10 Tips to Keep Your Crypto Portfolio Profitable During a Crisis

The global economy is on freefall due to the novel Coronavirus and that has resulted in millions of people getting laid off at work worldwide. You might want to protect yourself by getting an extra source of income and cryptocurrency is the best option. 

Probably you might have noticed Bitcoin outperforming Berkshire Hathaway stocks and gold in times of COVID-19. Here are some tips for investing in crypto during this global crisis:

Diversify your investments

One of the most important tips of keeping a crypto portfolio profitable during a crisis is not putting all your eggs in one basket. 

Instead of having only crypto investment should not even cross your mind because when that one cryptocurrency fails, the entire portfolio will go up in smoke. During the years, there has been a lot of cryptocurrencies that have been developed and made available to trade. 

That gives you enough options to build a solid portfolio that should remain profitable even in times of crisis. Cryptocurrency traders have come a long way since Bitcoin was the only player in this industry, there are a lot more you can trade now. Diversifying the portfolio can also help pass the break-even point much sooner than expected with only one type of coin.

Start now

Right now, there is a lot of panics, and people are selling their cryptocurrencies, which means the prices are most probably going to drop. Therefore, there is no better time than now to start investing in cryptocurrencies and building a profitable portfolio.

The whole idea of investing in crypto is buying cheap and selling high and right now, you can get very cheap cryptocurrency to invest in. 

Conduct your research on the cryptocurrency coins you will invest in and choose the best ones that are currently cheap. Once the market starts normalizing again, the profit will start streaming in as the price surges. If you have enough savings to invest in cryptocurrency and then some, get a trading platform ASAP to start investing during this COVID-19 crisis.

HODL

The internet is full of successful day traders that purportedly made millions from this trading strategy. Although it may have worked for them, it might not be the best strategy because of the nature of the market whenever there is a crisis. 

During the COVID-19 pandemic, the prices might start to get slower, which means there may not be much action on the market to trade daily. 

HODLing, however, can return great results that will satisfy you. The term HODL was coined by an investing professional that misspelled holding and it was then used as an acronym. 

The acronym HODL stands for Holding on for Dear Life and that is exactly what you must do. Over a longer period of time, there will be better results and a lot of successful investors vouch for this strategy.

Keep a close eye on the portfolio

Serena Owen is a custom essay writer in finance and economics for Dissertation-today.com and her current research areas is the role of cryptocurrencies and blockchain in FinTech. In her view, to have a successful and thriving portfolio, you should be able to monitor it in the best way possible. 

She suggests that monitoring the portfolio will help with identifying seriously underperforming crypto coins that you should examine in finer detail. You will also easily identify how the overall portfolio is doing and what can be done to improve it. 

There are various portfolio management apps that you can use to monitor the progress and performance of your investments. Being alert to every significant movement can help you act swiftly according to the trading plan you established. Some traders do not like sophisticated apps, so they just use a spreadsheet to track their portfolio. 

Do not be too impressionable

Everyone has his own unique opinion about the cryptocurrency market but at times, some of these opinions can have a lot of followers. 

For example, a lot of people may identify a certain cryptocurrency and flood to it, making its price very high. Following that hype can be catastrophic because just when you join the hype, that's when everybody will be leaving. 

The results will produce a major loss because the coin will plummet right down to the floor of the market. You can easily avoid that by remaining mentally level at all times and conducting your own research instead of following the crowd. 

Most of the noise in the market is caused by greedy traders and following their example does not lead to sustainable portfolio management.

Carefully choose the crypto to invest in

Investing has always been a methodical process full of calculations and suppositions and that has built a lot of successful investors. 

The crypto market is no different; it operated on the same principles of conducting research and due diligence before betting your coins. There is a lot of research to conduct, which is another reason not to follow the crowd no matter what. 

For example, traders need to ensure that they have read the cryptocurrency’s whitepaper from cover to cover. That will give them insight into the success rate of that particular cryptocurrency. If the whitepaper is not well-written or does not highlight the real value of the cryptocurrency, it might be prudent not to invest in it.

Protect the crypto from hackers

A lot of traders believe that the cryptocurrency is safe when it is on the exchange because the developers have security measures. 

They indeed try to employ the best security techniques possible but some attacks are just too sophisticated to block them. Therefore, you should take the initiative to ensure that the hard-earned money invested in cryptocurrency is safe and sound. 

That applies very much in cases of a crisis because there are a lot of greedy hackers out there that want to steal down to the last penny. 

The best way to protect the cryptocurrency you bought is by keeping it away from the reach of hackers. You can accomplish that by using what is called a “cold wallet,” these wallets will keep the crypto safe and portfolio profitable.

Mentally prepare yourself for potential losses

Everyone is always caught off-guard when incurring a loss and that makes it very important to prepare yourself beforehand. Remember that the market is random and there is no surefire method of predicting how it will go. Whenever your portfolio gets a loss, do not start second-guessing the strategy you have been using successfully. 

The U.S Navy SEALs have a saying that goes, "You don't rise to the occasion, you sink to the level of your training.” That can apply to you when trading after incurring a loss, the best way to deal with a situation like that is remembering your training. 

What you learned and what has been effective should not be obscured by one or two losses, so don’t act on impulse but on knowledge. 

Plan entry and exit points

Risk management is a very important aspect of managing a profitable portfolio and it includes knowing when to get in and out. You should carefully analyze when to get in to avoid buying when a market is going to dip further. 

Also, you should know when to get out in case the market does not go in your favor and even if it does. There are risk management tools on every trading platform called stop loss and take profit. 

They were developed and featured in the platform for a reason so use them to your fullest advantage. Once you have identified where you are willing to cut losses, place the stop loss tool there and it will automatically do so. The same applies to take profit; you should plan the right point to take the earning made from the investment and use the relevant tool.

Use backtested methodologies

There are a lot of trading strategies that are recommended on the internet and quite frankly, most of them are ineffective. Traders that follow their direction often wind up with nothing left but broken dreams and empty wallets. 

Therefore, you should not go for the trading strategies recommended by “gurus” living a flashy lifestyle. Rather listen to the technical traders and economists that have a better understanding of the market.

Use their recommended strategies but ensure that they are backtested and proved to be working successfully. You can also try around some strategies and see if they are effective for you using a demo account. That will help you see how the strategy works in a real-life environment and if it is what you are expecting.

The bottom line

You can invest in cryptocurrencies even during a global pandemic that negatively affected the markets. With these cryptocurrency trading tips, you will have the ability to successfully manage a profitable portfolio while the whole world battles with the COVID-19 crisis.

Author Bio:

Serena Dorf has been working as an academic essay writer and editor for Best dissertation service in London for 3 years. Her recent published work is essay writing service reviews and the subjects that she loves to write includes business management, technology and finance.