February 20th, 2018 · Sadia Sarwar · Blockchain

3 Tips for Crypto Investing

It feels like everyone is either talking about, investing or trading cryptocurrencies today. The Bitcoin craze has captured the imagination of millions of novice and institutional investors alike.

If you’re interested in investing in blockchain companies and their tokens as well but don’t know where to start, then this is the place for you. Here are 3 quick tips to help you figure out alt-coins and start investing in them. 

Tip #1: Invest in what you know

Warren Buffett is famous for saying: “Invest in what you know… and nothing more.”  And while Buffett is not likely to invest in the world of cryptocurrencies anytime soon, his advice is relevant for crypto investors. You should only invest in assets and opportunities that you understand well.

In crypto investing, the asset would be the company’s digital token or alt-coin. Simply defined, it is the company’s tangible financial product that you can purchase and then trade on exchanges. Next, in order to judge a company’s digital coins, you need to judge the company itself. You should be able to answer these questions about the company before investing: 

  • Can I summarize what the company does in 1-2 sentences?
  • Have I read and understood the company’s white paper?
  • What utility does the company’s coin or token offer?
  • Is the company’s product or service offering unique?
  • How likely are people (or companies) to utilize the company’s offering?

By contrast, the opportunity is the situation that surrounds the assets. In order to identify the opportunity, you need to speculate about the market sentiment about the company. You should examine how the market feels about the company and what is the outlook of the other assets or factors pegged to the company’s assets. If the outlook is good and the asset is sound, then the investment is sound!

Tip #2: Bet on the jockey, not the horse

As important as it is to like a company and its business idea or product, it is equally important to like a company’s team.  A good founding team will not only have a good business idea and a product, but they will also be able to get the product to market and gain traction while doing so.

The team also determines the future performance of a company – whether it will be able to grow and sustain itself and whether or not it will be able to adapt to changing market conditions. In order to judge a team, you should consider the team members’ backgrounds and previous successes. You can also look at their cumulative years of experience in the industry. 

TIP #3: Buy low, sell high, and be patient

We are all too familiar with the age-old investment tactic of “buying low and selling high” and it is by far the simplest way to earn a good return on investment. However, in practice, you have to be patient and wait a long time to get the opportunity of “selling high.” In the crypto space especially, there are a lot of speculators who are trying to “time the market,” which is why it is hard to ascertain the “lows” and the “highs.” 

Last year, the crypto craze gave rise to several “daily crypto highs,” and with it came an advent of novice investors who wanted to get in on the market.  It is human nature to see something jump 20% in a day and want to get in on the action. However, these “daily highs” are not an accurate prediction of a crypto asset’s future performance. Thus, novice investors might be entering the market at already “high” prices instead of “low” prices. Thus, a good rule of thumb is not to be easily swayed by soaring prices and BUY LOW. 

Bonus Tip: Earn Interest on the Celsius Wallet

If investing in new tokens are not your thing then you can look for safer opportunities to earn consistent returns on your existing assets. Similar to saving accounts that pay interest on your stored money, you will be able to earn interest (of up to 9% annually) on your existing digital coins on the Celsius wallet. 

In addition, the Celsius Wallet will also be one of the only online crypto wallets designed to allow members to use coins as collateral to get a loan in dollars. And in the future, it will allow its members to lend their crypto to earn interest on deposited coins (when they’re lent out).