Welcome
As always when crypto goes up and new ATHs are reached, everyone is optimistic about the future and new investors enter the crypto world. They are full of hopes of getting rich fast and dreaming of owning a lambo.
As most of us know what goes up must go down, and when crypto goes down - it's really goes DOWN. Not 5% or 15% but 70-80% drop in value. Not one coin but basically all crypto market. And not for a day or a week, but for months.
So this post is for those new boys and girls who decided they are ready to be part of this world.
Few tips and terms I wish I knew when I joined in.
How to enter into crypto the wrong way.
I knew about crypto for some time, but only entered properly in April 2021. All coins were up, reaching ATH after ATH. Media, social networks - everyone was seeing crypto future via pink glasses. I bought some ETH via revolut. Then more, then more.
I knew nothing about the fees, or that revolut charges 2,5% and that it was way to much. I did not know I would not be able to withdraw it, and effectively not even own my coins.
Once I got into crypto world I started reading, learning, asking questions. I learned what basic term means and how to find best deals. How to safely store my crypto and how to DCA and panic or fomo buy.
So after April came May and then after ATH came crash... My crypto value was down significantly. But at this point I was already aware of basics and how to deal with situations like this.
I knew I don't lose money until I sell so I told myself to not tuch my revolut account until ETH is at very least back to the same value when I purchased it, no matter how long this may take.
I reviewed several projects and decided amount of money I was comfortable to invest on regular basis.
I don't drink alcohol, don't smoke and as such I decided that money others spent on alco/ cigarettes I could put into crypto. I made sure I'm not touching my savings, I can still pay my bills and got spare money for going out and in case emergency.
It wasn't much but I'm not a big investor and already had significant amount of money locked in ETH when I entered crypto like a moron. So I planned my DCA strategy.
I wanted to have more then few coins in my portfolio to maximise my chances of success.
I decided on following strategy:
15% into biggest and safest coins - BTC and ETH.
10% on coins that I could see potential in becoming big and safe - ADA, ERG, SOL and ATOM
6% in coins that were fairly cheap, strong team behind the project and potentially massive gains at some point - VET, TEZOS, DOT, LUMEN and ALGO
I am DCA'ing monthly. This was my investment and I understand not everyone share my sentiment for those coins.
You should only invest in projects you support for whatever reason.
Only last week or so my portfolio started showing green. And finally I manage to sell my ETH with profit and move all my money out of revolut.
It doesn't really matter since my plan is to DCA until 2025 and then hold until 2030. Then sell during next bull market.
But it nice to know my average price for coin is half of the current price ;).
What I want new investors to understand:
As crypto scene is still young, most altcoin follow BTC. When BTC pump - other coins follow. When BTC dives - other coins follow.
In the past, both leading up to and immediately following halving events, Bitcoin price has experienced a bull run. These bull runs have been followed by crashes. The crashes have been followed by long “crypto winters” where sentiment is at its lowest and major news networks suddenly lose interest in Bitcoin. Until the next halving cycle starts the process again.
So expect sentiment to go down at some point (probably before Xmas).
Terms you should be familiar with:
FIAT - standard money (£,€,$ etc)
ATH - all time high - refer to day when crypto value reached its highest value to date
HODL - holding crypto assets for long time
DCA - dollar cost averaging - it's an investment strategy, basically meaning you put set amount of FIAT on a regular basis (daily, weekly, monthly etc) to buy crypto. By doing so you avoid risk of buying at ATH and you have a good chance to lower your average price per coin which means once you sell you will get higher profit. Decide how much you can afford to lose.
So first of all you need to decide how much you can spare for your investments - do not go balls deep, see what you wasting monthly on junk food / vices/ prostitutes and decide what you can live without or using less - this will be your DCA amount.
It doesn't matter if you have massive pool of money or odd few bucks - DCA is your safest way to invest and minimasing any loses.
You should never invest in crypto any money that you can't afford to lose. Do not put your life savings, money you know you might need in the future. Crypto is still young and very viotile market. People make great gains but also people loose all their investments. Look at this as buying lotto ticket, just with higher chance of winning, but there is still risk you can not get your investment back.
Remember nothing is sure in crypto it can go up, it can go down - only invest what you can afford to lose.
Decide what to buy
DYOR - do your own research - don't just jump on the bandwagon because there is a hype or reddit told you to do so. Read about project, development team, future proposals. Compare with other similar projects. Check past performance and how stable the coin / token is. Read outside of reddit on price predictions to get the general idea. Avoid scam coins/ meme coins - they are not good for long time investment.
FOMO - fear of missing out - Don't buy based on emotions. Be prepared for your coin to drop in value as soon as you buy it - I call it the crypto law - it will go up eventually.
And remember as long as you don't sell you didn't lose any money. 1 coin of btc, eth etc is still 1 coin of btc, eth etc.
Decide where to buy
EXCHANGE - The places where you normally buy coins. There are big and small ones. If you are just starting I would advise to use the one that are most popular and safe. Using small ones you risk of being scammed.
