Like many people who follow personal finance topics, you probably know about cryptocurrencies. But investing in crypto may seem like a game to young, tech-savvy investors. How can a more traditional investor like you build wealth using crypto?
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Surprisingly, getting started in crypto is not as difficult as it may seem. While complex terminology and buzzwords can be intimidating, it’s to cut through that noise that cryptocurrency experts Aaron and Austin Arnold (yes, they’re twins) founded Altcoin Daily, a news channel dedicated to helping everyday people understand the ins and outs of cryptocurrency.
The Arnold brothers bring the same intelligence and wisdom that helped build Altcoin Daily, YouTube’s largest crypto news channel and community, to the GOBankingRates Top 100 Money Experts series. He has five key strategies that even beginners can use to build wealth – some of which may sound familiar to traditional investors.
1. Use dollar-cost averaging
Both brothers admit that dollar-cost averaging is a concept that will resonate with investors who have been in the stock market for a while, even if they are new to crypto.
“It’s a tried-and-tested investment strategy for one simple reason: because it works. Especially in crypto,” he said. “You’re never going to buy perfect bottoms, just like you’re never going to sell perfect tops.”
Instead of trying to predict the market – which even experts struggle with – Arnolds suggests investing a fixed amount of money regularly, regardless of price. Remember the old investing adage, “It’s about timing the market, not timing the market”? This also applies to crypto.
“Over time, this averages out your costs and reduces the impact of volatility, turning crypto’s wild swings into stable growth opportunities,” he said. “That’s how most investors get rich. It’s like constantly planting seeds in a garden. Some days the soil is expensive. Other days it’s cheap. But you’ll reap a greater harvest in the long run.”
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2. Take the emotion out of investing
Like any other form of investing, crypto rewards those who stay calm – or at least don’t panic sell during dips or impulse buy during market highs for fear of missing out (FOMO).
The Arnold brothers said, “To make money, set out a clear strategy – or rules – in advance, such as predefined entry and exit points based on research, and stick to them no matter how the market feels.” “Invest with discipline, not emotions.”
In his own research, he has found that the best time to shop is when other people are worried. Best time to make profits? When market sentiment reaches a state of excitement.
3. Understand Market Cap vs. Price
According to Arnolds, new investors are often taken aback by the coin’s low price, believing it to be a steal compared to something like Bitcoin. But if something sounds too good to be true, it probably is.
“A $1 coin with a billion supply has the same market cap as a $1,000 coin with a million supply. So, while the coins have different prices, the market size of the asset is of the same value.”
Market capitalization, or market cap, is the total value of all coins in circulation. It is calculated by multiplying the current price of the coin by the number of coins available. Market cap gives a clearer picture of the actual size and potential of a project than price alone. While a cheaper coin may be attractive, a more expensive coin may have more scarcity – and more potential for growth.
“By prioritizing market cap, you make better choices about the real size and real profit of the project, avoiding overhyped penny cryptos that rarely provide sustainable wealth,” he said. “It’s nice to own a lot of things. But a big bucket of pebbles is no more valuable than a small nugget of gold.”
4. Don’t invest more than you can lose
Arnolds freely admits that the potential for massive profits in crypto comes with equally massive risks.
“Always understand the animal,” he said. “The moment you become overly leveraged in a volatile market like crypto is the moment you start behaving emotionally rather than logically.”
They recommend starting small – perhaps investing 1% to 5% of your portfolio in crypto – and using only disposable income. Rent, bills and your emergency fund should never be at risk.
“This mindset not only protects your financial health but also lets you sleep better at night, so you can survive the downturn and take advantage of the recovery without letting disappointments cloud your judgment,” he said.
5. Invest in yourself every day
You may have heard the saying “knowledge is power.” Arnolds says this is especially true when it comes to building economic power and freedom through crypto.
For example, they present a hypothetical: What if you could go back to the early days of the Internet? You’ll probably learn everything you can about technology, connect with other people passionate about it, and look for ways to take advantage of it in the future.
“Crypto, like the early Internet days, is in its infancy,” he said. “Although most coins will no longer be relevant 10 years from now, the ones that remain will deliver life-changing returns. You will never regret investing in yourself and learning more every day.”
ground level
Investing in crypto for the first time doesn’t have to be scary or intimidating. By applying some of the same principles that make traditional investors successful, you can build real wealth in crypto – one smart step at a time.
This article is part of GOBankingRates’ Top 100 Money Experts Series, where we highlight expert answers to the biggest financial questions Americans ask. Do you have any questions of your own? Share it on our hub – and you’ll be given a chance to win $500.
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This article originally appeared on GOBankingRates.com: 5 Crypto Strategies Even Beginners Can Use to Build Wealth
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