What Makes A Great Crypto Investment? Key Traits Smart Investors Look For
Many investors in the Crypto space end up making terrible investment decisions when selecting altcoins for their portfolios. Very few make smart investment decisions. This is largely due to a lack of research and risk management. Two very important principles that should always undergird an investment decision. In most cases, a bad investment is fairly obvious at first glance. However, some individuals still end up ruined by bad investment decisions, largely due to ignorance.
A good return on your invested capital is only one criterion for a great investment. This is often the only criterion that is considered by certain investors. This group of investors often ignores several other very important aspects essential to making an investment a success. How you approach an investment is absolutely imperative to your success or failure. How you execute your strategy is of the utmost importance. It’s not just about choosing the right asset, but how you deploy capital and execute your strategy.
Simply taking part in a Formula 1 race does not necessarily guarantee you the trophy. It all comes down to how you drive, a combination of skill and execution. In the investment world, it comes down to knowledge, combined with excellent execution. You must have both. Knowledge with poor execution doesn’t help much. The two must work together.
The Most Important Investment Rule
I view allocation as the most important rule of investing or trading. Wise and prudent allocation can and will make all the difference, especially when things don’t go your way. Dollar-cost averaging strategies often work well, as the market tends to move against your desired outcome initially. Investment is not a case of all or nothing but rather a means to secure gains.
Throwing your entire capital at any particular investment is, in essence, a gamble. If all goes well, you walk away a winner! If things don’t quite go your way, you stand the chance of significant ruin! This is particularly true in the Crypto world, especially within the micro-cap market. You need to consider what happens if things don’t go according to plan.
When Things Don’t Go Your Way In Crypto: How Smart Investors Respond
Whether you want to admit it or not, there will be times when circumstances seem heavily opposed to your investment decisions. What do you do in times like these? If you followed the golden rule, then you can simply add to your investment and subsequently pull down your entry-level average. Alternatively, you could also wait for a trend reversal confirmation. Once confirmed, you could increase your holdings.
In the case that the project has suffered a fatal blow, your loss is not devastating, as it was only a portion of your capital at risk. If you chose not to follow this rule and allocated all your investment capital, you would be “toast”! Smart investors protect themselves from greed and ultimately destruction. You need to be prepared with a backup plan. Trust me, you are very likely going to need it.
How I Utilize Passive Income To Mitigate Risk
This has got to be one of the best ways to grow your investment portfolio. Even when an investment opportunity appears relatively sound, there may be other risks involved. BetFury was one such case for me. Being a gaming and gambling platform, there are a few important aspects to consider. Regulatory issues often arise that are specific to certain locations and laws. Transaction volume can also drop due to a multitude of reasons.
After recouping a small investment in BetFury, I decided to gradually expand this avenue by using passive income from other strategies. In this way, I am not really risking anything, as this is capital being generated automatically without any work. The following fundamental aspects are what encouraged this move.
Guaranteed Token Appreciation: Build Wealth With Smarter Token Picks
Before we look at this, it is important to understand how this investment works. The BFG token, which can be purchased on Biswap or Hotbit, is required to stake. Staking this token earns daily dividends in BTC, ETH, BNB, TRX, and USDT. Dividends are credited to your account every 24 hours. These earnings are also withdrawable at any time without any red tape. It’s as simple as inputting your address and hitting the send button.
Playing games and gambling subsequently earn users BFG. This is known as mining BFG tokens, as tokens are actually mined relative to the wager amount. The mining difficulty adjusts over time, so one needs to wager more BTC to mine BFG. What this does is basically ensure that the price of BFG increases over time. Now that the BFG token can be bought on exchanges, the purchase price and mining price need to remain somewhat tethered. Given that the mining price increases by default, it makes sense that the purchase price will have to follow suit for this model to remain relevant.
Why Earning Dividends From Growing Assets Is So Powerful
This strategy works extremely well when dividends are held and HODLed over time. Initially, all dividend payouts were made in BTC only. The addition of other coins has only taken place fairly recently. I was receiving BTC dividends when the price of BTC was only a few thousand dollars, so you can imagine how those earnings have grown over time.
This is another reason why this particular opportunity works so well when you incorporate sound investment principles into the mix! You need a structured plan and to work your way into a stronger position over time. You can see that I initially recouped my investment and then chose to expand my exposure. I didn’t just throw money at it.
This DeFi Yield Is Even Better Than CAKE
Many within the Crypto space will be familiar with PancakeSwap, a DEX powered by the CAKE token. CAKE is the native token of PancakeSwap and can be staked to earn a monthly yield of approximately 6% on various platforms, including PancakeSwap. This figure fluctuates slightly and will be higher if earnings are compounded within the staking protocol over time.
Depending on what price you can secure your BFG tokens, you can generally earn anywhere between 7% and 10% per month on your initial investment. With daily dividend payments and immediate withdrawals, it is an attractive opportunity. These yields have since increased. Users can now also earn yield on their BTC, ETH, BNB, and stablecoins.
Why Crypto Dips Could Be Your Biggest Opportunity
If the BFG price drops significantly, it becomes a perfect entry point for someone looking to earn ongoing passive income. Buying the dip essentially means increasing your dividend yield, provided the price returns to previous levels. If the price remains trapped, then the expected 7% to 10% is still available. However, if the price increases, you are set to earn more in dollar terms, which is also a win.
Using Dividend Income For Smarter Risk Allocation
When investing in smaller-cap projects that are still undiscovered, I prefer to take capital from passive income sources. I do this to eradicate risk. Passive income is generated continuously and requires no time or effort on my part. This approach does not put my lifestyle or budget at risk. It can be slower than throwing enormous amounts of capital at an investment. However, it is a lot safer and allows me to sleep easily at night.
This is a prime example of how I evaluate opportunities and apply sound investment principles to mitigate risk. I ensure I formulate a strong plan and then execute it systematically. I try to avoid unnecessary risk where possible.
Final Thoughts
It is imperative to think things through. To formulate a sound plan or strategy and then execute it without deviation. Crypto is risky enough as it is; it’s important to mitigate risk wherever possible. This is not investment advice but simply my personal approaches and strategies to generating Crypto wealth. All the best as you navigate your way through this ever-changing and exciting market. All the best, see you next time!