Crypto Investing on a Budget: COMPLETE 101 GUIDE!! 💲

picture this you have some cash that you want to throw into crypto you've done your own research about a few coins and tokens and have identified your top crypto picks for one reason or another you're only able to invest in one or two of the multiple cryptos you think have serious potential so which ones do you choose now this is a common dilemma faced by crypto investors and it's also one of the most common questions i get in my bi-weekly amas on instagram that's why today i'm going to tell you about a few key factors to pay attention to before making that final decision so that you get the most bang for your buck [Music] i know it's a drag but there is a disclaimer i need to flag everything in this video is for your education and entertainment because i am not a financial advisor and giving financial advice would result in my arraignment just so you know i'll be using a few coins and tokens as examples in this video so don't take their mention as a sign to yolo if this channel is foreign to you my name is guy and crypto is what i do the coin bureau has some of the highest quality crypto content on youtube from news to coin reviews to market moves and crypto tools you'll find everything you need to get to the moon if you want to conquer the crypto market subscribe to the channel and ping that notification bell to get started i've sprinkled some time stamps in the video timeline which you can use to skip ahead to any juicy topics you find watching the whole way through will give this video a boost as i'm sure you already know and with that out of the way let's get this show on the road i want to start by answering the obvious question why not just invest in all the cryptocurrencies you're interested in well there are a few reasons for starters you might not have enough cash on hand to make diversifying your investment worth your while for example let's say you have 100 and you invest it evenly into 10 crypto currencies so 10 in each imagine that after one month one of those cryptocurrencies has gone up by 10x another one by 3x five of them stayed the same two dropped by fifty percent and the last one went to zero your total profit in this hypothetical scenario would be much smaller than if you had invested your initial one hundred dollars just between the two cryptocurrencies that source serious returns now obviously knowing exactly which cryptocurrencies will pull a 3x or a 10x is much easier said than done but this can be estimated with some accuracy using the factors i'll be discussing later in this video another reason why it might be better to invest in just a few of the cryptocurrencies you're interested in has to do with fees specifically exchange fees and transaction fees whenever you buy a cryptocurrency you pay a small fee many crypto merchants also force you to buy a minimum amount that could be greater than what you're willing to spend on a single crypto in terms of trading most cryptocurrency exchanges have a minimum trade amount in the case of binance it's not possible to trade less than 10 of any cryptocurrency you'll also probably want to hold your crypto in your own personal wallet until you sell and the minimum withdrawal amounts and fees for some cryptos can be very high on some exchanges transaction fees are usually less of an issue unless you're planning on buying bitcoin ethereum or an erc20 token btc transfers can cost as much as 50 dollars and the ethereum gas fees you'll have to pay to transfer a token like ave can exceed a hundred dollars when the network is congested the last reason you might want to consider choosing a smaller number of cryptos to invest in is for practical purposes keeping up with updates news and price action for more than a dozen cryptocurrencies can be difficult to do and missing one of these could mean the difference between a 2x and a 10x return if you're wondering i currently hold 17 cryptocurrencies as part of my personal portfolio if i held much more than that i know i wouldn't be able to stay up to date even though crypto is my full-time job now if you want to know why i hold the cryptocurrencies i do well i happen to have a video about that which you can get to using that link in the top right now back to the task at hand you've got a bunch of cryptocurrencies you really want to invest in but can only choose a few if you like you can write out these cryptocurrencies on a piece of paper and cross them out as you follow along with this video the first step in your triage process is to ask yourself why these cryptocurrencies are on your list to begin with if you want to invest in a cryptocurrency purely because you've been led to believe that it will go up in value due to hype then you can immediately scratch it off your list while there is a chance that the dog themed coin or token of the day could rise to new all-time highs tomorrow this is a gamble and not a strategic investment decision that said lots of social engagement and interaction is crucial for the price action of a cryptocurrency coin or token and this is the second thing to factor into your decision there could be a cryptocurrency on your list that is objectively the best by every possible measure but if it has no online reach or community base then it may as well not exist the easiest way to check if the cryptocurrencies on your list have sufficient engagement is to check their twitter followings and watch list counts on coin market cap for reference most cryptocurrencies in the top 100 will have twitter followings and cmc watchlist counts of more than 100 000. cryptocurrencies in the top 200 will have twitter followings and cmc watch list counts between 10 and 50 000. take note of whether the cryptos on your lists meet these minimum thresholds if you notice one of the cryptocurrencies you're considering has a remarkably low following compared to its ranking then there is a chance that a lot of the price action you're seeing is manipulation after all if there is hardly any community engagement then who the hell is doing all the trading shady price action is usually quite easy to spot on coin market