Blog Invest How to make the best crypto investment strategy for 2021

How to make the best crypto investment strategy for 2021

date September 10, 2021 time 5 min read 176 views

If cryptocurrency investing was easy to figure out, a huge segment of the population would be millionaires by now—but instead, you probably know just as many people who have lost money as those who’ve earned anything. Although you can’t eliminate risk completely, you can increase your chances of success by formulating the right crypto investment strategy. Here’s how to do it.

Ever since bitcoin burst onto the scene over a decade ago, cryptocurrency has moved continuously closer to the mainstream. It’s no longer the “next big thing”—it is the big thing. Not everyone agrees that digital tokens will replace or even rival fiat currencies in the future, but if you’re a believer, make sure you do yourself justice by approaching your crypto investment strategy in the right way.

The world of bitcoin and digital tokens might feel like a game of chess, but with a good crypto investment strategy, you’ll know how to play it.
The world of bitcoin and digital tokens might feel like a game of chess, but with a good crypto investment strategy, you’ll know how to play it. (Source: Pixabay)

While there’s not a single right way to invest in crypto, there are certainly multiple wrong ways to go about it, so make sure you avoid the usual mistakes by cluing yourself up on the basics. Wondering how? Look no further.

A brief history of cryptocurrency

First came bitcoin, next came world domination. If your knowledge of cryptocurrency history doesn’t amount to much more than this, you’re in the right place. Let’s run through the basics.

An anonymous individual known as Satoshi Nakamoto (pseudonym) launched a whitepaper detailing the mechanisms behind Bitcoin in 2008, amid the financial crisis. In 2009, it went from idea to reality; 

What began as a niche project began to gain traction after a few years. WordPress became the first major company to let its customers use bitcoin as a payment method in 2012, and various other merchants would follow (including a few false starts, like the recent Tesla debacle).

By this point, it wasn’t all about bitcoin; competitors and complimentary coins followed. Bitcoin’s first major competitor was Litecoin, launched in 2011, although the coin has now faded to relative obscurity.

Currently, the second most popular cryptocurrency is Ethereum, launched in 2015. Unlike Bitcoin, it’s designed for smart contacts and launching applications rather than as a medium of exchange—this shows just how expansive the cryptocurrency world has become.

There are thousands of cryptocurrencies floating around now, with more being launched every day. 

Even institutional banks and traditional financial institutions like Goldman Sachs are researching and investing in cryptocurrencies to figure out how to work them into their offerings, and many national governments are considering launching their own. For instance, El Salvador became the first country to accept bitcoin as legal tender in September 2021.

Crypto investment strategy for 2021

The history outlined above only skims the surface of what there is to know about crypto, but hopefully it’s helped you appreciate just how rich and complex this topic is. Now, we can get onto the juicy stuff: formulating your crypto investment strategy.

The world hasn’t been the same since bitcoin was launched and gradually began to take over the world.
The world hasn’t been the same since bitcoin was launched and gradually began to take over the world. (Source: Pixabay)

But firstly, a caveat. We’re a peer-to-peer lending platform and not a financial advisor, so we can’t offer you advice about how you should invest your money—but we can give you some pointers to start your research and planning process as you venture further into the crypto world. Deal? Let’s go.

Expect the unexpected

Unless you can see into the future, crypto investment is going to involve plenty of risks, a few nasty shocks, and possibly even some irrecoverable losses. If seeing your investments decline drastically overnight is likely to spook you and make you panic-sell, cryptocurrency might not be the right place for you to put your money. 

But while the risks are high, so are the rewards, which can be double-, triple-, or even quadruple-digit returns.

The main issue is that many people buy Bitcoin in the midst of a bull market thinking that its price will continuously increase; when the opposite happens, they don’t know what to do. To avoid repeating their mistakes, assess your risk tolerance realistically. Only invest money you’re not likely to need in the short term, and avoid looking at the prices of your crypto too often if it will make you stressed. You should be in this for the long haul.

Also, make sure that you understand just how volatile this market is. We’ve seen no end of flash crashes so far, and more will come—the crypto market almost functions with accelerated economic cycles. Back in May 2021 many crypto prices crashed, but many of them recovered within a few months. Be patient.

Diversify your portfolio

Although we’ve mostly focused on bitcoin in this article, it’s just one cryptocurrency of many. Diversifying your portfolio is important—litecoin probably won’t be the next bitcoin, but maybe ripple or even nano coin will. 

If you’re not sure where to begin, start by looking at the cryptocurrencies with the highest market caps (which are the most prominent). Then research their price history and usability and pick out the candidates that seem most promising to you.

It’s now easier than ever to experiment thanks to revolutionary new options—for instance, at MyConstant, we let you invest in new cryptocurrencies by earning interest on your cryptos you can get 4% APY in BTC, ETH, or BNB, compounded and paid every second. 

Alternatively, you could invest beyond cryptocurrencies by putting some money into real estate, index funds, individual stocks, or other alternative investments.

Whatever you do, don’t just invest in something on a whim because some guy on the internet told you to. Speaking of which…

Avoid the hype

Take the most obscure, low-value cryptocurrency you can find and we guarantee there’s a corner of the internet talking about how inevitable it is that this token will one day be the world’s dominant currency and skyrocket in value.

Don’t believe everything you read online.

Choosing the right crypto investment strategy doesn’t have to be complicated if you follow some basic principles.
Choosing the right crypto investment strategy doesn’t have to be complicated if you follow some basic principles. (Source: Pixabay)

Before you invest in a cryptocurrency, make sure you really understand its mechanisms, features, and benefits so you can make an educated decision. You should be investing because you truly believe in a coin’s usability potential, not because you’re suffering from FOMO or you’re dreaming of a quick money maker. 

Get involved in crypto with MyConstant

Crypto investment isn’t for everyone, but if you have a good head for risk and you’re in it for the long run, you can at least be smart enough to have a solid strategy. One way to do that is by expanding your portfolio without selling the crypto you have, allowing your investments to work twice as hard.

With MyConstant, you can collateralize your existing crypto to receive instant crypto-backed loans with low interest rates—and then you can use the cash to buy even more crypto (or different investments). Other benefits of our services include:

  • 24/7 customer service.
  • Rates as low as 6%.
  • Early repayments for lower rates.
  • Instant matching.
  • Store and borrow against over 70 different cryptocurrencies.

Alternatively, you could consider how to lend money online or using our other products such as Short Selling and Futures.
Sound interesting? Sign up for a free account today and start investing.

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George Schooling

George Schooling

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