I didn't know much about crypto until 2020. Of course, I had heard about Bitcoin and cryptocurrencies, but for me, it was something similar to Paypal transfers or in-game currencies. The first time I seriously thought of buying Bitcoin was in late 2017. But when I realized that it would be a great idea to invest, the crypto market crashed.
Last year I started thinking about investing in crypto again. The market bounced back, and the technology was still working. I decided to save up enough money to invest and figure out which projects I wanted to invest in. By Christmas, I had saved $6,500, which I decided to invest in several cryptocurrencies.
This is where the most challenging and most exciting part started for me. I started thinking about what to buy. Bitcoin? Ethereum? Or try my luck with other coins? I had to dig through a lot of information on the Internet and YouTube, and I asked my friends to help me understand specific projects.
The first thing I decided was not to get my hopes up. Past All-time Highs were just before Christmas 2017, so it could be the same thing this time.
Second, I decided to invest in altcoins. I thought that ETH at $630 and BTC at $23,000 were already much for these two leading cryptocurrencies (spoiler: I was wrong). That's why I decided to invest in altcoins.
To understand which altcoins are worth investing in, I decided to spend a couple of free days choosing ten projects from the top-100 on Coinmarketcap. These are already strong projects since they comprise the top-100 of the entire crypto market. But at the same time, they need less momentum to grow than bigger cryptocurrencies like Ethereum. There's more room to grow.
Third, I decided to choose diverse projects. Many studies, informative videos, books, and experts told us that investments should be diversified. This means that investments should be spread amongst different economic sectors and different investment products.
I wanted to take risks and was eager to discover crypto space. So, I opened the main page of Coinmarketcap and started selecting projects and buying their tokens:
Infrastructure projects like Cardano, Polkadot, and Solana. These were three big and well-known projects, which, as I understood, had been in development for quite some time and promised significant updates in 2021.
Exchange tokens. Yes, they grew really well in 2020, but the demand for them is constant. The growth of trading volumes on exchanges and the constant development of services only increased demand for such tokens. So I decided to buy tokens of decentralized exchanges 一 Uniswap and Sushiswap.
Substantial projects that are already being developed. This is where I decided to invest in Compound and Nexo. Both projects operate successfully in the credit sector, and Compound has shown itself in the DeFi sector.
A somewhat disrupting and complex investment. But it would look cool! After a long search, I decided to choose Matic (now Polygon, a network of secure second-tier solutions and autonomous sidechains) and Loopring (a decentralized protocol and exchange using ZK-Rollups technology).
It took me a long time to choose the last project. There are a lot of great projects in CMC top-100; their tokens were really appealing to me. But I chose only one, and it was COSMOS—"an internet of blockchains" based on the Tendermint Core protocol.
Understandably, even with this kind of set of different projects, the diversification was not complete. In fact, I held only one type of asset—cryptocurrency. And I used only one investment instrument—the spot market. But I was driven by a huge interest in a new market, and I had money and time available to learn it all.
Another important question that I had to answer was how long I would invest. This was an important decision: either my portfolio would reach a certain amount or I would invest for a certain period. So I decided to invest for four months because I was planning some purchases in the spring and might need this money.
So, I invested on December 20 and decided to sell all the assets on April 20. That was probably one of my most important decisions—not to sell my assets before a certain date. Otherwise, I would have dumped everything long ago—right at the earliest stages.
After the purchase, I constantly checked the price of my assets and portfolio for some time. But after the New Year, I calmed down, deep dived into my work, and only every couple of days I came to check the balance.
However, in February, the toughest part began: some of the assets grew markedly. The most obvious examples: Sushi rose x7, Solana x6, Cosmos x4, Compound and Nexo x3 times (spoiler: the price of some of them when I sold them in April was lower).
I had an incredible urge to sell everything, take the money, and enjoy my first earnings in the cryptocurrency market. I started to spend more time observing what was happening to see what would happen next in the cryptocurrency market. But after digging through Reddit and Twitter I suddenly realized that people there were trading on margin trading or advertising, not the most trusting projects. I decided to stick to the original plan—to sell all my cryptocurrency on April 20.
April was the most challenging month for me asI did not expect such growth in cryptocurrencies. The only thing I kept thinking about was: "Don't let everything collapse by the end of the month." I repeated these words like a mantra before going to sleep, afraid that the portfolio would be in a significant deficit in the morning.
However, it did not happen. Or rather, only some cryptocurrencies lost some value, but not all of them. So I proudly sold all the assets. The result was impressive: my initial investment was $6500. In the end, I got almost $53,000.
I decided to withdraw most of the $40,000 to take advantage of this situation and do something worthwhile. Also, so that I wouldn't feel bad about wasting money later. I decided to pay the mortgage on my house with that money.
Ultimately, I decided to leave the remainder, about $13,000, in cryptocurrency and keep it until next Christmas. Further, the growth of cryptocurrency continued, and more than once, I felt the proverbial FOMO that I could have held the whole amount longer. But on the other hand, sticking to the principles of investing in different altcoins and for a certain time helped me gain an incredible profit, which I was able to use for a good cause.
So, after this entire investment drive I have three main points of advice:
DYOR, or Do Your Own Research;
Invest in altcoins (or just try to diversify your investments);
Stick to the plan.