Should you invest in crypto?
This isn’t an easy yes-or-no answer. You’ve probably heard about cryptocurrency and its volatility. The birth of the blockchain technology industry has ushered in a whole new asset, which has made millions for some and trouble for others.
Five years ago, most people thought about Bitcoin as a bizarre internet currency. Now, we meet more and more people who own a little to a lot of crypto, even if they don’t have any other investments in their portfolios.
While the potential for growing wealth via crypto investments is significant, the risk of losing your money because of bad investment decisions is also there.
Is crypto investing right for you? Explore these six qualities of strong crypto investors, and consider whether you’re ready to begin the journey of learning more about this opportunity.
Remember, this is a new frontier. Our purpose is to help you consider possibilities and pitfalls. This is not financial advice. You should always do your due diligence prior to investing and keep a solid eye on your assets.
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Quality #1: A Long-Term Mindset
One quick way to lose money in investing is to jump on the bandwagon without knowing where it’s going. It’s important to have patience and a plan for weathering the chaotic storms of this up-and-down market.
An investor with a long-term mindset will take the time to understand the opportunities, and be thoughtful about timing so as to respect the bull and bear market fluctuation. A long-term mindset avoids the emotional knee-jerk reactions that lead us away from gain and into panic.
A long-term mindset is years long, ideally 5-10 years. Particularly in the crypto space, which has 4-year cycles, you’ll want to learn and adapt without hindering your quality of life or funds you may need in the near-term.
If you’re aiming for a get-rich-quick opportunity, crypto might be a dangerous space. If you’re willing to develop patience and perseverance in your time perspective – which is certainly possible! – the going will be less frenetic.
Quality #2: A Willingness to Invest Gradually & with Discipline
During the last crypto bull cycle in 2021, it was astounding (but not surprising) to learn that people were taking out credit card debt to invest in cryptocurrency. They were hoping to triple their money and then pay the card off. When the markets took turns they weren’t expecting, they were left with tremendous debt and no payday, the worst position to experience. Don’t let this be you.
We know another person who dragged his feet about crypto through two years of a bear market, and then decided to jump in with a large investment at the height of a bull run, meaning the cost of the asset was many times higher than it would have been the year prior.
He invested hoping to ride the wave up and make it big. Unfortunately, he hadn’t taken time to understand the market and was responding only to the fear of missing out. The market peaked and turned, costing him significantly.
Good practice is to exclusively invest money you have and won’t need until it has time to grow in a substantial and sustainable way. When the charts are flying around, green candlesticks seem to be everywhere on the charts and the media is feeding the hype, the time to make significant investments has likely passed.
Forming a plan and sticking with it with advantageous adjustments requires research, diligence and awareness of factors that can affect your decisions.
Quality #3: A Readiness to Position Yourself
This quality is about your willingness to prepare and position yourself for a market you can’t control. No investor has it right all the time or hits every intention as expected. The less you get it wrong, the more successful in the long run.
One method of beginning a portfolio is to evaluate your income vs. expenses and resolve to being saving a pot. This is especially productive in a bull market, when prices are high. It’s counterproductive to buy at these times. This time of waiting can be used for accumulating wealth.
Once a bear market comes, cost averaging, or Dollar-cost averaging, is one method of gradual investment that can be a solution for starting out responsibly. Cost averaging is a discipline of consistently investing regular amounts across a market direction regardless of price.
Ideally, the majority of cost averaging is done during a bear market, when the prices are lowest. This allows continuous involvement in a market with the ability to observe how it breathes and responds to global news, human psychology and day-to-day events.
Cost averaging can be done according to your ability, or weekly vs. monthly. Paired with a long-term mindset, the totals will accrue over time. Taking time to review cryptocurrency charts, like those at TradingView.com and other sources, will help you get a visual perspective of the current market state.
We have an exceptionally disciplined friend who learned about crypto in 2021 and decided to take part. He made some lifestyle changes, and has been investing $28 per day across the past year. At some points, his asset of choice was $1.42 per coin, and at other times $.25. His consistency has allowed him to take advantage of compounding his investments and learning through experience.
There are several sections on this process in the Cryptofluency Investing & Trading Courses, designed to help you take action on a plan that works for you.
You want to be present and ready when the market makes itself available for you to make moves.
Quality #4 A Healthy Relationship with Money
An honest look at your relationship with money will help you consider if crypto investing is right for you. If you are in bad shape emotionally, this might be a focus you address before investing. Some people have a lot of money but are frivilous and have trouble keeping it. Others have less money and feel resentful towards it.
