1. Buy and Hold
Buy Bitcoin, don't sell it, don't trade it, just hold it. This strategy has served many Bitcoin investors exceptionally well over the journey. While there have been some serious price crashes along the way, eventual rebounds to new all time highs have always followed, so far. Those who haven't panic sold during the dips have reaped the rewards of the peaks.
Buy and hold is a simple strategy providing that you only invest what you can afford to lose. When you don't abide by this, things aren't quite so easy. In fact, they can get seriously ugly. If there is a major crash in price, followed by an extended recovery period, you may be forced to sell at a loss if you need the funds. This happened to many people who bought at the peak in 2013 and the losses they took were huge. For those who didn't need to access what they invested and have held until now, the losses never materialized, and incredible gains in price have followed.
There are those who have made their fortunes trading bitcoin, however, they are the minority. Most traders lose, and in a volitile market like Bitcoin, the losses can be swift and significant.
If you are going to trade with peace of mind and keep your shirt if things go south, then only invest what you can afford to lose. Next, either be an experienced trader in other markets, or learn how to trade, read and interpret charts and understand and manage risk. If you go in green then you are taking up gambling, not investing.
3. Buy, Hold and Take Profits
This is a variation of buying and holding, where you hold an amount of Bitcoin that is at least equivalent to your initial cash investment and take out profits when you need them.
The downside to taking profits is that you are decreasing, rather than growing, your Bitcoin holdings over time. A drop in the market can also reduce the value of your holdings to an amount lower than your initial cash investment. And if you find yourself moving money in and out and trying to time the market, you have become a trader.
4. Hold Some, Trade Some
This is where you set aside a percentage of your Bitcoin that you will hold and a percentage that you will trade. Now if you have one or two successful trades, it can be tempting to think that you're an expert and risk trading more of your Bitcoin holdings. Be careful. A series of good trades can be quickly erased by one bad one. Good intentions of a 90% hold, 10% trade portfolio can turn into an 'all in' which usually results in a 'win for the house' so to speak.
Bitcoin to the Moon is a blog dedicated to following the original cryptocurrency on a journey to its ultimate destination.
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