I wrote this article to guide myself. Today I was thinking of how I should invest into cryptocurrencies, and after a month into this I realized that there is a lot of strategies, and some are very interesting, all based on premises.
The four strategies below are very risky by themselves because we are dealing with something VERY new, but, doing these, we could say that it is a way to secure and maximize the potential. I strongly recommend you to use a spreadsheet or cryptocompare.com/portfolio to manage your strategies.
As you can see, I set 5 BTC for each strategy (total of 20 bitcoins), but you can change it to your own size, which means that you can set from 0,01 BTC to 100 BTC, but please, be sure that you are putting the money you can lose, otherwise you probably will cry a lot!
Update: I changed the order of the strategies from the easier to the hardest to operate.
1) Renting on Poloniex (or Bitfinex) - The easiest
Premises: Here in Brazil you can use banks to invest your savings, getting returns of 1% poer month (at maximum) or go to the stocks (which is risky). Well, if you take a look at the Poloniex gains, you can go from 1% per month to 2%, 5% or 10% (and we are not considering the value of your bitcoins that also can increase)...
- Maximum investment: I suggest the daily transfer limit from your account at Poloniex, this way you can sell your positions fast (if you want to).
- Risks involved: Poloniex bankrupt, hacked accounts and the situations based on Poloniex terms of service.
- What to do with the profits? You can send it to your “buy and hold” portfolio or to your “Entering the ICOs” portfolio.
2) “Buy and Hold” Portfolio Strategy - The must do
Premises: Buying and holding, maybe in 5 or 10 years, one or more of these coins are going to explode, turning on profits even if the others 99% coins fail.
- Total altcoins: from 30 to 100 altcoins.
- Composition: 70% of studied altcoins and 30% of shitcoins.
- Maximum investment: 5 BTCs.
- Time to hold: 5 years.
- Risks involved: All the coins going to zero, government regulation, hacked wallets or exchanges.
- What to do with the profits? If you are a kind of person that cannot wait 5 years if you see some profits coming in 1 month, 1 year or less, try to set partial goals and selling part of your results, not it all. If you take it all, maybe you will be crying as the guy that bought 2 pizzas for 10,000 bitcoins.
- Current desired coins to hold: BANCOR, DASH, DECRED, ETHEREUM, GNOSIS, GOLEM, IOTA, LITECOIN, NEM, PIVX, RIPPLE, SIACOIN, STEEM, WAVES, ZCASH and others (update: this list is one that basically don’t change very often because of the nature of this portfolio, some coins can be added but it’s hard to take one out).
3) “Entering the ICOs” Portfolio Strategy
Premises: If you study the whitepapers, the technology, the people behind the coin and the news, you might buy new coins that are going to multiply your BTCs, making you very rich.
Some thoughts: For me, I talk a lot to these amazing guys: Alexandre Rodrigues is an entrepreneur that write some ways to choose altcoins. Eduardo Capanema is a computer scientist that choose coins based on technology. I also got the inspiration from this portfolio. Don’t forget to follow ICOs here, here and here!
- Total ICOS: Unlimited.
- Maximum investment: 1 BTC per ICO.
- Risks involved: ICO scams, problems transferring the funds, unknown bugs and low volumes/liquidity.
- Current desired ICOS: Polybus, DAO, Tezos. (uptade: this list changes very fast!)
- What to do with the profits? You could send it to another ICOs, to your "lending account" or "buy and hold" strategy.
4) “Trading” Portfolio Strategy - The hardest
Premises: If you do it good by setting right times to buy and sell, you can easily multiply your money and make a fortune and if you lose it all, well, you will know that you can not keep doing it, that is why it is important to set a limit to your invested money and never go over it.
- Total altcoins: from 5 to 10 altcoins
- Composition: 50% of studied altcoins and 50% of shitcoins
- Maximum investment: 5 BTCs
- Risks involved: The market becoming bearish, bad news going against the market, government regulation, stop loss not set, all the coins going to zero, hacked wallets or exchanges. From all the portfolios, this is the risky one.
- What to do with the profits? If you are like me and want to avoid as many risks on it as possible, you could send the profits to the “Lending” portfolio strategy or to the “Buy and Hold” portfolio strategy. This will let you continue to trade but just with the initial coins, not increasing the maximum investment.
- Current desired coins to trade: RIPPLE, DIGIBYTE, SIACOIN, BURST, ANTCOIN and others (update: this list can change very fast and easily to get outdated).
This document was created by José de Menezes, founder and CEO of Learncafe.com. You are free to share, contribute or change it, but keeping the author’s name and website.
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