How Buy and Hold strategy help with cryptocurrency investments?

In the financial market there is a large number of projects, businesses and operations available that allow users to start investing, however, a large part of these are considered volatile, or variable income, so a strategy was designed that allows investors can take care of their capital, this strategy is known as Hodl, or holding.

What is an investment?

The term investment corresponds to the fact of allocating capital in transactions, projects, or initiatives, either own or of third parties. The initial part of the investment is when the asset is acquired, or the capital is placed in the project, after which the time in which the transaction becomes profitable begins, thus generating profits, which allow recovery the initial capital.

The time in which an investment becomes successful is measured from the beginning of acquiring income, however, this interval in which the business, asset, or project generates value, is generally undefined, which is why some inexperienced investors withdraw from it. your projects before they are really profitable.

Strategies to invest in cryptocurrencies

The acquisition of cryptocurrencies is a financial activity that can be done through different operations, the simplest way to invest is through the wallets, in which you change an amount of a conventional currency, for another currency, which can be decentralized, in addition to this, multiple strategies are used to make these negotiations, among which are:

Buying and holding

Also known as Buy and Hodl , this practice is translated as Buy and Hold, is used by investors who are in markets of high economic risk, considered that way because the cost of the asset, business, or investment, varies constantly.

Therefore, maintaining the investment until market values are found for really high amounts, is the basic principle of the strategy, with the aim of generating large profits.

The holding is practiced since it began to notice the irregularity of the patterns in the state of the stock market, this is because it is one of the spaces that has a lot of extremely lucrative business, however, to succeed is necessary have a true investment strategy.

With the arrival of cryptocurrencies in the financial world, the holding company has become more used, since the cryptocurrency owe their value to the principle of supply and demand, therefore, they are under a series of changes in relation to the price of each asset. However, the holding company has been one of the business principles that has generated great profits in this market, because during 2017, investors and holding experts increased their income in a high percentage.

Trading

It is a different practice to the holding, because in the trading are exchanged, or exchange currencies in a shorter period of time, traders study the state of cryptocurrencies, make their investment and it is barely possible to recover the capital invested, these are removed from the market; selling your assets.

Investment in ICOs

The initial coin offering of a cryptocurrency project are a great opportunity for investors, because if the project is really profitable it will have a more advanced growth than others, the ICOs are usually used by the holders, because they participate in the Token sale, when it reaches a high price they recover and multiply their investment.

 

How profitable is the holders’ strategy in the cryptocurrency market?

The profitability of the holding company was demonstrated for those investors who entered the cryptocurrency market at the beginning of 2017, since cryptocurrencies such as Bitcoin, Ether, Litecoin, or others, magnified their price in large quantities.

Therefore, those who kept their investment until the end of 2017 and after it left the market, it is possible that they have taken the holding as a permanent strategy for future investments in high-risk markets.

Disadvantages of the holding company in the cryptocurrency market

The market for cryptocurrencies is highly variable, therefore, some investors withdraw from the market before their strategy begins to be productive.

It is possible that the investor is faced with situations in which the cryptocurrency is not increasing its value, but decreasing it, that is the moment in which an investor must withdraw from the market, thus he will not suffer any loss in his investment.

By investing in the cryptocurrency market..:

After entering an equity market there will be a series of changes, in relation to the state of that market, since it is possible that the asset with which you are investing is in decline or increase in value, to be successful in this market should take into account that:

  • It is necessary to study the behaviour of the asset beforehand, so it will be easier to know the patterns it has had.
  • If you do not know the market in which you are investing, it is necessary to request expert advice, generally, it is provided by brokers or financial analysts.
  • The equity market generates more profits than the fixed income market, this is because the investments will be destined to a market where the final result is unknown, therefore, investment profits increase.
  • No asset increases its value indefinitely, it is possible that they are rising for some time, depending on liquidity, profitability and risk, however, it will not be unlimited.

To take into account at what time it is prudent to invest it is possible to be guided by the price of Bitcoin in 2017, the year started with a relatively high value, however, it increased considerably until reaching USD 20,000, after which its decline began, that was the moment when some holders withdrew from the market and acquired their profits.

However, after that in January 2018 it remained at the value of USD 8,000, where it was considered the new opportunity to enter the market for investors.


Credit: Translated criptotendencia | Image: google

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