Your attitude towards money can’t help but color your investment experience. The man we mentioned before who lost his investment was a wealthy man. He didn’t have trouble making money, he had trouble keeping it. And, when the markets turned downward, the same anxious energy that fueled his investment pushed him to sell at the bottom, where he took a maximum loss.
If he had been able to stabilize himself and wait through the bear market – a three-year span – he would have experienced the bull run again and a tripling of his initial investment. As it went, he lost the whole investment and was left with the psychological aftermath. It is a sad and true story.
If you’re struggling with your relationship with money, be encouraged that you can change! We have a special Mountain of Wealth video that could serve you in overcoming perspectives that could be holding you back.
Quality #5: Willingness to Make Changes To Accumulate Money
Perhaps one of the most challenging and rewarding qualities to develop, this one asks for creativity and ingenuity. Remember the last time you saved for something you really wanted? Remember how you treasured it when you received it?
In this case, you’re potentially making adjustments in your life so that you can change it for a lifetime. For some, this might be an invitation to decrease expenses and spending. Our friend who achieved the $28 per day was able to eliminate excesses he liked but didn’t need, and re-direct them. That might be as simple as skipping coffee or cancelling unnecessary subscriptions. Most of us have a few things we could clean up in order to anti up.
For others, this might be a charge to use entrepreneurial or fundraising skills in a new and personal way. Maybe we could take on a few more clients, or say yes to a project that would infuse some new capital.
Effort and restraint are two friends to this quality because they strengthen our resolve to do wise things with the funds we’ve acquired, sometimes far more responsibly than if we had a pot of extra funds with no particular destination.
Having money is not the key to making money, but acquiring money to use to make money will eventually lead to having money. This is especially possible in crypto, where you don’t necessarily need a lot of money to grow it significantly.
Quality #6: Capacity to Do Research
Are you willing to do research about the protocols you choose as investments? This does not require you to be naturally scholastic or studious. It is important that you have a fervor for investigating the cryptocurrencies and crypto entities you choose.
This industry is emerging, and it is new for all of us. Young companies are starting out in a volatile market and need time to get rooted. Not all of them will make it. You want to avoid rug pulls, scams and less ambitious projects.
Doing this research can be exciting and telling. If you’re putting your money in a place where you’re expecting it to grow, it makes sense that you’d review where it’s living, how it’s being treated and where it might end up in the future.
In best case scenarios, when you take your time to choose winning projects and follow them, you’ll be enriched by the growth and progress of the team and for your money. In less ideal circumstances, you’ll feel relieved that you didn’t send your money somewhere to suffer or be lost.
You can keep tabs on your investments by following a project’s website, social media, ongoing updates, adherence to their roadmap, clarity on tokenomics and depth of relationships and partnerships, among other things. You may also feel compelled to participate in their communities, which gives you a closer perspective.
Derek covers a few ways he accomplished this in this blog’s partner video, watch here.
Quality #7: The Ability to Be Honest With Yourself
It’s rare that we go anywhere and don’t get into a conversation about crypto. We were at a party recently where a friend of a friend had strong opinions about crypto colored by some recent things he had read in the news. He felt that the markets were too volatile, the projects too new and the opportunity too risky. The subject quickly changed as he was not open to hearing anything to the contrary.
A few minutes later, he was explaining his latest football bets and his certainty that this path would be a solid money-making venture as long as this player did this and that player did that and all before the fourth quarter.
We all have our blind spots and our gifts not yet actualized. This is a historically unprecedented time to slow down, take stock and really consider. What is your current state? What is your perspective on the future? What is encouraging you and preventing you? Can you be honest with yourself about your biases and setbacks that need your attention?
Often, these are questions that unearth the real reasons we haven’t made the changes that would mean the most.
A Word of Encouragement
All of these qualities will contribute to a stronger investment experience, but they need not all be mastered prior to setting out. Some are earned along the way. It is the awareness of them that begins to build in a different direction.
Our recommendation? Start by identifying your easiest and most difficult challenge. Let yourself be curious about it. Make one small change in each category, and then discipline yourself to expand on that change gradually. Ask for help, and find tools and resources that might serve you. Join us in our OG Membership or Inner Circle Group.
Just like the portfolio you may eventually build, your own progress as an investor may take time, with dramatic gains and periods of inactivity. It is the continued effort that makes the mastery.
Why wouldn’t you be one of the ones who can say that you truly took advantage of this time?
Which quality stands out most to you, and what do you plan to do about it? Let us know in the comments.
