Cryptocurrencies differ slightly from other asset classes, primarily because they’re new. However, the basic principles of investing in crypto are the same as investing in other assets.
At the outset of many people’s journey in crypto, they turn to YouTube for advice, only to be confronted with hype. The platform is drowning in content promising to reveal the next token that is about to 100x in price.
Many newcomers to crypto often turn to YouTube for guidance, only to be bombarded with sensationalist content promising astronomical gains. But beware, not all advice is created equal, and many of these so-called experts are just operating out of their bedrooms, not luxury penthouses.
Trying to time the market, i.e., predicting when a token will skyrocket in value, is a common strategy. However, even successful investors like Michael Saylor admit that timing the market is easier said than done. He once stated, “The more you obsess over timing the market, the more mistakes you make. The best strategy is to buy bitcoin and wait.”
He should know because his company, MicroStrategy, currently holds 190,000 Bitcoin, which they purchased at an average price of $31,224 per bitcoin. During the bear market, this represented a considerable loss for the company, whereas, at the moment, it’s about $3 billion in profit.
His approach reveals two critical aspects all successful investors follow, irrespective of their field. They don’t sell, and they have a long-term outlook. These are crucial attitudes to avoid chasing quick gains, often leading to fast losses.
Not only does Saylor have this outlook, but investing legend Warren Buffett famously said, “If you aren’t thinking about owning a stock for ten years, don’t even think about owning it for ten minutes.”
Ten years sounds like a painfully long period for most people in crypto, and the truth is that the cycle in this market is faster and more violent than equities. While you don’t need to hold crypto for ten years to see huge gains, you need to keep tokens for longer than ten minutes.
This is why borrowing and lending platforms such as Paribus play a vital role in the ecosystem and will become even more important when the bull cycle starts. Both holding and selling crypto are uniquely challenging.
Holding tokens is different from holding cash because, in general, they only do little. Having the ability to deposit them into a lending pool and generate a yield on them is an easy way to earn passive income, irrespective of whether their value is increasing or dipping.
However, nothing in crypto is without risk, which is why DeFi is essential. As soon as tokens are deposited into a centralized fund, you immediately lose control of them. Whereas, using Paribus keeps your tokens under your control. They are locked into a smart contract, and at no time do you have to hand over your private keys.
Likewise, selling is tricky because you always fear that the price will increase after you sell. Instead of selling, being able to use them as collateral for a loan gives people access to liquidity at the time they need without having to let go of their tokens.
Whether someone is borrowing or lending, platforms like Paribus can help grow their crypto portfolio without the need to time the market. As more investors embrace DeFi, borrowing or lending will become second nature rather than selling tokens. This will allow newcomers and seasoned investors alike to grow their portfolios in the same way as Warren Buffett and Michael Saylor.
