Are volatile cryptocurrencies a huge opportunity?

Are volatile cryptocurrencies a huge opportunity?

In today’s NJroute22.com VLOG – we’re going to talk about investment strategies in cryptocurrencies.

From an outsider’s perspective.

We do not “day trade” and we do not own a mining rig. The only thing we do is dabble and observe.

Cryptocurrencies are wild and unnerving for many

If you’ve been following cryptocurrencies – you’ll certainly know that the “ride” is very wild. Or what they refer to in the markets as “volatile.”

Huge swings day to day and week to week. Double-digit percentages both up and down. And frequent “crashes” and “booms.”

But the overall long-term trend for most cryptos is generally up. And up. And up.

You can see the “rainbow chart” for Bitcoin for more information.

Short-term opportunities in crypto are there

As we’ve observed the trends – it appears that a lot of people day trade cryptocurrencies.

There is a huge opportunity to earn compounding profits from quick buy and sell transactions within the crypto markets.

You just have to stomach the tumultuous nature of the swings.

It’s not uncommon to earn single-digit gains on a daily or semi-daily basis. Those profits will compound if you’re fortunate enough.

Sell on substantial profits you pre-determine in your mind (whether it’s just 2% or much higher). Or if you get unlucky and buy at a bad point (we had an issue last month where we bought crypto and it went down 10% that day) you just hold either until you break even or make a modest profit.

Either way – enduring a big loss of over 10% can really stall your opportunity for steady gains. That is why it’s probably smart to not invest your whole bankroll at once.

This way, if you suffer a loss, you can dollar cost average out and buy more at the true dip to regain a profit faster.

My new rule of thumb going forward is to max out at 50% of our bankroll and reserve the rest to cover the dips. Of course, that can hurt if you miss out on a big gain as well.

But missing the gains is less painful than getting smacked with a substantial loss.

It’s hard to predict the volatility of the crypto markets. Maybe some know better than others. But when institutional money moves – it often creates swift large-scale changes both up and down.

The collective group of millions of small investors (with the help of social media) also has an effect – but it is much slower and less drastic from what we’ve seen.

But it does seem to affect medium-term trends.

If you have money to spare – it seems like a fun potentially profitable hobby. Just be sure you can afford it!

We honestly have no idea what the future of cryptocurrencies holds. Perhaps they’re one regulation away from total ruin. But we doubt that considering the worldwide adoption rates.

But with a lot more amateur investors in crypto than the traditional markets – it seems like a prime investment option for both long and short-term investors.

Just remember that if you invested just $10,000 in Bitcoin at the outset of the “crisis,” you could have easily had a solid 200 grand in cash.

What do you think? Can you grow your cash reserves by making frequent trades in the crypto markets?