In previous articles, we discussed topics like asset diversification, how to start saving, and much more. Today, we’ll talk about how to properly allocate funds in cryptocurrencies and explore strategies that may suit the “laziest” investors.
How to Allocate Funds
Unfortunately, most newcomers to the cryptocurrency space, after hearing stories of how someone made a lot of money by investing just a few hundred dollars in crypto, are eager to replicate that success. However, in practice, this leads to rash decisions, often resulting in losses rather than gains. One of the reasons for these mistakes is the lack of understanding of the current market stage: whether the asset is overpriced or undervalued, and where the market cycle stands.
This strategy is aimed at those who are willing to stay in the crypto market for at least 4-5 years and invest steadily.
Example of Allocation Based on Monthly Investments of $100
Let’s assume you’re willing to invest $100 every month for 5 years. Over this period, you would invest around $6,000. How should you properly allocate these funds?
1. 50% in Bitcoin — This is the foundation of your portfolio and your “safety net” against losses. BTC is the market leader, and its stability, despite volatility, makes it the cornerstone for long-term investments.
2. 20% in Ethereum — A secondary asset that has proven to be reliable and promising over the years. Despite competition from other projects, Ethereum remains the foundation for most decentralized applications (dApps) and smart contracts.
3. 20% in promising blockchains and projects — These are assets with real utility and growth potential. These could include projects like Polkadot (DOT), Near Protocol (NEAR), Avalanche (AVAX), Cosmos (ATOM), Algorand (ALGO), and others. These projects could form the foundation for future technologies and use cases.
4. 10% in other assets, including meme coins and riskier projects — A small portion of the portfolio that can be allocated to more speculative and high-risk investments. But it’s important to remember that these assets can be highly volatile and not always justified.
Strategy
As mentioned earlier, the strategy is based on long-term, monthly investments. By investing $100 every month, you’ll be able to experience all the market cycles: from downturns to sharp corrections, from market reversals to growth. Through such investments, you’ll gain experience, learn not to panic during drawdowns, and understand the importance of a long-term approach, believing that your investment will pay off over time.
This strategy is beneficial because you don’t have to try to predict the exact market bottom or peak. Many people waited for Bitcoin to drop to $12,000, but when it actually reached around $15,000, many didn’t buy. Then, when the market began to rise again and hit $25,000, those same people were hesitant to buy.
Thus, monthly investments allow you to buy assets at various price levels, and over time, this will result in averaging your purchase price (average entry point), which will give you an advantage in the long run.
Examples of Successful Strategies
1. El Salvador — The country that buys 1 Bitcoin every day. This is a strategic approach aimed at long-term accumulation and supporting the cryptocurrency.
2. MicroStrategy — A company that buys Bitcoin as long as it has fiat currency available. Each BTC purchase happens regularly, helping to accumulate assets even in uncertain market conditions.
Conclusion
Be patient and prudent. Big money isn’t made quickly, but over time. This is not a “get rich quick” process, but a long-term accumulation of assets, taking into account market cycles. The strategy of regular investments, without trying to guess the market bottom or peak, is one of the most effective and proven ways to accumulate crypto assets.
