The following article is not investment advice. It is the true story about the current altcoin season and how I invested in it. Famous sayings of Warren Buffett about investing is "Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1." When I invested in altcoins, I tried to remember both rules.
To minimize the risk of losing money, you can build a balanced portfolio of altcoins and think of it as a single investment. In my case, I decided to select 20 coins and bought each of those in equal sum. In that way, if some of those fail, I could cover those losses with a 10x gain of others. I also decided that the market cap should fall between 2-50 million dollars, so even smaller amounts could significantly increase their value. To find good coins in my portfolio, I skimmed thru nearly 500 coins and made a fundamental analysis of interesting ones.
One other good investment rule is to buy low (undervalued) and sell high (overvalued). It might be impossible for any human to predict where the lowest and highest points are, but a good strategy can replace that. There seems to be a pattern that repeats on many coins. There is a lot of volatility right after they came tradable in exchanges. Then the value stabilized, and little while it starts rising. That is the point where I buy. Sometimes, that spot is already history; I bought coins after significant dips in those cases.
Also, other metrics affect when I buy altcoins. One is the Bitcoin dominance metric. A higher value means a more suitable time to buy altcoins because when dominance moves lower, altcoins gain market cap. Even better is the altcoin season index, which you can found here. On that index, I try to time my purchases on Bitcoin seasons. I bought my positions during December and the first week of January.
The next thing to do is take your original investment back when the coin value is 2-4 times the initial value. That is absolute protection against losses. Whatever happens after that, your initial investment is safe, and you still have at least half of the original altcoin tokens left for future gains.
After securing the original investment, I collect 1/3 as profits each time the coin value doubles. This way, I don't need to guess absolute top. When altcoin season starts, I already have collected quite handsome profits, and a large part of the token value is untouched. During altcoin season, I take 1/3 of value as profit for each time value rises enough. Yes, I know it is a vague statement, but there isn't any better description of that.
My strategy is not to get the most profit but to make sure that I can't lose money and get lots of profit wherever each altcoin tops. In this season, I have 20 altcoins in my portfolio. One of those has lost 30% of the value. All others, I have already taken my initial investment out, and for 12 altcoins, I have already taken some profits.
The biggest problem in my plan execution was high gas fees. Initially, I bought tokens from Binance and Uniswap, and I intended to sell them back in the same exchanges. High gas fees, however, would take a significant portion from profits in Uniswap. So I adapted my plan by creating accounts on two centralized exchanges and selling tokens there.
If you get interested in trading altcoins, my opinion is that this season is too late for you to start. It might be better to wait until the next bitcoin season. At least if you are following Warren Buffett's advice, avoid losing your money. Follow the altcoin index, and you won't miss the party next time.
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