Best Crypto Investment Strategies For Investors in 2023
Learn about the various crypto investing strategies out there and pick the crypto investment strategy that works best for you.
Selecting an investment tactic for crypto is only the beginning. You will also need to find a platform that will allow you to execute your strategy effectively.
However, every investor will employ unique strategies to minimize loss. If you’re not sure which approach is best for your financial goals, don’t worry. Let’s look at the best Crypto investment strategies to see which works best for you.
- Crypto investment strategies help control risk.
- Every investing strategy is unique. Your situation, risk tolerance, and financial objectives will determine your approach.
- Many casual/serious investors prefer long-term buying and holding.
- Dollar-cost averaging (DCA) is a tried-and-true strategy that can assist you in timing your market entry.
- Day/swing trading can be lucrative but riskier than long-term investing.
- Do your research and set goals before betting everything on one coin.
- Investing in ICOs may be profitable, but there are also scams to watch out for.
- Microcap altcoin hunting can be risky but rewarding.
- Other strategies include trading popular narratives, finding airdrops, yield farming coins and NFTs, copying successful investors & minting or trading NFTs.
- You are not required to select a single investment style. Incorporating a blend can provide you with the stability you seek while providing some excitement in the short term.
What is a Crypto Investment Strategy?
A crypto investment strategy is a set of guidelines designed to help investors decide what and when to invest and how much to buy.
There are many investing strategies, from conservative ones that aim to protect wealth to aggressive ones that aim to grow capital. It means they range from low-risk to high-risk risk portfolio management strategies.
All investing strategies have pros and cons, but the best one for you will depend on your age, objectives, expectations, and available capital, among other things.
14 Best Crypto Trading Strategies of 2023
If you’re starting cryptocurrency investing, you can learn the best practices right here.
1. Buy and Hold Crypto Strategy (HODL)
This “buy and hold” strategy is known as “HODL” in the crypto world. It translates as “Hold On for Dear Life” and is pronounced ‘HOLD.’
‘Buy and hold’ is a popular crypto investment strategy that appeals to a wide range of investors. It is the most passive investing style, in which you select a few promising crypto assets to invest in. It is frequently accomplished through dollar-cost-averaging (DCA), which requires gradually purchasing small amounts of cryptocurrency.
It is a low-stress way to invest, and it’s suitable for people who believe in crypto’s long-term potential and are willing to hold on for a long time, no matter how the markets move in the short term. Holding, also known as ‘HODLing,’ is an excellent strategy for both new and experienced traders.
The buy-and-hold strategy is appropriate for those who:
- Are new to cryptocurrency but want to get involved slowly before it’s too late.
- Wish to invest with minimal effort and time commitment.
- They are only occasionally interested in monitoring the performance of their cryptocurrency holdings.
- Believe that cryptocurrencies have long-term potential and prefer a more passive approach.
- Don’t feel like keeping up with every piece of cryptocurrency news.
- Don’t need to see any money back for at least a few years.
- Are willing to endure periods of volatility and price declines.
- Seeking projects with solid foundations that will still be operating in 5-10 years.
2. Dollar-Cost Averaging (DCA)
One of the most popular crypto investment strategies is dollar-cost averaging (DCA). You can make consistent, recurring investments with DCA. DCA is a tried-and-true strategy ideal for beginners or anyone who constantly lacks time to monitor markets for the best entry point.
DCA invests a large sum of money gradually over time rather than all at once. The goal is to reduce market volatility and capitalize on market downturns without exposing too much capital at once.
Benefits of DCA
- Reduces the risk of purchasing at market peaks.
- Reduces the negative effects of short-term market volatility.
- It does not necessitate a large initial investment.
- Simply automate and sit back while your portfolio is built.
- Lower cost of purchase and prevent bad timing.
- Disciplined saving
If you don’t know what you’re doing, investing gradually over time will likely yield better results than trying to time the market with every investment.
DCA is a very useful tool that can be automated with DCA Bots such as Coinrule DCA Bot, 3Commas DCA Bot, Poinex DCA Bot, and more. They allow you to invest consistently with the least amount of risk possible. Forget about bad timing. Just tell DCA Bots when, how much, and how often you want to buy, and it will manage the rest for you.
