Originally posted on lifestylemaniacs.com
If we look at CoinMarketCap, we can easily see there are more than 10.000 cryptos at the moment of this writing. These cryptos are sorted descending by market capitalization.
Most people have turned the crypto market into gambling by choosing the newest crypto, with the lowest market cap, with the bet they will give them 100x profit. However, they can also go to 0 and lose everything.
Few people have the patience and knowledge to read and understand the whitepaper of low cap crypto and only those have the potential to make 100x gains. The rest of the people will lose money.
Let’s be honest, crypto is new and, thus, very volatile. Even Bitcoin, the highest market cap crypto is volatile and can drop 50% in 1 month — as we saw in May. Also, Bitcoin is the lowest risk crypto and gives 10x returns in 4 years, as history has shown.
If Bitcoin can give 10x returns if buying the lowest and selling the highest within the 4-year cycle, why on earth would I look at low or medium market cap cryptos which have a high risk of going to hell?
I chose to research and buy only in 5 cryptos, which belong to the top 25 on CoinMarketCap. The rationale is simple, there will always be top 25 cryptos, and there will always be top 5 from these top 25.
This helps me sleep at night, not stress during market swings, and hold for the entire bull market. Of course, I am selling during a bear market because I want to buy in at low prices.
I am a long-term trader for now with crypto and any other market. I may hold my buys for 6 months, 1 year, 2 years, who knows; it all depends on how the market moves. You chose the strategy that makes you happy.
Bitcoin vs Altcoins
This is very interesting. Bitcoin has become the S&P 500 index of the crypto market. You see, we look at the price evolution of cryptos compared to the USD, which is not a good metric.
We should compare altcoins’ price evolution to Bitcoin’s to see if we are making a better portfolio performance compared to if we were holding Bitcoin alone. Most of the time, Bitcoin outperforms altcoins and crypto portfolios in the long term.
Before learning about crypto, I bought mindlessly and I would have had a better portfolio performance if I would have just bought Bitcoin and Ethereum. There is beauty in simplicity.
All of this being said, I only look at the top 25 for my crypto research, because I am sure I will outperform Bitcoin using this strategy. Also, the higher the market cap, the higher the liquidity, the more exchange listing, the more research resources, the greater the community.
This simplicity applies to most investments. Always put in balance the risk/reward ratio and the hustle and stress involved in researching. I want to keep things simple and as safe as possible and expect big returns in the long term.
What is your strategy? Leave a comment. I am curious.
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Disclaimer: I am not a financial adviser and don’t recommend investing in anything as nothing is guaranteed. Everything I write on the topic is for informational and educational purposes only. Always do your research.
