3 smart crypto trading strategies that aren't so different from investing in the stock market (2024)

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• A long-term investor suggests treating crypto like a 401(k), investing small amounts regularly.
• Buying crypto and forgetting about it is a more successful strategy than day trading.
• Make informed decisions about each coin's utility instead of blindly following the hype.
• Read more stories from Personal Finance Insider.

Some people think that cryptocurrency is a shortcut to wealth, but it's not always that simple.

Crypto expert and NFT studio director CALV!N of Purebase Studio started mining and buying cryptocurrency in 2013, years before apps like Coinbase and Gemini gained popularity with the masses. Because crypto investors can be vulnerable to theft and violence, CALV!N is using a pseudonym to protect his assets and physical safety. Business Insider has independently verified his identity.

"It was a completely different world back then," he says. "There weren't exchanges that made it easy for you to connect your bank account or store crypto."

CALV!N and his business partner took extra profits from their business and bought bitcoin and litecoin, and started mining dogecoin. He spent $4,300 on mining equipment, $1,700 on the first month of electric bills, and started putting a few dollars into bitcoin and litecoin. "In 2013, we mined about 5 million dogecoins, but it was only worth a couple hundred dollars, so we were losing a ton of money," he says.

CALV!N stopped mining dogecoin and stored it in a crypto wallet. He pivoted to other ventures, completely forgetting he even had 5 million in dogecoin in that wallet. By the time he retrieved the wallet in 2017, it was worth $65,000.

Between 2013 and 2021, CALV!N relied on highly successful trades to build his portfolio, investing only five figures total in the last eight years. Now his portfolio is worth millions.

CALV!N shared three long-term (and stress-free) investing strategies for people looking to build wealth through cryptocurrency — and they're not so different from the best advice for investing in the stock market.

1. Only invest what you can afford to lose

"Unless you're a professional equities trader or someone who's looking at charts 24 hours a day, I would just keep it simple," CALV!N said.

Just like financial planners typically don't advise investing cash you'll need within the next five years (the time horizon is too short to make up any losses), CALV!N cautions against stretching yourself thin to buy bitcoin: "Don't buy crypto with money that you need to live today."

You shouldn't be sacrificing your quality of life just to buy crypto, and if you do, you might not be in the headspace to make rational decisions about your investments.

2. Buy it and forget about it

"Too many people try to make that 300x gain happen in a week or a month, and it could happen. But for the majority of people, it doesn't happen like that," CALV!N says. "A lot of people who have billions or hundred millions in crypto, they're the people that held for seven or eight years."

He says this strategy greatly outperforms day-trading. "My friends and I pooled our resources to buy 40 bitcoins at the beginning of 2020. Our initial investment was $280,000 total and now it's worth over $2,000,000. There's no way we could have made that kind of money through trading."

He suggests treating crypto like investing in a 401(k) for retirement: slow and steady over time. If you can afford it, start with investing as little as $10 from each paycheck, "no matter what the price is." he says. This is a traditional investing strategy called dollar-cost averaging, which helps manage risk. Plus it will save you the emotional rollercoaster of checking the market each day — never a good idea.

3. Know what you're investing in

Learn about each coin's (or token's) utility — what people are actually use it for — before diving in.

Ask yourself: Is this project something that can change the way people interact with tech in the future? Do I see myself using it in the future? If the answer is no, don't invest in it.

It's the same approach you might take to the stock market, investing in mutual funds,ETFs, or retirement accounts: Invest in securities you understand and leave speculation to the pros.

For example, bitcoin's utility is to store value, much like gold and silver. Ethereum's utility is to run smart contracts that provide fraud protection for its users. And there are meme coins that are all hype and no utility, but can provide great rewards.

No matter how you invest, it's important to make informed decisions without getting lost in the hype.