You can now DCA your Favorite coins below, Calculate DCA, and much more.
Or visit our site DCA Profit to Dollar cost Average other excellent coins.
3. Swing Trading – Short-Medium term
Swing trading involves taking advantage of short- to medium-term price fluctuations (usually a few days to several weeks).
Swing trading strategies are most effective when a long-term trend is strong (like during a massive bull run). Although the overall trend is up during these times, there is a lot of volatility and big price swings, giving swing traders plenty of opportunities to predict trends and make money quickly.
Swing trading is suitable for someone who:
- Is looking to take advantage of a bull market or a particularly volatile time period.
- Has some market knowledge and can spot short- to medium-term trends.
- Is looking to invest in long-term projects but is also willing to buy and sell for a quick profit.
- Can ride out market fluctuations and have some “average” days in their portfolio.
Swing traders evaluate the same underlying factors in a project as their longer-term counterparts. They also use technical analysis (Support/Resistance levels, trendlines, etc.) to help inform their trading decisions.
4. Day Trading – Short term
Day trading is the most stressful, high-risk, high-reward strategy of all. In order to profit from any market movement, day trading involves spending hours at your computer keeping a close eye on the market.
Multiple trades may be executed in a single day (many small profits can add up), but you’ll need a firm grasp of technical analysis to see consistent gains.
Day traders are those who:
- Has a thorough understanding of technical analysis and the cryptocurrency market.
- Is willing to put themselves in high-stress situations to make quick money.
- Has a lot of time on their hands and a high tolerance for risk.
- Prioritizes profits over industry support and investments in projects with solid fundamentals and long-term potential.
This trading style is time-consuming and NOT suitable for beginners. However, many people end up day trading because of the potential for short-term profits in such a volatile market. Knowledge and practice are essential if you are serious about day trading.
While it may seem like a good idea to take advantage of short-term volatility as a newcomer, the reality is that most people who jump in without much preparation end up losing money. Check out this short guide to learn tips on how to become a successful crypto trader.
5. Buy Low, Sell High
In the crypto investment strategy known as “buy low, sell high,” the goal is to acquire an asset at a low price to resell it for a profit at a higher level. It may appear to be a basic crypto investing strategy. However, determining whether the price is low enough to buy or high enough to sell is difficult.
So, it’s crucial to use indicators that show how the price of the cryptocurrency is moving. The TradingView is one of the most user-friendly indicators. There are a variety of indicators to choose from, such as Market Cipher and Lux Algo indicators for crypto trading.
For example, you can use this crypto investment strategy to set buy and sell triggers for Solana.
6. Going All in on One Coin
Not all cryptocurrencies offer an excellent opportunity for investors to profit. As you begin exploring the Crypto market, you may form strong opinions regarding which coins or tokens are durable and which you should avoid.
It is normal for crypto assets to experience large price fluctuations, but prolonged losses are typically not a good sign for any investment.
Don’t rush into anything new in the cryptocurrency market. Although many investors are attracted to new projects, do your own research before investing your money. Unfortunately, scams appear on the market regularly, so it’s critical to analyze every project and rule out those that raise red flags about their legitimacy or trustworthiness.
When going all-in on a specific coin, it is wise not to overspend oneself. Even the most reputable cryptocurrencies, such as Bitcoin and Ethereum, are highly volatile compared to fiat currencies, such as the US dollar. Don’t put money into investments that you might need to withdraw soon.
Before entering the market, establishing your investment goals is a good idea. Of course, buying low and selling high is a good strategy. Plan your long-term strategy before investing in a single Crypto asset.
Ask yourself; Do you intend to keep it for a long time? Or just until your portfolio reaches a certain amount? Using platforms like Kraken and Coinbase to set a stop loss price or profit taker can help you achieve these goals.
7. Value Investing
Among all the ways to invest in cryptocurrency, value investing is one of the best. Value investors’ goal is to find cheap investments relative to their true worth. Value investors consider a variety of factors, including:
- Real-life use cases
- the founding team’s background
- Community Engagement
- Blockchain network
- Competitive environment
As a value investor, researching is the first step in building confidence in your crypto portfolio. Therefore, do your research.
Read for the best cryptocurrencies to invest in right now.