You should always check the fees for buying / selling crypto as well as fees for withdrawals of crypto.
For example exchange A can have cheap fee for buying but high fee for withdrawing. Exchange B can have high fee for buying but cheap or free withdrawals. You should always compare where overall is cheaper for you. It may depend on your location, currency you are using etc.
Some fees are fixed, some are percentage.
If you are small investor percentage fees are more friendly for you.
MAKER ORDER is when you make order to buy / sell if the trade order is not matched immediately against an order already on the order book, which adds liquidity.
TAKER ORDER is when you make order to buy / sell if the trade order is matched immediately against an order already on the order book, which removes liquidity.
Explanation for dummies:
if someone is seelling for 10 and you place order to buy for 9.99 you will be paying maker fee as long as no one at this time is selling for 9.99 as you "making" market.
If you make order to buy for 9.99 and there is someone who already placed order to sell for 9.99 you will be paying taker fee as you are "taking" this offer.
Your order may take minutes / days / weeks to be completed - or not be completed at all if no one will be willing to sell / buy for your price. You do not pay fee for canceled orders.
INSTANT BUY / SELL - you pay price set by exchange there and then. For this privilege you pay 1.5% - 5% fee.
Even if fees for withdraw are free you still need to pay miners fee for some crypto (not to exchange but to the miners) these are same no matter what exchange you use.
Below is summary of 3 biggest exchanges.
KRAKEN
Instant buy fees 1.5%
Instant sell fees 1.5%
FIAT deposit - free
FIAT withdraw - free
Crypto withdraw - flat fee ( there is minimum requirements) Full list here:
Kraken withdrawal fees and minimus
Kraken pro (monthly trade below $50.000)
Buy / sell order fees 0.16% (for maker order)
Buy / Sell orders fees 0.26% (for taker orders)
COINBASE
Instant buy/sell fees approx 4% (Coinbase has the highest fees in the industry)
If you are buying or selling in the amount of $10.99 or less, the trading fee is $0.99 (min. 9%)
If you are buying or selling between $11 and 26.49, the trading fee is $1.49 (min 5%)
If you are buying or selling from $26.50 to $51.99, the trading fee is $1.99 (min 3.8%)
If you are buying or selling from $52 to $78.05, the trading fee is $2.99 (min 3.8%)
FIAT deposit - €0.15 / £0
FIAT withdraw - €0.15 / £1
Coinbase pro (monthly trade below $10.000)
Buy / sell order fees 0.5% (for maker order)
Buy / Sell orders fees 0.5% (for taker orders)
Crypto withdraw - free (apart from network fees)
BINANCE
Instant buy fees 0.5%
Instant sell fees 0.5%
FIAT deposit - free
FIAT withdraw - free
*Binance has biggest choice of FIAT that you can use.*
Crypto withdraw - flat fee (there is minimum requirements)
Full list here:
Binance withdrawal fees and minimums
Buy / sell order fees 0.1% (for maker order)
Buy / Sell orders fees 0.1% (for taker orders)
For small investors difference in market fees is negligible (if used pro version of exchanges) and Real difference is in withdraw fees.
To compare withdrawals fees go HERE - you can search by coin or exchange and compare.
Decide where to keep your crypto
"not your keys not your crypto" - you'll see this here a lot. It only means if you keep your crypto on exchanges you don't have physical control over your crypto (like if you keep cash in Bank).
IMHO sometimes it's more practical / worth to keep your coins on exchanges. It's a simple access, all in one place and if it's a small amount you might actually lose more by moving your coins out (by paying fees).
In any other case it's advisable to keep your crypto on cold wallet.
COLD WALLET - device to store access keys to your crypto, that is not connected to Internet and as such risk of someone getting access to your crypto is significantly reduced. Most popular seems to be ledger and trezor.
DYOR before deciding if / which one you want.
There are also wallets that are off exchange but still on the Internet. - personally I do not like them. If you want to keep your crypto on wallet connected to network you might as well leave it on exchanges.
Additional ways to get crypto for free
STAKING - allocating crypto to staking pool/nodes etc and by doing so you receive reward on regular basis (small portion of coin Staked). Think of this as saving account in Bank. You can stake some coins directly from cold wallet which makes it very safe. Staking usually gives profits around 5% per year but it vary depending on coin.
Some coins allow staking on exchanges where you buy them, some can be staked on cold wallets.
If you are holding crypto for long term you might as well let them generate some profit for you.
Taxes
Before you start investing in crypto you should really read on your tax obligation. Different countries have different rules but most common one is that every time you buy crypto and sell it you need to pay some sort of tax based on profit you made. Most of the time it only come to light once you sold crypto.
Some places require you to pay even if you convert crypto to another crypto.
So keeping record of your activity is very important. There are online tools that can help with this search crypto tax calculator and you have list of those.
Tldr:
- Doesn't matter if you put £5 or £5000 - if you have money you can spare - get in.
- Do not get FOMO, invest after DYOR.
- Plan your DCA and don't panic sell.
- You don't lose unless you sell at loss.
***not financial advice****
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