A Month Of Cryptocurrency Craziness
If this is your first contact with cryptocurrency, you may want to check out my other article HERE that gives some great introductory advice, and check back here after! For those of you with a little more crypto-experience, here are a few things I’ve learned over the last month after diving into the world of crypto. Let me know if there is anything you would like to add in the comments below!
When Should You Invest?
As a beginner to the crypto world, you’re instincts will tell you to jump on a coin when it hits a new “All Time High” price per market cap… This is in fact the worst time, and is probably the easiest way to lose money the fastest. I like to set a “Limit Order” on all my buys, making it so the coin is only purchased if they drop to a specific price.
As a rule of thumb, remember this: “Buy the Dips”. Wait until the currency has dropped to at least 5-15% below its all time high to invest. As they say in the business, if you are feeling the “fear of missing out” or FOMO, its probably already too late. Between this and the Dollar-cost-average rule I’ll discuss below, you should have a 500% better chance of being successful in the crypto world after reading this… Okay maybe i made that statistic up, but I still think its a good start.
From Coinbase to GDAX to Bittrex and Beyond.
Something that is very important that you will need to account for is the time it takes to get your money from the bank to Coinbase, which can take anywhere from a few days to a week. Deposit some funds into your account in advance so that you can jump on a dip when it happens, saving you the frustration. Seriously, like right now. Do it!
Then you can use that cash to buy one of the four coins currently listed on GDAX, and send that over to Binance if you are interested in buying “altcoins“. You can also make “instant” purchases on Coinbase using a debit or credit card, if you are willing to eat the fees. BE CAREFUL. I meant to buy with a card but it defaulted back to my bank account, stating i now had to wait 8 days to receive my ETH!
…The same goes for transferring currency to Bittrex or Binance. Once you submit your transfer, don’t freak out! It will probably take a while, especially if you are using Bitcoin. For this reason I would suggest you buy into another coin like Litecoin or Ethereum to trade with; which also tend to be less volatile. Doing all of this in advance can save you from ripping your hair out when a coin starts to moon.
Dollar Cost Averaging
This is one thing that separates the amateurs from the pros. If you aren’t using Dollar-Cost Averaging, you’re basically just gambling. It’s actually pretty simple: you the amount you intend to invest in a coin, and buy-in half today and half a week from now. This is supposed to help you to protect against volatility by allowing you to pay an average cost. For example: You invest $500 in Litecoin today and the price drops $250 next week, when you invest another $500. You now own $750 worth of Litecoin instead of $500 because you waited. It could also go the other way… but if you split it up to invest over a number of weeks or months, you are taking the average of the market and should come out on top.
If you are unsure about the stability of a volatile currency, like when Bitcoin drops from $17-12k in a week and back, DO NOT PANIC AND SELL ALL OF YOUR HOLDINGS! Instead, you should exchange for USDT, or US Dollar Tether. Basically, its like putting your money back USD, only you aren’t pulling it out of the system so you don’t need to pay the fees associated with cashing out.
Faucet + Mining Update
In my last crypto-article I talked a bit about faucets so I figured I’d add a quick update here. I have officially earned over 500 Dogecoin through about a week of constant faucet usage, and some clever arbitrage using Coinpot’s free Exchange feature. That currently translates to about $4 USD. The time/ effort ratio required makes this hard to justify continuing, but one thing I would say is that it can be quite difficult to get your hands on cryptocurrency at the moment so this is a great way to start! Coinbase told me I have to wait 8 days to receive the ETH I bought and I still haven’t received it, whereas the Dogecoin I transferred to my Freewallet arrived within a few hours.
Also, I found this Litecoin Cloud-Mining service that works pretty well, and you can mine 0.025 LTC per day for FREE without even signing up! You just add in your LTC wallet address and click “Start Mining”. Get started HERE! They also have an Ethereum Mining site HERE with even better payouts then the LTC site! Keep in mind that I am still in the trial process with both platforms and although it has let me withdraw 0.01 LTC for free so far, I have not invested in the paid service which has mixed reviews about its payouts and legitimacy. If you want a better solution for cloud mining more coins for free, check out Robot-Coin!
Avoiding The System
I have had a lot of people ask me about purchasing cryptocurrency lately without being tracked, given the decentralized movement behind cryptocurrency. To this I must first add a disclaimer ***I do not suggest or support anyone that anyone attempting to avoid the SEC or government in any way.
That being said, if you choose to ignore my warning I can’t stop you and it will be at your own risk. Coinmama is a service that just might meet your “Farm-to-table” cypto-needs. They allow you to buy up a reasonable amount of Bitcoin or Ethereum without having to give out your personal information. If you would like to purchase altcoins without ID verification as well, go with Binance 😉
My new favorite exchange happens to be Changelly, which lets you purchase crypto with a credit card (or Visa gift card for those of you looking to keep things low-key.)
Is it Too Late?
The truth is, anything could happen. Bitcoin could go to $100,000 or back down to below a $1. But now there is a huge interest and market created around the cryptocurrency world so If you are just getting started you should realize that unless you have massive amounts of money, you probably aren’t going to get rich investing in Bitcoin alone. New altcoins launch ICO’s (Initial Coin Offerings) and are added to Binance every day, creating exciting possibilities to catch the next “sleeper” coin.
Even if bitcoin were to lose 90% of its value today, it would still be recognized as the best investment in history, coming from 8 cents/ coin in 2010. I actually am writing this as BTC crashed from around $17,500 to $11,000 overnight, only to stabilize at $15,000. Stay in it for the long term. Do your research. HODL when the market drops. You’ll do alright.