8. Growth Investing
Growth Investing is the next approach in our guide to crypto investment strategy.
It’s the practice of putting money into digital currencies when they’re still comparatively new but with a high growth potential. But doing this can be risky, so doing your research is essential.
Distinct growth factors may influence the price of various cryptocurrencies. It is the best investment opportunity for those looking to make a substantial investment over a long period. You must invest some time in research to be able to recognize such an opportunity and select the appropriate cryptocurrency.
Let’s take gaming tokens as an example. Looking at player data, on-chain activity, NFT price movement, etc., is crucial in this situation. However, for layer one protocols, it is vital to consider the expansion of the developer ecosystem and the projects it supports.
9. Balanced portfolio
A well-balanced crypto portfolio is built around the concept of investing in the asset class as a whole. It intends to profit from the cryptocurrency market’s overall growth and adoption.
Using the balanced portfolio crypto investment strategy, the loss of a single crypto will not have a major effect on the portfolio’s value as a whole.
To keep up with market changes, a well-balanced portfolio should be rebalanced regularly.
10. Unbalanced Portfolio
An unbalanced portfolio is one that is overly invested in one or a small number of cryptocurrencies. It is only investing in the cryptos that you have researched. Even though it is generally accepted that a diversified portfolio is the best strategy, this may not always be the case.
Cryptocurrencies are volatile and tend to follow trends. When you rebalance, you might sell a cryptocurrency that is going up and buy one that is going down. As a result, an unbalanced portfolio may be dominated by a few cryptocurrencies.
Some investors have put their entire portfolio into cryptocurrency blue chips like Bitcoin and Ether. When looking at the portfolio’s long-term performance, it has been relatively stable and successful.
11. Copy-Trade Whales
Whales are traders with large portfolios who control the majority of the market for a specific cryptocurrency. If you can’t beat them, you should join them. Copying the trades of successful investors in the cryptocurrency market may help you avoid the pitfalls of learning the market.
The effectiveness of copy trading is determined by who you are copying. Sometimes, the Crypto whale will make a trade unsuitable for your portfolio. But sometimes, you might get lucky if a big player in the Crypto space makes a big trade.
Need help with how to copy a trade? One option is to dive into the blockchain. The transaction sizes can be discovered by looking at the data. If you notice a high-value transaction, a whale has just made a significant trade.
The good news is that you don’t have to do this analysis alone. Whale tracker tools such as Whale Alert and ClankApp can be extremely useful in locating the largest Crypto investors. Check out the best copy-trading platforms to automate your copy-trading strategy. These platforms make it simple and convenient to copy successful investors.
Read for how to become a crypto Whale.
12. Investing in ICOs
ICOs (Initial Coin Offerings) are similar to IPOs (Initial Public Offerings) in which investors in a crypto project receive a token instead of company stock. ICOs raise funds for crypto projects by selling their native token to early supporters at a low price, such as in BTC or ETH.
This early entry possibility may prove fruitful down the road. For example, Ethereum’s initial coin offering (ICO) in 2014 raised several million dollars during the launch period. However, watching out for scams is critical, as some ICOs have managed to escape with millions of dollars.
One method for detecting potential scams is to read the whitepaper. Dive into the document’s details and look for anything that doesn’t add up. Doing your homework on the founders can help you protect your investments.
13. Yield Farming Coins & Mint NFTs
Yield farming involves depositing Crypto into DeFi protocols to maximize yields.
Typically, this involves staking, depositing your crypto into a Lending platform, and providing liquidity to a decentralized exchange. This investment approach’s point is to increase capital returns while maintaining control.
This investment opportunity allows you to receive payment in cryptocurrency. Instead of exchanging fiat for crypto, you can build your Crypto portfolio by flipping NFTs. It is a great option to consider if you’re low on investment capital but have access to innovative projects that could quickly gain a large audience.
The best choice is to buy and sell NTFs on the resale market because it might be challenging to outbid other investors for a new NFT minting contract. However, this strategy is extremely risky. Since the early adopters have already taken the easy money, investing in NFTs takes a lot of time, effort, and luck.
14. Hunt for Micro Cap Altcoins
A newbie crypto investor starts with widely recognized tokens but finding a winning microcap altcoin can be very lucrative.
