In my opinion, there are 17 styles of investing in cryptocurrencies.
In today’s content I will cover:
- Various cryptocurrency investment styles
- How to find the style that suits you
- What I recommend most people do
- my personal style
Irons, let’s move on to today’s topic!
1. Maximalist (Maxis)
Maximalists put their “full heart” into a project, and we most commonly see maximalists in Bitcoin and Ethereum.
The lives of these maximalists are so unpretentious, and they have a lot of time and energy to tweet all day about how superior their investment is.
2. seed round investors
By being part of a VC firm, maintaining good circles or being an influencer, seed investors have the opportunity to get exposure to projects at a very early stage.
They can buy the project’s tokens at the lowest price before they are released to the public.
3. ICO/IDO investors
In fact, retail investors can also make early investments in some cryptocurrency projects, that is, participating in ICO (Initial Coin Offering) and IDO (Initial Exchange Offering).
Some cryptocurrency protocols actually prefer to raise funds through the community rather than venture capital firms.
Provide irons with some websites that can conduct ICO/IDO:
- Impossible Finance
- And the Ecosystem’s Launchpad
Of course, these sites may be restricted in certain countries.
4. Microcap Hunter
Which cryptocurrencies may become the next hundredfold coins? You can hunt small cap coins that have potential.
Small cap coin hunters use different tools and signals to try to find these potential gems.
In any sport or game, there is a dominant strategy at all times.
The Warriors have been at the top of the NBA for several years because they started the era of small ball (three-point shooting).
Therefore, being able to identify and invest in narratives at a very early stage has the potential to be profitable.
The narrative of the currency circle in 2021 includes:
- Ethereum Killers: Solunavax
- The rise of the frog nation (an organization of projects such as Wonderland, Popsicle, Abracadabra, etc.)
- OHM Fork Season
Some narratives may be far from expectations, like Solidly earlier this year.
I highly recommend reading Cobie’s article “The Trading Meta Game” :
metagame, which engages the cryptocurrency market during the stimulus phase of a bull market, is isomorphically more akin to playing a modern video game than investing.
Most competitive modern video games have an evolving metagame. A metagame can be described as a subset of the game’s basic strategy and rules that are necessary to play a high-level game.
In League of Legends, the metagame is constantly changing as developers make characters, items, and abilities stronger or weaker. Sometimes Assassins are very powerful, and sometimes the best way to play the game is to play a specific subgroup, the extremely powerful “Hidden Grass” masters. As some characters are strong, other characters who are good at dealing with these meta-roles also become popular “counterattack” strategies, as they are well suited to exploit the weaknesses of these overly strong characters.
I don’t play Magic: The Gathering, but the internet tells me that the metagame is determined by powerful/popular decks, the list of banned/restricted cards, and the best responses to these powerful and popular decks.
6. Fork Hunter
The job of a fork hunter includes:
- Find a successful Dapp (Decentralized Application)
- Find an upcoming first or second floor
- Find a great team that is trying to fork a full-fledged Dapp on a “new hot public chain”
Example: Balancer is a very popular protocol on Ethereum. Beets brought Balancer to FTM, and it’s doing well.
It’s a bit like investing in a new town. Fork hunter identified a new boomtown (competing public chain). You know they will need specific infrastructure:
- DEX (Decentralized Exchange)
- Balancer’s fork protocol
- Stablecoin game (Abracadabra or Curve)
These fork hunters invest exclusively in these projects.
7. On-chain/whale wallet watchers
Tools used by on-chain/whale wallet watchers like @nansen_ai, @etherscan, @debankdefi and others to analyze on-chain activity.
These observers are not looking for addresses that bought ETH at $15 and held it for years. They’re looking for better traders.
Maybe the whales have inside information, or maybe they are better analysts.
These address watchers are doing “reverse derivation”, they will find out which addresses’ transactions were successful, and replicate some of the actions of these addresses for transactions. Example: @OnChainWizard
8. Traders of newly listed tokens
Whenever some new cryptocurrency is listed on a major exchange such as Coinbase or Binance, their price tends to rise.
Buy on rumors, sell on news.
Of course, this type of trading is not as popular as it used to be during the 2017 bull market.
9. Airdrop Hunter
Protocols issue airdrops (free tokens) to reward their communities and guide growth.
Some airdrops are lucrative, such as the Ethereum domain ENS and those in the Cosmos ecosystem.
Airdrop hunters try to predict which protocols will issue airdrops and what actions will be required to get them.
10. arbitrage trader
Arbitrage traders take advantage of the spread of cryptocurrencies on different platforms.
- Exchange Arbitrage: You need a lot of cash, bots and good algorithms.
- Seigniorage: Some cryptocurrencies have a seigniorage model (especially algorithmic stablecoins). They encourage arbitrage to keep the stablecoin pegged.
