What do you want from crypto… is it a quick buck or the opportunity to create generational wealth? If it’s the latter, this guide will put you into the right mindset so you understand how the best traders and investors use cryptocurrencies to build their fortunes and legacy.
1. It all starts with the right mindset
Be it that you decide to trade crypto options at Bitlevex, buy spot positions on Binance, Kucoin, Uniswap, or FTX, hold NFTs, etc. – you need the right mindset to succeed.
Without it, you will only end up losing money, and your goal here must be to use all of these crypto products to build your fortune that you and your future generations can enjoy.
The best thing about crypto is that, unlike other industries or assets, building generational wealth won’t take 30-40 years. It might take as little as 1-5 years if you manage it well, but to be more conservative and “down-to-earth,” we will say ten years.
2. Money and risk management
You need to build a portfolio, and to do it, you need to allocate your money based on the following variables:
- The potential of the project (backed up by your fundamental analysis)
- Profit potential of the project (based on the market cap and comparison versus similar projects on the crypto markets)
- Level of risk (for example, a meme coin will inherently be much riskier than a project backed up by Coinbase Ventures, Alameda Research, etc.)
Let’s imagine we come back to the beginning of 2021; you could have used the following allocation:
- 70% to solid potential with a low market cap (example: KDA, QRDO, UMB, XPR, etc.)
- 15% to crypto products such as IDOs, presales, NFTs, virtual land, or for a trading account focused on spot trades, futures, crypto options, etc.
- 10% to stablecoins such as USDT, BUSD, and USDC so you can buy the dips in case a cryptocurrency’s price falls below your entry point
- 5% to risky plays such as memecoins, shitcoins, GameFi tokens, etc.
By building a portfolio this way, you’re bound to grow your portfolio successfully. We recommend keeping 10% of your portfolio in stablecoins because, this way, you can dollar-cost-average (DCA) whenever the opportunity comes.
Now, let’s talk more about the riskier part of your portfolio. These profits should be used to buy more tokens and coins from serious projects with excellent potential.
For example, let’s suppose you bought $SHIB and made an insane return of x500, then it’d be a good idea to invest 70% of those profits into projects like KDA and QRDO, while keeping a smaller percentage to stablecoins and funds for other risky plays.
3. Riding the market cycles
Just like it’s essential to build a solid portfolio, it’s also critical to know when to buy and when to sell. Of course, this is easier said than done, but there’s a simple piece of advice that will help you to ride the market cycle:
“Buy when there’s fear and blood on the streets… sell when there’s greed and euphoria”
As long as the project you’re buying hasn’t been hacked, rug-pulled, or failed to deliver the products and services they promised, you should buy the dips, especially if we are within a crypto winter because this is when you will get the best prices.
Furthermore, your best bet is to sell portions of your holdings as the prices increase. Nothing goes up forever, so you are likely to get a shot at buying again at low prices.
You should hold while the sentiment is bullish, but at the same time, you also need to sell gradually to accumulate stablecoins that you can use to buy the same or new projects at lower prices.
This approach will be especially successful if we are in a Crypto Super Cycle because the bear markets will get shorter while we will get more frequent and powerful bullish rallies.
4. Focusing on the long-term
If we focus on building generational wealth, we need to look at the long term. Don’t marry any project, use it to make more money, which you can use to buy new, more exciting projects that can give you an excellent ROI. So, you need to be patient and, at the same time, protect your capital.
Never keep large amounts of crypto on exchanges; always store it safely in cold wallets. Don’t openly talk about crypto; keeping it to yourself is better. Remember, this is about the long term, so you better be ready to protect your hard-earned money to accomplish your dream of generational wealth.
Last Updated on by Pragya Chakrapani