Microcap altcoins typically have a small market capitalization of $50 million or less. If you can invest in a popular microcap coin early, you could see a significant increase in your investment. Modefi and Argello are two examples.
However, there are risks associated with investing in small coins. Some people compare microcap coins to penny cryptocurrencies. It’s possible to make money, but it’s not always clear which trades will end up profitable. It can make it feel like gambling. If you intend to buy and hold for the long term, this could backfire if the coin proves to be a flop.
Why is a Crypto Investment Strategy Important?
Crypto Investing strategy function similarly to a guide. They make investors set goals and decide how much risk they are willing to take. They also have to commit to a plan for expanding their wealth.
The strategy governs all investment decisions, including when to buy, what to buy, how much to buy, how long to hold, and when to sell. The following are some of the advantages of having a strategy:
- Assisting investors in making investment decisions. Rather than being swayed by the latest trend or FOMO, an investor sticks to their selected plan.
- Encourages more precise and independent thinking. A strategy forces investors to plan ahead of time for investment decisions and goals, making them less susceptible to psychological biases.
- Helps in reducing investment risk. A strategy ensures that any risks taken are calculated and that the maximum acceptable risk is defined before investing.
- It helps define realistic goals. Investing strategies are intended to increase or secure investors’ wealth. Defining them ahead of time allows for a better understanding of future capital needs/allocation required to achieve those goals.
Finally, investing strategies assist investors in achieving their objectives.
How to Choose the Right Strategy for you?
How do you choose the best crypto investment strategy for you now that we’ve discussed 14 different ones?
Several factors to consider are investment objective, risk tolerance, and preference for passive vs. active investing.
1. Set your Investment Goal & Time Frame
We all have different investment goals and time frames.
A person who wants to invest with a shorter time horizon might be someone who wants to save up for a trip abroad. Their time frame is relatively short-term (1 to 3 years), and their objective is to make quick profits for a lavish trip.
Other investors want to save for retirement or their children’s college.
The two goals and time frames listed above are very different. The time frames for achieving the goals, the portfolio needed to fund them, and even how important they are to the investor are all very different. These factors will affect the crypto investment strategy.
Set your investment goal and time frame by considering the following:
- How much money do you need in your portfolio? Determine a specific amount – to the nearest $1,000 for short-term and to the nearest $10,000 for very long-term goals.
- When do you hope to achieve this goal? Set the time frame, whether it’s months or years.
- What is your initial investment, and how much can you invest in the long run? Do you have a lump sum to invest right now, or do you intend to set aside a regular portion of your monthly salary?
- What kind of profit margin will help you reach your objective? You can easily find a compound interest calculator online.
Your final crypto investment strategy will depend on all of these aspects.
2. Understand your Risk Profile
Investing in crypto is a high-risk endeavor because of the inherent volatility of the digital currency.
The profit potential is linked to the level of risk you are willing to take, which is related to your selected investment strategy. Although the most successful cryptos have the highest return potential, they are also the riskiest due to market volatility.
Compared to Bitcoin or Ethereum, smaller altcoins frequently offer higher returns, but they also carry a higher risk due to the lack of project history.
So, should you put all your money into the asset with the most risk if you want bigger profits?
No, in most cases, diversification will be a part of most investment strategies. Your level of risk tolerance will help you decide how much to put into riskier assets and how much to put into safer assets.
Risk tolerance is the amount of loss an investor is willing to accept while executing his crypto investment strategy. The answer to this question is complicated and depends on things like:
- Experience: Those with investing experience may have developed a bias towards particular asset categories or types of investments. In contrast, if you are new to investing, you may not know much about the crypto market, so don’t put too much money into cryptos. Your experience will influence your risk tolerance.
- Age: Younger investors take more risks because they have more time to wait for market volatility to settle.
- Time frame and goals: Each investor has a unique investment objective and time frame. If an investor intends to invest for a long time, he will usually be willing to take on more risk.
- Portfolio size: If your investment portfolio is large enough, you may feel more comfortable taking chances.
Is Crypto Investing Profitable for the Long Term?
Investing in cryptocurrency can help you diversify your overall portfolio. Investing in cryptocurrencies using any of the above strategies could be profitable over the long run. You can choose any strategy or a combination of strategies based on your risk profile.
