Let’s ride the powerful bull wave! Or has it already crested?

Once upon a time, I heard about Bitcoin. I thought it was a fad. So I didn’t get in. Then, a few years later, I was intrigued and looked into buying a few coins, but the permutations I’d have to go through to buy them seemed too much of a pain. Yes, I’m kicking myself now.

It’s easy to buy cryptocurrencies these days. Even the obscure alt-coins aren’t that hard to invest in. But if the goal was to become a Bitcoin millionaire from investing the cost of a few pizzas… well, that ship has sailed.

Don’t despair, it’s still possible to make a great return from investing in crypto. I’m doing it, and I’m a newbie.

The trick, I’m discovering, is to have nerves of steel and to ride the waves.

Crypto cycles

Crypto has traditionally moved in cycles. Bitcoin is the cornerstone, and it moves in four year cycles based on its halving. Alt-coins follow the Bitcoin waves. They don’t move in tandem, however, which makes these cycles more profitable.

Typically, Bitcoin will rise, then it will take a breather while the alt-coins do their thing. A good way to play these waves, then, is to cash in some of your Bitcoin profits and put them into the alt-coins of your choice.

As a newbie, I originally invested in both Bitcoin and Ethereum. Running some Monte Carlo simulations based on the Sharpe Ratio, I came up with an approximate “ideal” distribution that was weighted in favor of Bitcoin. The goal was to minimize my risk while still getting a good profit.

As I became more comfortable with the crypto space, I traded in a small portion of my Bitcoin for three smaller alt-coins — Chainlink (LINK), Cardano (ADA) and Polkadot (DOT).

As I learned more about crypto-cycles, I decided to once again reconfigure my portfolio to take advantage of the upcoming alt-coin season. Since Cardano seems to be a dog, I converted a portion of my ADA into a couple of cryptos with a much smaller market cap. These smaller cryptos are risky, but with it being alt-coin season, I think it’s the perfect time to take that risk.

Have I made the right move? Who knows? Perhaps tomorrow Cardano comes back with a vengeance or my “small caps” stagnate. Then I’ll kick myself.

Right now, however, is the time to expose yourself to alt-coins. While they made a good run yesterday, some of them seem to be taking a breather today, which might make this a good time to buy in. I think we are just starting the alt-coin bull phase and so you might want to make sure you’ve got at least some exposure to these volatile but potentially quite lucrative cryptos.

Your risk tolerance

So, should you go all in?

It depends on how risk-tolerant you are.

I’m a relative newbie. I know that I’ll learn faster and better by having skin in the game but at the same time I’ve tried to mitigate my risk. Your risk tolerance and/or investment saavy might be greater than mine.

Crypto is a speculative investment. Even if you keep most of your stash in Bitcoin, safety is relative. If a correction comes along, you could be down 90% on your alt-coins while your Bitcoin may offer you the relative stability of “only” being down 40%.

Personally, I think April will be a great month for alt-coins, so I’d increase your exposure to them. One way to do it is to just take your profits from Bitcoin and put these into the alts you favor. That way even if these alts go to zero, you haven’t lost any of your initial investment.

Some higher risk moves

While I think investing in crypto by following the natural cycles in this space is a great way to make some money, there are other strategies that could potentially make you a lot more.

One strategy that I’m personally wary of is doing a lot of trading. Some people report huge profits by jumping in and out of various coins. There are a couple of things to be aware of, however.

First, while it’s easy to spot broad market patterns, exact timing is hard. If you’re good at reading charts you’ll be able to predict with some confidence when a run-up is imminent, but chances are you won’t be spot on.

Second, there are transaction fees and taxes, and these can eat up your profits if you are an active trader. So make sure you take these into account if you want to play this game.

Another thing I’d be wary of is shorting cryptos and buying on the margin. Again, there are people who have reportedly made fortunes doing this, but by doing so they’ve added another element of risk to an already risky space.

It all really comes down to risk management.

There are some people who are so risk averse they won’t invest in cryptos at all. Others, like myself, are newbies who have cautiously dipped our toes in.

As I’ve become more comfortable, I’ve put money into more alt-coins. I think this is smart given the explosion I see during alt-coin season. But it’s alright if you don’t want to take the associated risks. You’ll still make a good profit just holding on to your Bitcoin and Ethereum.

Finally, there are the people who are living on the edge. If you feel comfortable doing this, you could make huge gains. Just be aware of the risks.

You can use tools like the Sharpe Ratio to help you manage your risk. In a future article I’ll examine this particular tool, as well as some others, in more detail.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://levelup.gitconnected.com/alt-coin-season-is-here-4ac544e79932?source=rss——-8—————–cryptocurrency