Share an interesting fact with the irons:
SBF, FTX’s first brother, has profited from arbitrage trading through the “Kimchi Premium” (the phenomenon in which the price of cryptocurrencies on the Korean Japanese exchange is higher than that of other countries).
There used to be a huge price difference between bitcoin exchanges in the US and Japan, and he was arbitraging the difference between the different platforms every day. In January 2018, he was doing $25 million a day in carry trades.
11. DeFi farmers
DeFi farmers typically provide liquidity to a protocol and are rewarded with inflationary tokens.
There are very few protocols here that generate “300% annualized” that will actually give you 300%+ dollar-denominated returns after a year.
Irons need to pay attention to:
- As more and more people enter DeFi mining, the annualized revenue of the protocol will continue to decline.
- Token economics: especially around how tokens are issued and the token’s fully diluted value (FDV)
- The drop in the price of the token: the inflationary nature of the token, people take turns to mine new fields or the market enters a new cycle
If you don’t understand token economics, you’re probably going to have a bad hand.
But what is token economics and what should you pay attention to?
Here ‘s everything you need to know about token economics.
(A free Token Economics Checklist is attached)
12. NFT speculation
NFT speculators usually “buy low and sell high”.
They will choose to mint new NFT works or buy NFT works they think have potential.
They will look for:
- founding team
- route map
Since I don’t usually play NFT, I don’t know if there are any old NFT cannons who can evaluate the framework I wrote above?
13. passive investor
In traditional finance, buying index funds is a very popular investment method. Investing in index funds generally doesn’t pick individual stocks, but buys entire markets, such as the S&P 500.
Currently, the closest thing to an index equivalent in cryptocurrencies is a 50% Bitcoin and 50% Ethereum portfolio.
The index fund approach is making its way into the cryptocurrency space.
14. Value Investor (aka Warren Buffett)
Value investors try to buy tokens that are significantly undervalued relative to their intrinsic value.
One way they judge could be by revenue expense or price-to-earnings ratio.
15. Evil Crypto Vs and Venture Capitalists
Some crypto influencers have built a following large enough that they start driving the market. And they can take advantage of this for unethical profit.
Some of the ways they make money include:
- Hype tokens are then sold: For example, a crypto big V buys X coins and starts to hype it, the price of the tokens rises, and then he sells X tokens to make a profit.
- Spread rumors and buy at a discount: Spread a rumor about a solid cryptocurrency to influence its price, then buy it at a discount.
- Undisclosed false information: Crypto influencers exaggerate a cryptocurrency and make it feel like a very objective recommendation. But they did not disclose the compensation they received for doing so.
16. technical analysis
The technical analysis school looks for potential profit patterns by analyzing cryptocurrency-related charts and indicators:
- Relative Strength Index (RSI)
- Moving Average (MA)
Some people believe in technical analysis, while at the same time, others consider them to be the cryptocurrency version of astrology.
17. day trader
Day traders include:
- swing trader
- position traders, etc.
There are actually many types of day trading styles.
This is a deep rabbit hole and I want to focus on more specific styles of crypto/fiat.
Advice on how to find your own style
You may be wondering which style is the best?
You’ll hear different people advertise their style. But remember, if you are determined and capable, everything will be easy for you.
I believe you need to understand your own psychology and risk tolerance.
How much time do you have?
If you have a full-time job and two kids, it can be hard to keep up with everything.
Day trading is not going to work well, and trading narratives are not going to work well either.
I recommend for most people:
- Invest 50% Bitcoin 50% Ethereum
- Focus on increasing revenue
- Fixed investment in fiat currency every month
- Feel free to play with 5-10% of your portfolio
Where are we now?
We are in a bear market right now.
- I am buying ethereum
- Find value investing
- I’m doing some secure stablecoin DeFi mining
I don’t trade narrative, and I don’t hunt for forked projects.
The best strategies for making investments change during market cycles.
What are your strengths?
Each style can make money, but it has to be aligned with your strengths and abilities.
I love numbers, but I’m not very good at analyzing “culture”. So I prefer DeFi to NFT.
By the way, you don’t have to use a single style.
Irons can think of themselves as Aang in Avatar.
I present to you 17 trading styles that you can combine to create your own.
Maybe you might ask, “Brother, what’s your style?”
- Fork hunter
- value investor
- benefit farmers
There are already some deals that are starting to invite me to some seed rounds, but I haven’t found any that excite me. I don’t do technical analysis, day trading, NFTs, etc.
What you need to think about next:
- How would you describe your current investment style?
- What other styles are you interested in and would you like to learn?
- Write down your favorite encrypted big V, what style do they belong to?
- Who is the best V to follow for the style you want to learn?
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/17-cryptocurrency-investment-styles-which-do-you-belong-to/
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