cap and coin gecko dead giveaways are low trading volumes with sudden spikes and limited exchange support for reference most cryptocurrencies in the top 100 have 24-hour trading volumes in the billions or at least the hundreds of millions those in the top 200 have 24-hour trading volumes in the hundreds of millions or at least the tens of millions now again take note if you see any abnormalities here for the cryptos you're considering once you've established that the cryptos you're examining have a decent amount of social engagement that isn't just hype the next step in your triage is to check supply sources and demand drivers broadly speaking there are two supply sources in cryptocurrency inflation and vesting i.e the unlock periods for any coins or tokens allocated to private investors or the team behind the crypto project if we're being technically accurate almost every single cryptocurrency on the market has some amount of real inflation even if it has a maximum supply since new coins or tokens are being created every day most cryptocurrencies have levels of inflation that range from five to ten percent others such as tokens you earn from yield farming and d5 can have annual inflation rates in the hundreds of percent inflation isn't really a problem if you're only planning on holding a cryptocurrency for a few weeks or months you can also sometimes offset that inflation while you wait to sell by staking that coin or token however inflation can have some serious implications when you couple it with a vesting schedule and this is something that is often overlooked by even the most experienced crypto investors as i discussed in my video on tokenomics most cryptocurrencies we see today were pre-mined meaning the founders created some or all of the supply of that cryptocurrency in advance usually only a very small percentage of that initial supply is sold to retail investors like you and me with the rest going to venture capitalists private investors and the team behind the project this is why most cryptocurrencies have a low circulating supply and you can usually check how that cryptocurrency was initially allocated using ico drops or massari the coins or tokens allocated to private parties usually have a lengthy unlock period to prevent everyone from selling too soon after the coin or token starts trading because it would crash the price while vesting schedules come in all shapes and sizes the main thing to look out for is any large vesting cliffs because this sudden release of tokens in such a short period of time often suppresses price action using polygons matic token as an example we can see that its price seems to have stagnated in the first week or two after each vesting cliff as private investors sell some of their unlocked tokens the worst part is that many cryptocurrency projects allow their initial investors to stake their coins or tokens while they are vesting in other words they are earning inflationary rewards while they wait in some cases these coins or tokens have been vesting for years and sometimes the inflationary rewards from staking began accumulating well before that crypto even began trading on the market this can turn an initial allocation of 10 million tokens into an actual allocation of 12 or 15 or even 20 million tokens by the time they're unlocked when that vesting cliff comes a crash could come with it if you see a coin or token on your wish list that has a high inflation schedule coupled with an aggressive vesting schedule wherein staking was possible you might want to count it out that is unless it has strong demand drivers while there are multiple demand drivers in cryptocurrency two of the most powerful are use case and institutional demand in terms of use case btc's primary use case is as a store of value whereas eth's primary use case is to pay for gas fees on the ethereum network the robustness of the bitcoin network and the size of ethereum's ecosystem is why there is a constant demand for both even if the cryptocurrencies you're considering have high inflation and aggressive vesting schedules it is very possible that the demand for some of them could be high enough to overcome that supply shock polygons matic token is again a good example of this even with vesting matic has been flying lately and that's because people want to use ethereum dapps with cheaper fees on its layer 2 blockchain now if you're lucky some of the cryptocurrencies you're considering might be on the radar of institutional investors like retail investors institutional investors are starting to get more comfortable with altcoins and have been getting exposure through various exchange-traded products like greyscale's crypto trusts grayscale has been buying up billions of dollars of cryptocurrency on behalf of its clients and it's currently in the process of getting confirmation for almost a dozen more trusts i'll leave links to a few of those trust filings in the video description so that you can check if one of your crypto picks is on the list pro tip be aware that many crypto projects will shill their institutional connections and partnerships even though they have no practical effect on their coin or token do extra research for these claims when examining the cryptocurrencies on your list ask yourself if there are any use cases beyond speculative retail investing that could push up the price of those coins or tokens ideally the demand coming from the use case should be real something long-term and not due to a short-term incentive of some kind once you've identified those use cases you have to honestly ask yourself whether there are other crypto projects competing in that niche that are doing a better job or could do a better job in my experience some of the best cryptocurrencies are those that have a practical use case in a small niche without much competition travala's ava token comes to mind here anyways the problem with most cryptocurrencies that have a strong use case or institutional investment is that they have seen most of their growth for this bull market so this brings me to the final factor you need to keep in mind assuming the cryptos left on