Short-term volatility can sometimes cause ‘FOMO’ (fear of missing out) among retail investors. However, sticking with one crypto investment strategy can lead to financial success. But there are times when volatility can offer chances for short-term gains.
The cryptocurrency market is still in its early stages. Putting money into cryptocurrencies now can yield exponential returns later on. Being an early investor in new projects and technological advancements can provide significant returns. There are also numerous passive investment opportunities.
How to Choose a Crypto to Invest in?
It is critical to understand the crypto ecosystem before making any investment decisions. Cryptocurrency analysis differs from traditional assets such as stocks. As a result, developing your own crypto investment strategy is essential. You can do it if you consider your risk tolerance and level of expertise.
You can learn about a cryptocurrency’s market cap and price stability by looking at its price chart. It also shows the effect of real-world events on the price of cryptocurrency.
Using a Blend of Crypto Investment Strategies
Some investors want the best of both worlds when it comes to investment strategies. A buy-and-hold investor may want to experiment to see if they can make short-term profits during a bull run.
Using a combination of long-term and short-term investing strategies can look like this: You may have allocated 80 percent of your portfolio to established coins such as Bitcoin, Ethereum, and Polkadot and now want to use the remaining funds to gamble on a few low or mid-caps that are expected to surge very soon.
While it is best to leave a significant portion of your crypto portfolio alone if you are in it for the long haul. Or, you could try your hand at swing/day trading with the 5-10% profit you make the next time Ethereum or Bitcoin spike.
You’ll have the stability you desire and the potential for short-term gains. That is just one example of how you can combine several strategies. It’s also a great way to learn about various approaches, so you know what kind of trader/investor you want to be in the years ahead.
Put Your Strategy Into Action
Choosing a crypto investment strategy is just the initial step in the process. You’ll also need a platform that allows you to execute it efficiently. You might try a few different approaches as you start to create your cryptocurrency portfolio to get your feet wet. Whether you’re using a strategy or simply Dollar cost averaging ETH, you’ll need a secure place to build your Crypto portfolio.
eToro is one option, as it allows you to copy trade, analyze cryptos, and socialize with other crypto traders. Another option is Kraken, which provides staking, careful analysis, margin trading, and other services. Crypto.com is another reliable platform that allows you to buy, sell, store, send, and track over 100 cryptos.
Is Investing in Crypto a Good Investment?
Yes, crypto investments can help you diversify your portfolio. When applied to cryptocurrencies, any crypto investment strategies may produce returns over time. You can select any strategy or a combination of multiple strategies based on your risk profile.
What is the most profitable crypto strategy?
Several strategies can be used to invest wisely in cryptocurrency. Some are Dollar Cost Averaging, HODLing, Buy low and sell high, and so on. Before making a coin investment, one must always do homework on the coin’s fundamentals. Substantial investments are ones with solid fundamentals.
How do you become a successful day trader?
You have to invest a lot of time learning about crypto markets in addition to all the technical analysis tools. The potential rewards are high, especially during bull markets and periods of volatility, but this strategy is not for the faint of heart.
To win at day trading in the long run, you’ll need to learn about candlesticks, moving averages, bar charts, trend lines, and support and resistance levels. Many online guides and courses teach you this high-risk, high-reward strategy.
Can you get rich investing in cryptocurrency?
Cryptocurrency is viewed as a high, high-risk asset. If invested wisely and strategically, the returns could be profitable, but entering the crypto markets with the expectation of making quick money is likely silly.
What crypto should I invest in as a beginner?
As a beginner, investing in blue-chip cryptos may help you get used to this asset class’s volatility. Blue chip cryptocurrencies have a long history and solid fundamentals and are more stable than smaller cryptos. Bitcoin, Ethereum, Ripple, and other cryptos fall into this category.
This blog was a beginner’s guide to the best crypto investment strategies to know in 2023. Bitcoin and other cryptocurrencies are volatile and risky investments. Volatility and down-trending months can put your patience to the test. However, you can create long-term wealth by sticking to your cryptocurrency investment strategy. Many investors whose portfolios were in the red but who decided to HODL made a lot of money in the end.