We just released a video about investing in a volatile crypto market. We shared our experiences and how we personally started and how are we investing in cryptocurrencies.
Here is the transcript:
[GINGER] Hey everyone! We have another interesting episode here at GTV for you. I’m Ginger Arboleda and I’m EJ and we’re content creators and startup business owners who love sharing our experiences on personal finance, investing, business and parenthood. [EJ] Investing in Cryptocurrencies has become more popular, but before getting into it, financial vloggers often warn you that the crypto market is very volatile and only invest what you can afford to lose. So, let us warn you, if you plan on investing in Crypto, especially if you’re new to the game, only invest what you can afford to lose. [GINGER] Right now, our crypto and NFT portfolio comprise 6.30% of our total portfolio and, for us, that’s relatively fast considering we just got into it early 2021. We’re pretty new investors in this space, so at first we were really shocked at how high and then low the market could get. It was really stressful for us, seeing the number spike and dip the next day. But a year investing in crypto has taught us a lot, and we’d like to share what we have realized. [EJ] First, you should look at that instrument over the long term and see if it increased in value over the years. If it does, then that’s a good sign that you’ll probably earn LONG TERM on the investment. Let’s take Bitcoin. Bitcoin was at around 1 dollar in 2011, now in 2022 it’s at 41 thousand dollars. Obviously it rose over that long term so, for us, that’s a sign that over the long term, we MAY earn on bitcoin. Now, Bitcoin is THE cryptocurrency, everything else is called an altcoin or alternative coin and people invest in those in the hopes that they find one that’s worth a dollar now but will be worth 41 thousand later – those are much riskier investments and the method we’re talking about may not work the best for those. Of course, it’s up to you and your risk appetite if you still wanna invest in that. [GINGER] Now how do you invest? We advise that you use dollar cost averaging when investing in cryptocurrencies. Dollar-cost averaging (DCA) or Peso Cost Averaging, in our case, is an investment strategy where you invest a specific amount into that investment vehicle in regular intervals. By doing this, you reduce the impact of the volatility on the overall purchase. You won’t get the highest return BUT you also won’t be a victim of the lowest loss. That’s because during the bear or down seasons, you’re able to buy more with the money you invest. During the bull or up seasons, you’re able to buy less BUT the value of your overall portfolio is higher. [EJ] As an example, let’s use a shorter time frame. Let’s say on January 1, you bought 100 dollars worth of token X at 10 dollars per token – that means you bought 10 tokens. Then on February 1, the prices dropped to just $5 per token – you still buy 100 dollars so you buy 20 tokens. Then on March 3, the prices increased to 20 dollars per share – you still buy 100 dollars so now you have 5 tokens. Over that period, you have 35 tokens for 300 dollars.
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P.S. The main platform that we use for investing in cryptocurrencies is Binance. If you want to try out Binance, sign up here. To read more about Binance, check out this post.