Most of us joined the crypto market with hopes of making money and changing our lives financially. However, the longer that you have been investing in the market, you will learn that there is a stigma against selling your crypto. Once you have fallen down the rabbit hole of crypto, you should believe that it is the future. That in the future you won’t even need to sell it. That it will be used and accepted everywhere, just like dollars are today.
If you sell your Bitcoin, Ethereum, and crypto now while we are still in the infancy of this market. The thought is that you are giving away your winning lottery ticket all because you didn’t have the patience to wait a few more years. Taking quick profits now to help a certain need, rather than taking full profits later on, and never needing to worry about money again.
Let’s talk about this more.
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Crypto strategy - Are you using any strategy to manage your crypto portfolio?
When it comes to my crypto portfolio strategy, I am different than most. While others may try to make as many gains as possible in the short term. I am more than happy to sacrifice those short-term profits and take a nice and slow approach. Let me tell you why.
When deciding to build your crypto portfolio, you must first decide if you want to have a diversified or highly concentrated portfolio. A diversified portfolio means that you will have many different cryptocurrencies in your portfolio, which will increase your chances of having a coin that eventually performs very well. But, because your money is spread out over several assets, it will also diminish the potential gains you can have. However, some often try to balance this out by taking on a little more risk and investing in lower-cap altcoins.
The other option is maintaining a highly concentrated portfolio of only a few cryptocurrencies. Those who have high conviction in certain projects often prefer this strategy. Since there are only a few coins in your portfolio it increases the odds of missing out on potential gains by not owning the coin that is performing well. But, if you get lucky and have the crypto that does well, your gains will be much higher due to having a higher-concentrated portfolio.
Over the years my strategy has always been to keep a highly-concentrated portfolio. There are three main reasons for this.
The first is that I believe the name of the game when it comes to crypto is to accumulate as much Bitcoin and Ethereum as you possibly can. All of the other cryptocurrencies are distractions that have a much higher risk. While Bitcoin and Ethereum make up the vast majority of my crypto portfolio, I still own a very select few other coins. I’m using these other coins as a tool to accumulate even more BTC and ETH.
The second reason is that during my time in the crypto market, I have found it much easier to reach my crypto accumulation goals when I’m focused on fewer coins. By not spreading out my money too thin, I have been able to accumulate much faster.
Finally, my last reason is that it allows me to keep track of the coins in my portfolio much better. When it comes to my crypto investments, I want to know everything about them; becoming an expert. I also only invest in projects that I’m passionate about. While this sometimes results in missing out on potential gains. It also results in this industry being much more enjoyable for me. This is something that has allowed me to be very passionate about my investments, and maintain conviction in them for the long term.
Since we are all early adopters of the crypto market, the most important aspect is actually surviving the market for the long term. While some may consider Bitcoin and Ethereum to be slower movers than other altcoins. The truth is that most coins actually trend to zero when compared to them over the long haul. It isn’t about making the largest gains on your computer screen but maintaining them over the long term. While each person is different, over the years these strategies have worked very well for me.
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The first thing you need to understand is my own beliefs and biases around this topic. I have personally fallen deeply down the rabbit hole of Bitcoin and crypto, viewing it as the future. I have never sold any of my crypto for profits, and don’t intend on doing it anytime soon. For better or worse, I’m here for the long term. I have accepted my fate that I will either ride to extreme riches with Bitcoin or ride it all the way to zero.
Now back on topic. The most important thing you need to remember is that we are different, and have completely different financial situations. It is also important to remember that nothing is guaranteed in crypto. Tomorrow the price could go to zero, and we could go to zero.
Finally, we all entered this market to change our lives. The reality is that could mean a lot of things to different people. For some that might mean finally paying off debt or loans, moving into a nicer house, going to school, no longer living paycheck to paycheck, paying for an expensive medical treatment, saving toward retirement, or even actually being able to retire. Each of these things would be life-changing.
I’m of the full belief that if your portfolio has appreciated to a point that you can change your life for the better, you should absolutely take advantage of the opportunity. Before I began investing, I was in a horrible financial situation. Deep in debt, without much hope for the future. The weight that debt put on my shoulders was crushing. Using investments to pay off that debt would have been life-changing and improved my life drastically. If that is your situation, absolutely take advantage of it.
With that said, I do view this market as the future. If you don’t need the money and are invested in blue-chip coins such as Bitcoin or Ethereum. I would recommend HODLing as long as you possibly can. Generational wealth has the potential to be made.
How do you take profits?
If you decide to take profits, how do you go about it?
One of the most popular methods is to take out your initial investment. If you invest $500 into a coin, it does a 2x increase your value to $1,000. Then sell off your initial $500. You now have free money in the market. It no longer matters if it goes to zero. This will remove a lot of your stress in the market.
The other approach is selling everything. This would be recommended if you invested in a project you don’t believe in for the long term. While I don’t cash out to dollars, I will often trade a position into a different coin I prefer more.
There is no correct decision on whether to take profits or to HODL. You need to do what is best for your personal situation. Always remember the potential of this market, but also its risks.