your list have high social engagement with minimal hype and demand drivers that outweigh its supply sources the last thing to check for is growth potential now let's start with a reality check the bull market technically began in may last year and we have anywhere between four to eight months left before this one is over unfortunately most cryptocurrencies have gone up by 10x or more already on the bright side though even large cryptocurrencies like btc and eth will likely double and possibly triple in price by the end of the year as i mentioned earlier though a 2 or 3x on a small investment isn't a life-changing amount and you'll lose a lot of that money in exchange fees and transaction fees if you go with btc and eth luckily for you there are still dozens of cryptocurrencies that could 10x or more and a few of them might be on your list start by organizing the remaining cryptos on your list by market cap from largest to smallest as a general rule of thumb the smaller the market cap the more potential it will have to grow the trade-off here is risk smaller capitals will be very volatile and there's no guarantee that they'll pump next open up the coin market cap or coin gecko pages for each of those cryptos again and check to see what exchanges they're trading on if they're trading on good exchanges but not binance or coinbase then there's a possibility one of them could be listed there if they continue to see community growth and development now while i'm not sure about binance's listing criteria i recently made a video about coinbase's listing criteria which is linked to in the top right so if you have time open up a new tab and watch it after this video this will help you to analyze if any of your cryptos meet those criteria this is because being listed on a grade a exchange means more investment and the announcement alone will pump the price besides market cap and potential exchange listings another growth metric you can use is a crypto projects roadmap these can usually be found on their websites and if not try their telegram group if you're lucky you'll get a roadmap with detailed dates or at least estimates as with listing announcements you can expect the price to pump when the crypto news picks up on the update the final growth factor you can check is basic price analysis there are still many cryptocurrencies that have yet to re-test their previous all-time highs from the last bull market although it's not guaranteed that they will push past these all-time highs if you can see that the momentum is there then it is possible that this could happen conversely you might find that the current prices of some of your cryptos barely register on their longer term price history if the cryptocurrency you're looking at is newer has no previous all-time high and has been in a continuous uptrend that is definitely a very good sign so by this point you should have your list narrowed down to just a few cryptocurrencies that are worthy of your cash all that's left is figuring out the perfect time to sell and you can watch my guide using that link up there in the top right deciding which cryptos to invest in can be a daunting task when you have limited cash on hand after all there are dozens of promising cryptocurrencies on the market and new ones spring up almost every other day in a perfect world you would invest in all of them and some of us are lucky enough to have had the ability to do that even so i really think that being invested in more than 20 cryptocurrencies is seriously pushing it the crypto market moves fast and you need to be able to keep up with your investments not only that but you need to have enough knowledge about each project to make good decisions on the fly now as much research as i've done i sometimes feel like i've barely scratched the surface with many of the projects i've covered thankfully it doesn't take much research to figure out if you're dealing with a crypto that's all hype and no fundamentals while online engagement is arguably the most important metric to consider when deciding between cryptocurrencies it is by no means the only one you should be examining the ideal cryptocurrency should have more than enough demand because of a strong use case or institutional investment to overcome the supply increases it sees from inflation and vesting sales the truth is that there aren't many cryptocurrencies that meet this basic supply demand threshold and chances are that this is where you scratch most of your top picks off your list with a bit of luck however you were left with a handful of coins or tokens that seem to meet all of these criteria and still have lots of potential to grow if your list is completely empty then you better head back to the old coin ocean there are over 7 000 cryptocurrencies out there so i'm sure you'll find something just be patient and remember to do your own research if you wanted to save 20 on trading fees for life i have a cracking deal for you at binance hit that link in the top of the description to take advantage of that exclusive offer you can thank me later if you enjoyed today's video be sure to smash that like button and remember to subscribe to the channel and ping that notification bell so you don't miss the next one now i'm curious did any cryptocurrencies on your wishlist make the cut if so let me know by leaving a comment down below on your way there be sure to visit the video description that is where you'll find links to my twitter tik tok and instagram as well as my telegram channel where i give you daily crypto updates and my weekly newsletter where i give you the tips and tricks you need to tame the crypto market if you're feeling stylish you can even click that link to the coin bureau merch store to find six swag like this and more that's all i've got to say for now thank you so much for watching and i'll see you soon ciao you

Channel: Coin Bureau

Views: 637,272

Rating: 4.9624872 out of 5

Keywords: Bitcoin, Ethereum, BTC, Crypto, Tokens, Cryptocurrency, Investing, Picking, Blockchain, Projects, CMC, Guide, Education

Id: si5kq7TFjjg

Length: 19min 41sec (1181 seconds)

Published: Thu May 20 2021