Bybit Learn | Long-Term Crypto Investment Strategies That Work


Investing is a long-run game. The general idea of long-run investment is to put money into the market and gain sake or sell when the price appreciates. As a solution, investors can grow their savings or plan for retirement in any fiscal commercialize — stocks, forex, cryptocurrencies, and/or precious metals. however, successful long-run investment is not an easy job, particularly with the cryptocurrency market.

long-run crypto investment means investing in crypto for longer than a year ’ second horizon, or HODLing. A long-run investment is quite different from short-run speculation, and investors should have explicit cognition about what they are doing. In long-run investment, they should hold assets for a class or more. therefore, being a long-run investor means accepting a higher total of risks ( compounded by fourth dimension periods ) to get a higher return. In the context of cryptocurrency, long-run investment comes with implicit in risks. This is because the marketplace is hush unfamiliar to many people. however, the crypto market is becoming better-known day by day, and institutions are keeping their eyes on it. therefore, it presents as a big investment opportunity for long-run investors who want to diversify their portfolios. furthermore, without a taxonomic overture, any investment decisiveness may become disused. For this rationality, investors should focus on building an investment strategy with both an appropriate gamble assessment and exit strategy. In the follow part, we will detail a complete guide to long-run crypto investment strategies .

What is Long-Term Investment?

broadly, long-run investment is a imprint of trade scheme that seeks to profit by holding an asset for more than three years. Standard long-run investing occurs when company X holds a significant investment of caller Y without having a majority of voting shares. The buy price is considered a poise sheet detail, while the short-run investment stocks are related to the company ’ second profit/loss. The sale of long-run investment would normally be classified as other comprehensive income, not related to steer profit/loss. nowadays, let ’ s go through a practical case to better illustrate the theme of long-run investment. Let ’ s originate with two brothers, Bill and Joe. They saved $ 100 a calendar month for their long-run investment plan, and after 20 years, they got $ 24,000 each with the same annual tax return of 8 %. Bill had started investing at the old age of 36, while Joe waited until he was 46. At age 56, Bill will have a sum sum of $ 131,613, and Joe ’ s proportion will be $ 59,295. In the exercise, the return has been doubled for the same investment just because Bill started ten years before Joe. This illustrates how a long-run investment choice is more beneficial than a short-run investment ( due to accrued interest ). In the cryptocurrency grocery store, holding onto a long-run investment is known as “ HODL. ” It is a misspell interpretation of “ hold, ” and became a crypto market meme after being posted on the Bitcointalk Forum in December 2013. ( Some crypto investors wryly interpret it as “ hold on for dearly life. ” ) Nowadays, “ HODL ” typically refers to the buy-and-hold investment strategy within the context of the cryptocurrency market .Chart Source: TradingView

Why Invest for the Long Term in a Volatile Market?

Chart Source : TradingView A long-run investment is a reliable way to maximize the tax return for a stable asset. many individuals who lack knowledge about technical analysis and grocery store demeanor depend chiefly on long-run investment. One common advantage of a long-run investment is that it doesn ’ triiodothyronine necessitate observing the marketplace on a casual or weekly basis, or making a trade decision based on intraday market analysis. Investing in a trade asset is not a long-run strategy. however, investors can choose it with the intention to sell after some years. In that case, it will be considered as a non-current asset detail on the poise sheet, and its profit will be shown on a carnival value footing. On the other hand, profit/loss from a short-run investing immediately affects institutions ’ profit/loss. As a resultant role, it is effective for institutions that want to increase the value of their assets, and get benefits as other comprehensive examination income to the income statement. however, long-run investing requires a significant investment sum that is much unmanageable to hold for many individuals or institutions. In short-run investment, traders make money from a short-run price fluctuation that may provide more profits than just holding onto the asset. As a resultant role, long-run investments are often bad because there is no way to change investing decisions after execution. however, considering the brokerage house fees, capital gain tax, and professional fees, long-run investing is cheaper and requires less attempt. overall, long-run invest is a bang-up way to diversify a portfolio in emerging markets, such as Bitcoin or early cryptocurrencies, while holding short-run investments in traditional markets.

