shivsak

shivsak

13-04-2022

02:26

Different ways to make $ investing in crypto explained 🧵 👇 [1/x]

1. Buy & Hold (HODL) Buy coins with solid fundamentals, that you expect will do well in the long run. • Do deep research before buying. • Only sell if fundamentals change significantly and your original thesis is invalidated.

Pros: • Tried and tested, passive strategy • Can diversify with minimal time / effort • No tax burden since you aren't selling • Hard to go wrong if you're buying solid coins and your allocation strategy is reasonable

Cons: • Requires patience; Sitting around & waiting isn't fun. • Not the fastest way to make money (but probably high likelihood of success)

2. Altcoin Trading / Flipping A lot of people have gotten very rich trading and flipping altcoins, particularly in bull markets. $LUNA, $MATIC, $SOL, etc all 100x-ed in a period of 12-18 months.

I'm not the most successful altcoin flipper by any means, but I have learned a few things along the way: • By the time your favorite YouTuber with 500k subscribers makes a video about it, it's likely too late. • You need to know where to look for the next big winners.

• Smaller caps have more room to run - it's easier to go from $10M ––> $1B market cap than to go from $1B ––> $100B • Smaller caps can get absolutely destroyed in bearish times. • You MUST be disciplined about taking profits.

Flipping alts is different from Buy & Hold. Buy & hold: you're buying coins with solid fundamentals that you have long term conviction in. Alt flipping: you're trying to profit from narratives & trends. Be clear about which you're doing.

Pros of flipping Altcoins: • Great strategy for bull markets • Can be a great way to multiply your crypto (especially for smaller portfolios)

Cons of flipping Altcoins: • Most altcoins underperform ETH. Picking winners is not easy. • Requires a lot of time dedicated to research to be successful. • High risk - bearish markets will DESTROY your portfolio.

3. NFT Flipping The goal here is to find NFTs, get into them at launch or for cheap, and then flip them once the community / hype / market makes the prices go up.

Understand the concept of relative value. I highly recommend reading this thread about a man who started with a red paperclip and traded his way up to a house. His journey can inspire and help you learn concepts that may be useful for NFT flipping.

Pros: • Successful flippers can multiply their stacks by 10-100x • Can be fun to engage with communities, get perks, etc • Ownership bragging rights.

Cons: • Not easy to pick the right ones; Many will be worthless once initial marketing hype dies. • Requires time to research, get in on whitelists, engage with communities, etc • NFTs aren't liquid like altcoins. You can't just sell them anytime. You have to find a buyer.

4. Leverage Trading (Using Margin / Futures) This is often something that looks very attractive to newer entrants in #crypto. "If BTC goes up 50%, I can make 500% with leverage". It's tempting, but very risky.

My views on leverage trading: There's a lot more skill required than you think - understanding markets, TA, timing, risk management, position sizing, when to rely on signals or not to, etc. Bankroll management is super important - don't want to get rekt to 0.

Pros: • Can make money in bull and bear markets if done right • Useful to understand how to use different instruments to hedge or lever up.

Cons: • Most people are unsuccessful. • Requires lots of time and practice losing $ to acquire the skills needed - don't think you're a pro because you watched a few 30-min videos. • Requires time to actively track. • Taking lots of risk without being in control.

5. Yield Farming If you've been following me, you know that this is the area I focus on. Here's why: • Great supplement to buy & hold strategy. If you already hold a coin, you might as well earn yield on it. • Upside only if you only farm coins you plan to hold anyway.

• There are many, many ways to earn yield on your #crypto. • Can be active or passive depending on your goals. • You actually interact with the protocols (as opposed to just buying coins). You'll learn a lot about crypto - it will open your mind to how a lot of this works.

• Passive yield strategies can boost your crypto returns by 10-20%. • Active farming can boost by 50-100%+.

Cons: • Steep learning curve initially. There's lots of new terms and concepts. Can be overwhelming. • Can be a pretty time consuming process to research, execute and track positions.

• Can be tempting to chase high APRs, and buy shitcoins, or take on more risk than you should. • Connecting to more protocols exposes you to hacks, exploits, etc. You got to take your security seriously. • Taxes are COMPLICATED.

Here's some resources to get you started with the process.

And some more advanced concepts..

My approach: • Buy & Hold: Continuously accumulating BTC, ETH and strong altcoins with solid fundamentals. • Farm everything (within reason): No point leaving % on the table if I'm already holding the coins. Biggest constraint here is my time.

When things are looking particularly bullish, I might swing trade altcoins with strong narratives (sparingly though). Even then, it will primarily be altcoins with solid fundamentals. Sometimes these swing trades turn into long term bets.

I don't touch NFTs or leverage trading. I also don't trade memecoins, microcaps, etc. Don't have time for everything. No reason to believe I will be successful at it without spending a LOT of time learning and losing $ along the way. Pick your game, and find your edge.

The easiest rule to help you avoid losing $ is stay away from shitcoins. If it doesn't have good fundamentals and utility, just don't touch it. Of course, you'll probably miss out on the hot new meme coins but that's a dangerous game. It's harder to lose money in strong coins.

Hope this was helpful. Check out my past threads for more DeFi / yield farming guides

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