How to Win at the Crypto Investment Game
Buying cryptocurrencies is a game. The main rule is to strike a balance between opportunism (gains) and losing money. Both winners and losers want to win this game. They have different approaches to how to play the game.
Numerous new individuals are drawn to the cryptocurrency market by the promise of incredible profits. It could change the game for the majority of them. The only way they can make a lot of money that will change their lives is in this way. Many investors compare it to a lottery, where you bet to increase your chances of winning.
Cryptocurrency is distinct from lottery games. While luck is necessary, it is insufficient to stay longer. Many investors think they can influence returns. People frequently believe that there is a universally effective strategy for this game. You will succeed if you discover it. Where do I look for it, then?
I'll share the following three crypto investing game rules with you today:
Rules can change.
No one will tell you how to win.
Investing is not a guessing game.
Market Cycles
While cryptocurrency investing has many cyclical rules, some can change over time. The key to mastering this game is understanding this dynamic. Two main factors influence cryptocurrency market cycles:
Traditional economies and profit cycles have less impact than the real world, which has more. Events in the real economy impact cryptocurrency market conditions. Price is affected by growth, regulations, and inflation. To succeed in online markets, you must understand the offline world.
The psychology behind investors' behavior is primarily greed and fear. No one is buying when there is fear, and cash is king. Fundamentals are irrelevant when market participants are greedy. By investing in riskier assets, everyone is seeking higher profits.
Every cycle is unique. Additionally, we are unsure of the current timing. This is only readily apparent when examining the chart's left side.
We can use "raw" materials from inefficient markets to outperform other market players. This leads to mispricing, where some tokens are either underpriced or overpriced.
Since everyone wants to profit from this, it is difficult to identify these inefficiencies. A deal must have a purpose if it is to exist. Why don't other investors see it? You should always be aware of who is purchasing or selling from you on the other side of the transaction:
Who will “pay” it by long-run underperformance (why other investors may take the wrong position)?
Why do other smart investors not arbitrage away perceived opportunity (why don’t we have other smart investors)?
Inefficiencies, mispricing, misperceptions, and mistakes that others make are opportunities for superior performance. It would be best if you were on the right side of those mistakes.
This is my checklist for finding these opportunities:
Make sure to pay attention to some hidden risks.
Why does someone want to sell it to you?
Do you know more about the assets than the seller?
Why didn't someone else buy it before you?
So, how to outperform in any market? To be better than the market and other investors, you should have the following:
Insight (think of something they haven't thought about, see things they miss, or bring insight they don't possess)
Different reactions and behavior
Luck
The task is difficult, but how else do you want to get a market edge? Many investors want to simplify this process by outsourcing this to Signal Groups.
Signal Groups
Some people are better at something. We can also see this phenomenon in the investment world. Some:
Investors like Warren Buffet have better results than average investors.
Indexes like SPY outperforms most active strategies.
Crypto projects exist in different cycles.
Investors seek out those who have more knowledge than them because of this. These experts are accessible on various social media platforms, including Twitter, Telegram, and Discord. Of course, this knowledge is very beneficial. You might gain a benefit over competitors. If you can, think about the following:
Discovering next trends.
Spotting highs and lows on price charts.
This will resemble playing a game with swindles. It is then clear that this information must be costly and secure. Assuming you share it with anybody, your edge will vanish. Do you want more proof that you need to pay for admittance to this?
Assuming something sounds excessively great to you, you are correct in investment. This is additionally the situation with signal groups, paying little heed to which medium they use.
What verification of their past performance do you have? Your group can be right for just any random reason. Past performance doesn't ensure future outcomes. With many different signal groups, large numbers of them will be correct. Sadly, we don't have the devices to express this ahead of time.
Remember that this market is repeating, so we have good and less promising times. The best failures can be winners in various economic situations. Despite cycles, a great many people are just worried about the cost of their tokens.
Price
The price dominates discussions about cryptocurrencies. Everyone wants to guess this magic number. It is comparable to an alchemist's philosophical stone. Why is the price so crucial? Most investors think mastering it is the key to success in the cryptocurrency market. But investing is not a game of chance. It would be best if you were successful in many areas. In the long run, the person who can predict prices better in the short term might not come out on top. This is what I wished to convey in my Cryptocurrency Investment Framework.
And what is the price then? This is information. Prices always represent the expectations of investors and include the following:
Fundamentals
Psychology (how investors feel about fundamentals and value them)
Nonfundamental factors affecting supply and demand
These three factors interact with one another, resulting in a price. Each price reflects a brief agreement on value among buyers, sellers, and uncertain traders at the time of the transaction. Every chart pattern you see on the screen has a group of traders behind it. As an investor, you must comprehend this game mechanic, identify players, and practice winning.
Four main factors determine price:
Mood and Momentum - Price is primarily determined by mood and momentum, which, in turn, are driven by behavioral factors (panic, fear, greed).
Liquidity & Trading Ease - While the value of an asset may not change much from period to period, liquidity and ease of trading can, and as it does, so will the price.
Incremental information - Since you make money on price changes, not price levels, the focus is on incremental information (news stories, rumors, gossip) and how it measures relative to expectations.
Group Thinking - To the extent that pricing is about gauging what other investors will do, the " herd " can determine the price.
3 Rules
I've shared three rules today to help you win crypto games. Switch to gambling if you enjoy playing. Winning in a crypto game can alter your financial situation. It has its mechanic, just like every game:
Rules can change
No one will tell you how to win
Investing is not a guessing game
Learn these and practice to increase your chance. Luck can be helpful to win in one stage, but not a game.
In future posts, I will discuss the new process Cryptocurrency Investment Framework.
Stay tuned and follow me on Twitter to get a sneak peek of what is coming!