Cryptocurrency is an asset class that has exploded in value over the past 10 years. You often hear stories of people saying if you had bought $1000 in bitcoin in 2013 you would be a multi millionaire.
I think blockchain as a whole has so much potential across so many industries to make transactions safer and cheaper for consumers as a whole and I liken the innovation we are seeing in blockchain to be similar to the internet boom of the early 2000’s.
Investing in crypto is a risky strategy overall so I would only recommend investing what you can afford to lose.
In this guide, I want to outline which coins I am holding in 2021 which I think could provide a good return on investment.
If you are looking to invest in cryptocurrency, you can get $25 by signing up to Crypto.com using this link. Their app is available in USD, EUR and GBP.
Why I think it’s useful to hold crypto as part of your portfolio
When it comes to Cryptocurrency I think the risk vs reward is skewed massively in favour of the reward.
You have the potential to 10x what you put in which relative to other asset classes is much more difficult.
If you stay away from coins that don’t have any utility (i.e. they don’t have a real world application) you reduce the odds of having an investment that will go down in value.
This is because a lot of the tokens used as part of these blockchains are used to validate transactions.
Therefore the more use cases they have in the real world, the more demand these tokens have and therefore the more valuable these tokens become.
I have dabbled in Crypto over the last year, it only makes up a small percentage of my portfolio (I started with around 1-2% of my portfolio and this through gains is now about 4% of my portfolio as a whole).
I don’t believe you should be allocating large amounts of your portfolio to crypto as you have the potential for huge losses as well.
My Strategy when it comes to Cryptocurrency
I employ a simple strategy when it comes to cryptocurrency. I hold some of the biggest coins as a long term hold strategy whilst trying to swing trade smaller coins that have the potential to make much bigger gains.
The larger coins I think because of network effects will continue to be good long term holds but smaller coins might not become mainstream in terms of their use cases so I think holding these long term is riskier.
When buying coins, it’s never a good strategy to buy right at all time highs, as other investors will be taking profits when prices are the highest.
Normally, I try to buy coins that are in a state of consolidation that have been trading sideways for a period of time as this can mean they are due for a big run up.
If I get a coin that has risen in value to 2x or more of the investment I have put in, I start to take out gains, normally 10-20% of the total value until I have taken out the amount I originally invested.
It is really important to lock in gains wherever possible so you don’t overexpose yourself when markets turn south. It also means you have some capital to reinvest when the market does dip.
The Best Cryptocurrency to invest in 2022
Here are my top picks of 2022 (not financial advice btw)
Ethereum has the 2nd largest market cap, only being beaten by Bitcoin. It has the most amount of utility out of any coin on the market.
It operates as a decentralised platform and a lot of other crypto currencies are issued on the Ethereum blockchain.
Ethereum has the biggest network effects, which is effectively when something gets so big and ingrained it then starts to attract other people because of its size and scale.
It also has huge tail winds with the rise of DeFi applications as the majority of these are built onto the Ethereum blockchain.
In terms of long term holds, because of its wide use case, it’s the coin that I hold a large % of relative to my portfolio size. I think as a long term play, it’s a great coin to hold.
CRO – Crypto.com
CRO is the native token of the Crypto.com exchange which is one of the largest crypto exchanges in the world.
The company has over 10 million users of the app and is growing massively through their aggressive marketing strategies such as commercials with Matt Damon and buying rights to be the staples centre in LA.
The coin has been under the radar until it had a massive run up in price but is about 50% down from all time highs.
For the long term this is one of my largest holdings as I believe they will eventually become the biggest exchange in the world with the amount of utility the app and coin has.
At the time of writing the market cap is 15 billion dollars whereas Binance has a market cap of over 90 billion dollars. On this basis I think CRO has a lot of room to run still.
LUNA is an open source blockchain which is pegged to the UST stablecoin. Other stablecoins such as USDT are pegged to real fiat.
UST however holds its value by allowing others to engage in arbitrage opportunities when there is an imbalance of supply and demand.
When there is excessive supply and the price of the UST goes above 1 US dollar, an equivalent amount of the LUNA token is burned and converted into UST to keep the price stable.
LUNA tokens can also be staked for rewards which helps validate transactions on the blockchain.
The price therefore of LUNA is strongly linked to the amount of UST that is minted or traded.
UST has become the largest stablecoin, overtaking USDT and this has meant that LUNA’s price has risen over 100x.
This is my third largest holding and it’s a coin that I think could continue to rise in 2022.
Cryptocurrencies are a risky investment class overall but because of the profile I think it is worth having a small exposure to them.
In the past year I have made gains of over 100% percent which in comparison to the share market, even with the insane bull market we are in doesn’t compare at all.
Let me know which coins you have invested in and what you think will do the best in 2022!
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