Cryptocurrency Investment Strategy

What is a Cryptocurrency Investment Strategy?

Trading in cryptocurrency is an increasingly common and lucrative investment strategy for a wide range of people since the blockchain technology the cryptos (cryptocurrencies) use to generate value also keeps their investments secure (see the parent article for more information). A cryptocurrency investment strategy, then, simply refers to the process of investing in these alternative currencies.

While Bitcoin is the most famous cryptocurrency, it is not the only one. Alternative cryptocurrencies—called alts or altcoins—promise similarly high rewards for investors. These altcoins may be direct Bitcoin competitors deriving value from mining techniques or from being pegged to stable traditional currencies. They may also be tokens, a type of currency provided by corporations that may or may not come with shares in the company itself.

Why Is It Important to Have a Cryptocurrency Investment Strategy?

Though new, cryptocurrencies markets are both fast-growing and secure; even sovereign nations have created or are considering creating their own cryptos. This new market has captured the imaginations of millions of people around the world, who have already begun their own investment and trading plans. For most, they have found great success.

What Internal Data Should I Have for a Good Cryptocurrency Investment Strategy?

As with any investment strategy, the best place to start is the individual’s goals, needs, and resources. Do you want to enhance your retirement plan? Do you have an opportunity to trade in a company’s tokens while using the company shares that come with it to influence the company’s actions?

What External Data Is Essential for a Good Investment Strategy?

Essential external data begins with general investment knowledge, especially about the stock market as crypto investments operate more like forex trading than other, beginner associated, investments.

Also important is knowledge of blockchain technology and the type of cryptocurrency you choose to use, as mentioned above. Some resources can be found closer to the bottom of this article, and in the community here on Data Hunters.

What External Data May Prove Useful for a Good Strategy?

An additional facet of a good overall investment strategy is not to put too much resources into cryptos. In other words, a good cryptocurrency investment strategy should remain just one part of a financial portfolio. This is especially true for cryptos due to their particular market volatility.

What Are the Main Challenges of this Use Case?

As noted, cryptocurrencies are speculative by nature and therefore highly volatile. Most are not pegged to stable national currencies and, while the decentralized nature of the market appeals to individualists attracted to this type of investment in the first place, the lack of oversight and regulation is very risky.

Interesting Case Studies and Blogs to Look Into

World Coin Index
Nerd Wallet: How to Buy Bitcoin

Tangible Examples of Impact

Match-Trade Technologies announced on Tuesday the launch of its new digital currency data feed for 25 popular cryptocurrency pairs.

The company detailed that the data feed uses a proprietary algorithm to ensure prices’ speed and accuracy in various conditions, and the feed’s liquidity is sourced from “biggest spot/futures exchanges and the most prominent institutional market makers.”

Finance Magnates: Match-Trade Technologies Launches Cryptocurrency Data Feed