CryptocurrencyOpinion

“I only have $100 to put in crypto, what do I do?”

By March 5, 2018 One Comment

You’ve discovered blockchain technology, you’ve seen the massive financial gains potential, and you want to delve into investing in bitcoin and thousands of other cryptocurrencies. You only have $100 to spare (big amount of money in some countries) and a lot of passion. How do you do it?

In this article I will be taking you through some simple yet effective strategies and give you valuable tips on how you can make a large amount of money from crypto with as little as $100. Firstly, check out How I Began My Crypto Journey for a light beginner’s guide where I take you through major pitfalls and mistakes you need to avoid if you want to be successful trading crypto.

Let me start by prefacing that cryptocurrency trading and investing is hard. The upside is that there is massive gains, but the downside is terrifying to the core because you could lose everything. 1000% in the green is followed by 70% down or even 80–90% drops at times bringing prices back to pre-pump levels. If you get caught in the middle of that and don’t secure profits — you could be shaken out of the space for good. The first thing you should do is have a simple money management system so that no matter what happens you’re never exposed to big risk.

A Starting Plan

If I was starting today, with only $100, I would evenly divide that between the top cryptocurrencies on the market and into trading. You can find most cryptos listed on CoinMarketCap. I personally spend every day on that site, it is incredibly useful to gauge information about market sentiment and discover new opportunities early.

For the plan, just look to the top 10 coins and pick a couple that you like. Then, put $25 into each coin. I would go with Ethereum and Bitcoin. I would also strongly advise that you always have bitcoin in your portfolio. It has the highest possibility of survival and highest chance of becoming adopted worldwide which would bring the price per coin to well over a million dollars.

The other $50 would be used to enter the market on one or two riskier coins for short-term gains. They could be anywhere from the top 100 to the bottom 100. If you’ve done your research on them, enter at the right price, and know they’re legitimate you’ll have a high chance of success. The $50 you put in Ethereum and Bitcoin is your long-term pot that you do not touch. The $50 you put into the other coins is your trading portfolio which you can manoeuvre easily depending on market conditions. Your goal with these shorter-term trades should always be to maximise your long-term holdings of Bitcoin and Ethereum. Always have a healthy divide between your portfolio. That way you eliminate the possibility of a big loss and won’t be pushed out of the space by aggressive price movements. You won’t miss the upside causing FOMO, or fall victim to the downside causing fear and despair.

The Fomo Effect / Image from Dearhairdresser.co

Short-term trades in this case means 3–4 weeks. I generally don’t tend to do more than a few trades per month max. Bottomed out coins are my go-to. Here is an example of a price I would be entering at if the coin had a big event coming up in the next 3–4 weeks.

It’s extremely important to search for coins that have had their price bottomed out ideally over 50–60% down from their all-time high prices. Perfect scenario is if its price relative to BTC has returned all the way back to pre-pump levels. That’s because the risk to the downside is very little compared to the potential profits. You’re literally buying the bottom, the floor of the price. In fact, if you’re just starting out — apart from Bitcoin and Ethereum, you should only buy bottomed out charts. No matter how much you’re tempted to enter a pump that has already started, look away, and search for the next one BEFORE it happens. That’s where you will make most of your money.

Once you triple those $50, put half of it back into your long-term portfolio and repeat the process with the other half. Once you get a bit more capital, let’s say over $1,000 change the split from 50/50 to 80/20 where 80% is held for long-term gains and 20% you continue to try to triple. This is because, if it’s your first year in crypto you might be joining at the beginning of a massive bull run, so all you will experience is amazing gains for the first few months. This will tempt you to keep trading with more money. But when the bull run stops and price turns against you, you will lose a colossal amount of money. I implore you to read this story as a cautionary tale. No matter if you’re investing one hundred dollars or one million, if you don’t have a plan that is consistent throughout all cycles and has a built-in mechanism of avoiding big loss (no more than 20% of total portfolio in trading), you will be killed by the market.

Once you have a solid plan with which to proceed, I advise you to spend a few weeks just learning, reading, and gathering information before starting to trade. This means that you should keep your trading portion in Bitcoin as well, since you will be trading bitcoin for altcoins anyway. Here are some starting resources to help you out.

Valuable Resources

This is not a complete list, there are many more resources that I cannot cover in one post. In addition, there are new ones appearing almost every day. The space is quite dynamic, so always keep an eye open for new ideas and helpful sites.

