15 steps to crypto investing 🧵
The Crypto Investing Playbook was written by Karthik Senthil.
Use these opinions as lamp posts to help inform your thinking and portfolio strategy, not rules that must be followed.
- DYOR (Do Your Own Research)!
Nothing in this article should be taken as investment advice.
Make sure to do your own research and understand that crypto, like other investments, carry risk.
- Crypto Fluctuates like CRAZY.
Crypto is volatile.
It's not uncommon to see 10-15+% changes up or down in a single day.
If you can’t handle the swings and it affects your mental health, this may not be the game for you.
3**. Start Now!**
Crypto moves too fast and you’ll never be 100% “ready”.
Start ASAP (even if small) to force yourself to learn about the space.
Have skin in the game.
4**. Invest for Years, Not Days**
Your outlook in crypto should be multi-year in order to compound wealth over the long-term.
"The big money is not in the buying or selling, but in the waiting."
5**. Diversify into the Ecosystem**
Get exposure to the largest surface area possible.
Diversification protects your wealth.
Look into the crypto ecosystem as a whole rather than being a “single coin maximalists”.
6**. 3 Investor Types. Which One Are You?**
- Beginner: Your goal is to make money long-term. You tend to value your personal life / maintaining a low stress level over maximizing profits and ideally want to "set it and forget it”.
- Intermediate: You believe in crypto’s future and are willing to take more risk. You like learning about the latest crypto projects and take medium-sized bets.
- Ape: You are in love with crypto’s potential and community. You are okay losing everything for the potential of this once in a lifetime opportunity.
- Recommendations for Beginners
- If you’re new to crypto, you can slowly ease into it with these suggestions
- Have crypto be ~5% of your overall investment portfolio
- Within the portfolio, allocate 50% to Bitcoin ($BTC) and 50% to Ethereum ($ETH)
- Gain exposure through public equities
- Understand the Power of the Platform
Just like Apple’s AppStore, most value historically goes to the technology platforms rather than individual apps.
L1 and infrastructure projects might be the best long-term platform bets for crypto.
9**. Reassess Every 3 Months**
- Crypto changes fast (ie. innovations, regulations, new startups, greed/fear).
- It’s critical to reassess your investment so that you can adjust as needed.
10. Ride winners, cut losers fast
11. Automate, Automate, Automate
- Crypto prices fluctuate rapidly so you want to automate your investments so you can price average in and avoid FOMO based on price movements.
- Work backwards from what you have available to invest after paying bills, how much you wish to allocate to crypto, and set it and forget it.
12. Earn Yield
- Earn yield on your investments to compound your wealth creation
- Stake: Services like Coinbase allow you to stake ETH and earn.
- Lend: Services like Compound allow you to lend your crypto assets and earn.
13. Enjoy The Ride
- Investing is about building wealth so you can enjoy life, not about stressing every single day and constantly refreshing your account.
- If crypto investing is damaging your mental health, switch things up. Don’t forget to enjoy the journey.
Karthik’s Crypto Takes is a newsletter that writes on various topics in crypto and web3.
Make sure to check him out for more valuable information!