?) than answer your questions and comments constructively.
Their community is strategically protected by "fellow investors" who do nothing but put you down for asking questions or expressing a contrary opinion. They're usually very good at making invalid arguments which takes you farther away from the original question or topic of discussion.
These are all signals and may not be conclusive on their own but they tend to put me off a lot or at best, makes me very edgy about the project.
3. Avoid impulsive buying or selling
This is too basic that I almost didn't want to include it but I see even the "experienced" crypto investors make this mistake.
As I stated earlier when I am invested in a project with good fundamentals and a great team I wouldn't "react" to short term price movements.
If a coin I am interested in is already pumping, I wouldn't try to play catch up and buy into the pump.
There's always a correction around the corner, no matter how hard it pumps and I can wait for a good entry.
And if that correction never comes, I pass onto other opportunities. There're too many good projects to buy instead of impulsively chasing one.
Same way if it's dumping due to "whales play" or some bad news.
I would evaluate the cause of the "dump" and if I find it to be temporary I just remain cool and wait for the sentiments to settle down.
As long as the team is still building and putting in the work and you believe in the project, HODL on through any dip.
Except you're a trends trader and wants to ride the wave, reacting impulsively to a coin's price movements is almost always suicide.
There are over 7,000 different cryptocurrencies in the market. Once you miss a pump, look for another one.
Rather than spill your blood all over the place trying to catch a flight that's already in the air.
4. Watch and track or get trapped
Most times, when I am invested in a project, I pin their Telegram group for easy reference.
And I immediately add the token to my watchlist on CMC and CoinGecko - that's if I haven't already done that before buying in the first place.
And finally, I activate notification for their tweets and subscribe to their newsletters.
Because I want to know everything they're doing so that I can evaluate whether I would buy more, just keep holding, reduce or sell off my bag.
Plus I don't want to be the last person to know about their latest developments.
You need timely and accurate information to effectively manage your portfolio.
And that requires you to be up to date with the latest developments of all projects that you're invested in.
5. Avoid escalated commitments
According to Wikipedia:
Escalated commitment is a human behaviour pattern in which an individual or group facing increasingly negative outcomes from a decision, action, or investment nevertheless continues the behaviour instead of altering course.
Never fall in love with any project or coin. And never become overly committed to holding on to especially, a losing investment position.
Especially when all available information points to the fact that this was a bad investment.
Be bold. Cut your losses and move on.
You can't win all!
So learn to call your fuck up and pull the plug as early as possible to save whatever is left.
There's nothing like "it might still go up", "load up on the dip" nonsense, or arguing what is, should, and shouldn't with the project admins or team.
Just sell it off (if that's still possible) and walk away.
I like to keep my crypto investment rules as simple and flexible as possible.
The goal is first, to make money, and everything else is secondary.
Most times, it's easy to identify a good or scam project if you know what to look out for.
If you ever find yourself invested in a scam or total shitcoin, don't hesitate, cut your loses and move on.
And when you find a really good project, buy it and never sell.
What's your crypto investment playbook? Share with us in the comments section below.