Exchanges

LocalBitcoins Logo / Image from WeTrust Blog
  1. LocalBitcoins — No matter where you are in the world, you will most probably be able to buy Bitcoin off LocalBitcoins. It’s a trusted site, with verified sellers and buyers. Do not use new unverified sellers. Always make sure that you’re choosing someone with a high reputation and a good history of trades. This will be your entry into the crypto world. Alternatives to this are:
  2. Coinbase (USA)
  3. Bitpanda (Europe)
  4. Quoinex (Asia)

I go with LocalBitcoins first because that’s the closest you’ll get to entering the space in a decentralized manner. You must get into the mindset that this is your money and you’re fully responsible for it. Third party centralized exchanges hold the money for you, but they also hold the private keys effectively owning your coins. Never leave coins you’re investing in on exchanges. Which promptly brings us to the next set of resources:

Wallets

Image From Buy Bitcoin Worldwide

If you’re holding less than $10,000 in crypto, a free wallet interface will do just fine. For Bitcoin you can use:

There are more but for $100 this will do. Here is a starting point of information to learn the basics of what a wallet is:

For Ethereum and any token on the Ethereum network you can use:

There are applications that support both in one place:

For coins that are not at the top of the CoinMarketCap ranking, support will not be as big, so you will have to get a wallet off of their own website instead and store it on your personal device.

Here is a guide on the many different types of wallets, and their advantages and disadvantages: Hobo With A Laptop

It is imperative that you secure your holdings unless you want to end up losing all your hard-earned money to scammers.

Here are some stories to make you aware that nothing (even these wallets) is completely safe and you should be alert. Welcome to the Wild West, I hope you walk out alive:

  1. https://www.reddit.com/r/Bitcoin/comments/7h8jcl/my_blockchain_wallet_was_hacked_and_all_my_coins/?st=jed1aebf&sh=c0fcbb4d
  2. https://www.reddit.com/r/Bitcoin/comments/7cw2uw/how_blockchaininfo_stole_65000_from_me/?st=jed1dm8e&sh=8b9b52fd
  3. https://www.reddit.com/r/Bitcoin/comments/3ibh95/coins_stolen_from_mycelium_wallet_how_do_you/?st=jed1eobo&sh=16274355
  4. https://www.reddit.com/r/Bitcoin/comments/6u4y5z/hackers_stole_8500_worth_of_bitcoin_from_me_in_15/?st=jed1grpz&sh=c1886e1c

Information

The Cointelegraph logo / Image From DIID

This section covers news outlets focused on crypto, influencers in the space, and any sites that offer valuable information early and promptly. Of course, the quickest way to get new information is to be a part of the core community. However, not everyone has the time or the connections to do so. Certainly not for every single coin. This is where these sites come to help:

CoinMarketCap — this is your go-to for finding information about new coins, current trends, up to date sites on coins you’re in, social media presence, market capitalisation etc.

CoinMarketCal — extremely useful site that shows you up and coming events, news, developments of virtually every coin. Its community driven so if you don’t find any news for a coin you like for a certain month you can add the news yourself! You can also leave a wallet address for people to tip you!

Cointelegraph — media outlet focused on cryptocurrency.

The Merkal — same as CT.

Crypto Reviews — reviews for all types of cryptocurrency business services like exchanges, mining sites, wallets etc.

Twitter — crypto twitter is normal twitter, but you only follow crypto personalities. Get in the space and you will be able to stay in the loop with a lot less effort. For example, follow me @crypt0_borat, pick 10 of the people I follow to follow, then from them, pick 2–3 that they follow, and you will have built up a nice little feed. You can go through that every week to gauge the most important things happening. It’s nice to see your coins going up. But if you know WHY you will be able to decide a better exit point. Similarly, when things are going down, if you know WHY, you will be able to make more rational decisions than just blind panic. Things like China banning Bitcoin are hardly a cause for concern since that’s news that has been played out many times already, so you shouldn’t sell. But, information like NEO being too centralized could lead you to exit a position until the core tech and its potential brings confidence back into investors’ eyes. Twitter and the people you follow will help you get the information faster than you would on your own so you can act appropriately before the masses.

Conclusion

Cryptocurrency trading and investing, like anything worthwhile in life, is difficult. Without an appropriate plan you will most likely lose a lot of money. So, draw up your plan, start off small, build up the account and be consistent. Use the resources given here as a starting point. There are more — and better— sites out there to help you increase your odds of succeeding and help you craft your own style. Explore them and find what works for you.

There are four scenarios you will end up in every time you decide to risk money anywhere:

1. Big win

2. Small win

3. Small loss

4. Big loss

Eliminate the possibility of 4 EVER happening and you will already be better than the average.

•••

THANKS FOR READING !

Follow Crypto Borat on Twitter for updates on cryptocurrency trading and news.

 

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