What it takes to be a cryptocurrency investor?

Do you want to become a successful cryptocurrency investor? If the answer to this question is yes, you must continue reading this post where I will share the top 5 traits of a successful crypto investor in the cryptocurrency world. Learning the cryptocurrency terminology isn’t enough to succeed in this world. You must follow and master these traits to be a successful investor. Let’s explore them.

Traits of a Cryptocurrency Investor:

• High Emotional Intelligence
• Clarity on Fundamentals
• Attachment to Price Action
• A Real HODLer
• Lose it all Attitude

High Emotional Intelligence:

Before the world knows you, you should know yourself. Emotional intelligence is defined as the ability to use, understand and manage your emotions in a way that can benefit your life and your surroundings. It contains an important ingredient of self-awareness and motivation. A person with a high level of self-awareness is capable of making the right decision for himself, especially in tough situations.

He is well aware of his actions and their possible outcomes. He remains unaffected during the euphoric or drawdown phase. That’s exactly what this industry demands from a cryptocurrency investor. The price actions are so volatile, they can blind the investors. Only a stable mind has the power to penetrate through these runs.

Clarity on Fundamentals:

Buying the hype is an initial part of the learning curve. A real cryptocurrency investor knows where to dig his shovel to find the Gold. When it comes to cryptocurrency, the Gold rests in the fundamentals of the coin. An investor must take time to study the following parameters before investing –

1. Problems addressed by the coin
2. Total circulation limit
3. Project Founders
4. Competition
5. Current Valuation

1. Problems addressed by the coin:

It is very important to understand the reason behind the creation of a cryptocurrency project. Ask yourself –

• Why is it created?
• Does it solve a real-world problem?
• Why should people put their money into it?

These questions will clearly help you differentiate between the good coins vs shit coins.

2. Total circulation limit:

Who is holding the majority stake in the crypto project that you’re about to invest in? Does the coin have a limited supply or an infinite supply? As a rule of thumb, coins with limited supply spur demand and if it has potential, the price will increase proportionally as the demand rise. For example, Bitcoin has a limited supply that is capped at 21 million while Dogecoin has an infinite supply.

3. Project Founders:

Find out the team running the show behind the curtains. Study the key founders, their background, roles and responsibilities. You can look at their Linkedin profile to find out their relevant experience. Project founder plays a pivotal role in the success of any crypto project. For example, the backbone of the Polkadot Crypto (DOT) project i.e Gavin Wood was also the founder of Ethereum. Hence, a hint of trustworthiness right there.

4. Competition:

Is there a project better than the coin you’re about to invest in? Always take note of competitors, that’s where you may find the hidden gems. Take for example VeChain (VET), a perfect project solving the supply chain issue already has mainstream competitors like IBM and other tech giants. Likewise, Harmony (ONE) is a direct competitor to Zilliqa (ZIL), both addressing the scalability issues.

5. Current Valuation:

Is there any scope of growth in the future price action or Are you already late to the party? Understand the coin’s valuation and find out it’s MarketCap to estimate the future potential.

Attachment to Price Action:

A crypto investor is never attached to price action. By this I mean, detachment from daily price action. Once you did the research, checked the fundamentals, it’s time to make an exit plan before entering the market i.e decide at what price point and volume you will dilute your position and book profits.

This is the only way to enter the cryptocurrency market. Else, the fear of bear market and the excitement of bull market will drain your emotional health and cause constant frustration.

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Cryptocurrency investor – A Real HODLer:

Be it stocks or cryptocurrency, an investor always invests in the longer time frames that last at least a decade or above. A crypto investor is the real HODLer. That’s the reason drawdowns or bear cycles does not bother him since the goal is always focused on the long term reward with the exit strategy in mind.

Newbie mistakes HODL with the waiting period to take out profits when the candle turns green. That’s actually trading not investing. Red or Green candle, the target matter the most for an investor.

Lose it all Attitude:

When I say lose it all, I mean you as an intelligent investor have taken the risk factor into consideration and invested only the portion of your amount that you’re willing to lose. This is exactly what the top cryptocurrency investors have in common.

Only invest what you can afford to lose, no more than that. Have a breakeven strategy in mind i.e at what point you will take out the money that you have invested and let the profits run till you hit the exit target.

Remember these traits when you log in to a cryptocurrency exchange to invest your money into the right project. In the next post, I will talk about how to choose the right cryptocurrency investment. Do remember to opt-in to receive my newsletter and check out all my posts on Cryptocurrency.

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