Image Source: Upsplash

I talked with an old friend this week. After we caught up, he asked, “You still doing that crypto stuff?” He wanted advice on various coins, trading, and people to follow. So I told him what I know. Here are the key points.

Don’t Trade

Just don’t trade crypto. Instead, buy and hold coins for the long-term. Trading fees eat into your potential profits constantly. And most people time trades poorly.

And if you think trading stocks is hard, wait until you try cryptocurrency. There’s a reason “HODL” is a mantra in crypto. Perhaps most importantly, holding long-term means you don’t pay taxes until you sell. That allows your money to compound far more effectively. You can see more in “Why You Should Avoid Crypto Trading.”

Start With Bitcoin

Bitcoin (BITCOMP) is in another class compared to other crypto projects. It has an amazing security track record. And it has by far the most real world use. It is used as an inflation hedge and an emerging store of value around the world. 

I continue to believe Bitcoin has the best and most durable catalyst for future growth: inflation. I expect Bitcoin will separate from most altcoins in the near future and outperform the overall altcoin market significantly going forward. 

If you’re just beginning to build a crypto portfolio, I would suggest perhaps starting off with 70% to 90% Bitcoin, 10% Ethereum (ETH-X), and 5% to 15% altcoins. But I would say to only buy altcoins if you have the time and inclination to do it correctly. You can read more in “Bitcoin vs. Altcoins: A Lopsided Battle.”

Buy Altcoins in Bear Markets

Altcoins can be ridiculously profitable. But they are also wildly risky. Right now a lot of hot altcoins are getting absolutely slaughtered, and that could continue for a while. 

Successful buy-and-hold crypto investing takes years. You need to be patient. I don’t think right now is the best time to buy altcoins. I told my friend that during the next altcoin bear market — when the average token is down 90% and many are down 99.9% — I believe that’s when you should really buy. When everybody hates crypto and knew it was a scam all along, that’s when you can go shopping. 

I would say to look for crypto projects that keep going strong throughout the bear market — projects with real communities you can join. There won’t be many of them left by that point. 

That is how you can make big money in altcoins. Some people did make money in Dogecoin (DOGE-X) and Shiba (SHIB-X), but far more people lost it all trying to trade their way to riches. I hope that helps anyone looking for a little guidance.