Types of Cryptocurrencies for Long-Term Investment

There are two ways to invest in the cryptocurrency market :

  1. HODL
  2. Active trading.

With HODL, investors normally buy Bitcoin or other cryptocurrencies and hold them for an prolong menstruation, ignoring short-run fluctuations. In this case, it isn ’ t a simple matter to find good any finical crypto asset or stocks for long-run investment. however, cryptocurrencies that survived the 2018 crypto clang are big, due to their commercialize constancy and investors ’ toleration. Let ’ s have a search at five cryptocurrencies that survived the crypto crash in 2018 : additionally, cryptocurrencies that yield dividends are besides effective for long-run investing. Holding onto assets can yield both dividend and price appreciation for investors. here is a list of such digital assets :

  • VeChain (VET) 
  • Neo (NEO) 
  • Decred (DCR) 
  • Komodo (KMD) 
  • PIVX (PIVX) 
  • Reddcoin (RDD) 
  • Navcoin (NAV) 
  • Neblio (NEBL) 

note, however, that investing in a cryptocurrency grocery store requires a systematic access. An appropriate investment scheme is mandate in order to make any investment decision .

Investment Strategy 

Whatever we want to achieve, it ’ sulfur important to have a plan. long-run investment strategies consist of a dispatch investment design that considers investment objectives, risk judgment, time horizon, tax implication, and submission & passing plan. Investors should have a well-researched trade strategy that is effective in the market and has a long history of providing returns. however, investing in the cryptocurrency commercialize is different from traditional forex or the neckcloth commercialize. For this rationality, it requires some exclusive and effective investment strategies. One of these effective investment strategies is “ HODL ” since investors have to hold the asset only. Another is dollar-cost averaging ( DCA ), a cryptocurrency investment strategy in which investors allocate the amount of capital sporadically, is a “ big hidden ” for small investors who can not accumulate the investing necessity all at once. And however another scheme is asset reallotment, where investing decisions are made after analyzing macroeconomic factors. The new path to long-run investment success depends on the execution and management of risks. To get the maximal output signal, investors should include a fourth dimension horizon and gamble assessment in their strategy. They must have a clear cognition about how long they want to hold the investment — and how much gamble they can afford .

Cost of Long-Term Investing in Cryptos

A long-run investment is cheaper than trade, but investors should be concerned about some high costs before jumping into the commercialize. Below are some of the costs of long-run invest in cryptos :

  • Financial Advisory Fees: The financial advisory fee is an amount that investors usually pay to investment, finance and money professionals. Many crypto advisory firms provide crypto investment guidance, or rankings, like Vanguard’s long-term investment grade, which often work to find a potential investment opportunity.
  • Expense Ratio: The expense ratio refers to how much assets use in terms of administrative and other operating expenses. Investors should find potential crypto assets that have a lower expense ratio.
  • Compound interest through loans and credit card payment: If your long-term investment in the cryptocurrency market includes any money from loans and credit cards, it is subject to interest expense. If the outcome is less than the interest expense, investors should avoid buying that particular asset.

Is Long-Term Investment a Good Strategy When the Market Dips?

“ Buying the pickpocket ” means purchasing a crypto asset when its price has dropped, and assuming that its price will increase in value. This opportunity comes from watching the price chart for an strain time and observing when it on the spur of the moment crashes to a substantial low price, seen as a short-run decline. In 2018, the Bitcoin price crashed from a acme of $ 19,675 to a level of $ 5,933. therefore, if anyone bought at the lower value, it would be considered as a buy dip. however, the fiscal marketplace zigzag, forming swing highs and swing lows. So it is often difficult to find the actual dip. The best method is to find a potent bearish imperativeness in the market that induces multiple lows. Another reliable method is to cite analysts ’ reports, in holy order to understand technical opinions for the movement. Investors with substantial cognition about technical analysis are dependable equipped to interpret analysts ’ reports regarding a grocery store dip. ultimately, a good cryptocurrency substitution with a reliable price and humble cost is an excellent resource when buying a dip. overall, the success in buying a dim depends on the potential of the particular crypto for future growth. One of the best examples is Bitcoin, which crashed during the Covid-19 pandemic. Investors who bought that dip and HODLed are now enjoying triple-digit profits.

Chart Source: TradingView

Bottom Line

Chart Source : TradingView As we can see from the above discussion, it ’ mho clear that long-run investing is very effective if investors can choose the properly asset. There is no exact way to say that long-run investment is more potent than a short-run investment. ultimately, it depends on an investor ’ randomness mentality and marketplace behavior. however, dividing your investment into both short-run and long-run outlays as a character of portfolio diversification is intelligibly recommended. last, having a solid cognition of technical analysis, which refers to anticipating the price apparent motion of a cryptocurrency by observing by price behavior, is important to understanding marketplace behavior .

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