TechnologyWhat will be the crypto investment strategy in 2021?
There might be possible exploitations on what will be the crypto investment strategy in 2021. What if the market goes up by several hundred percent? Shouldn't you sell at least some of your investments to profit from it? Meaning: With the profit made on selling some of your holdings, would one buy even more cryptocurrencies, or is it better to let them sit until they grow enough first?
The currency that has performed best compared to its peers during a rally will most probably be the currency that raises the most when all are sold. So my advice is to sell the top performers first but keep some cash aside for a correction.
Recent developments in Crypto
Many things we can take into consideration about crypto development. One is the "how many coins do you hold" question. If you hold too much of one currency, you risk losing out on the upside if that one falls (and it will look at some point). Of course, that depends on your circumstances.
Maybe you don't need to worry about capital gains tax (in which case who cares how many coins you hold), or perhaps you're invested for decades and can even ignore this downside. The other question is, "when do you sell." Some people set targets to exit BTC when it doubles, etc. Traders prefer to trade around my holdings daily/weekly, so I'm not thinking in terms of exits but rather entries.
Where would you recommend putting funds now?
I'm not so sure this is an easy question to answer. However, if you think the overall market will go up, I don't see why you couldn't hold both BTC and ETH. BTC because it's still the most widely used currency even if transaction fees are relatively high. And Ethereum might outperform because smart contracts are very relevant in a growing market.
Why change will happen in 2021:
Traders think some currencies will go up and others down, but this happens all the time.
And then when you own those coins, practice good trade hygiene by taking profit when available, raising stop losses when falling, scale back in when rising again, etc. And keep in mind that diversification within cryptocurrencies is not only possible but advisable too.
The traditional one, BTC, ETH, and so on, works very well, but perhaps not for everyone. Think about what your goals are with Crypto. Do you want to store value long-term? Then I wouldn't worry so much about daily/weekly trading pairs. Do you want to buy items online? Then BTC is a no-brainer. Do you care a lot about governance and voting? If yes, then DASH or GRS might be for you, etc.
Changes affect cryptocurrency investors and traders.
The best strategy for crypto traders is to find coins that are either undervalued or have recently risen in value compared to other currencies. If you're trading more minor currencies, it's easier to see whether they follow BTC up or down - look at their USD pairs. For more significant coins (& especially those on Binance), I usually use Bitfinex's XRP/USD pair as a benchmark. If you want to invest your in bitcoin, then you can read more about bitcoin from here.
Potential future investments or trading strategies
The cryptocurrency market has many different opinions on any given situation. Therefore, it's essential to understand the current market dynamics and how they're likely to change in the future. I think that diversification is an ingenious strategy for crypto investors and traders alike; the more time you spend researching these currencies, the less risky your portfolio will seem and the better your returns will be (in theory).
The key here is to understand what makes each currency tick and how it would benefit from increasing or decreasing interest. Of course, governments can intervene -- every day, we see new legal changes around the world - but this happens with every single asset class, so unless something completely unexpected takes place, I wouldn't worry too much about it!
This article will introduce some of the most popular strategies, including investing in ICOs, trading coins on exchanges, and mining.
A lot can happen between now and 2021, so it may be difficult to predict which option will yield better results for investors.
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