Cryptocurrencies are starting to gain traction lately, especially after the devastation caused by the latest bankruptcies. In a new interview with Insider, 29-year-old crypto investor Ariel Fox reveals the wisest choice she’s made with her investments, and 2 choices she regrets.
Investor who bought Bitcoin in 2009, now these cryptocurrencies are also betting
The young investor, who earns a lot with cryptocurrencies, thinks that cryptos are more profitable than traditional markets. “There are many people who have access to information about stocks in the market that the average individual investor may not have,” Fox says. The cryptocurrency market is more friendly to individual investors in this regard. In his own words, “if you get into certain crypto projects at the right time, you can profit from it. It’s a bit speculative, just like stocks”.
Fox first heard of Bitcoin when it was first released in 2009, but didn’t start investing in crypto until late 2020. He says he learned a lot along the way.
Fox has some advice for people who are considering investing in cryptocurrencies but are very new to the field. Here he gives some important advice to his followers under 7 headings:
Read a lot before investing
According to Fox, the first step to investing in cryptocurrency is like any other financial decision: Find out what you’re trying to do before you do. “It’s a good idea to read as much as you can before investing a substantial amount of money anywhere,” he says. By reading and researching, you will learn more about individual cryptocurrencies and be able to make more informed decisions about which investments are right for you and your level of risk tolerance.
“Stablecoins are good for generating smaller returns on your investments with the interest you earn,” Fox said. However, you should also be careful with stablecoins. Fox has invested heavily in the Gemini stablecoin (GUSD), but others like Terra have sunk price constants and riskier coins like Bitcoin.
Use referral code
Fox said that if you are going to invest in cryptocurrency for the first time, you should look for referral codes to get the bonus. You can get a referral code from a friend who has already invested in that platform or search it online. There is a lot of code out there, so take the time to browse through them and see which one suits your investment interests best.
Don’t invest in anything you’re not ready to lose
“Don’t invest in something you’re not prepared to lose,” Fox said. “I think this is definitely true, especially for smaller value cryptocurrencies and smaller projects that haven’t been in the market that long or have fluctuated a bit more,” he added.
Don’t panic sell
With all the volatility that comes with cryptocurrency, it’s really tempting for some investors to be timid and sell whenever their portfolios are bearish, but Fox said it’s best to handle volatility. Fox said, “Don’t panic sell. It’s not a loss until you sell it, that’s my belief.”
Make profit while there is profit
One method that has served Fox’s portfolio well is a concept known in cryptocurrency circles as “moon bagging”, which involves taking profits from rising cryptocurrencies and redistributing those gains to other cryptocurrencies while keeping the initial amount you invest in that coin.
In a situation where a $300 risky investment is doubled, Fox said, “I will now sell $300, but still keep $300 in the same cryptocurrency. This 300 is called ‘moon bagging’ and you basically use it as you go up.”
By doing this, Fox was able to diversify its crypto portfolio among many other cryptocurrencies and at the same time continue to profit from the coins whose price continued to rise. Fox added that this process is beneficial “especially in a bull market.”
Remember that not every crypto phenomenon has your best interests at heart.
Fox said there are a lot of sketchy crypto phenomena out there, and it’s important to remain skeptical and question the reasons behind the information you receive. “Some get paid to support certain projects that are not necessarily reliable because they have livelihoods. There are some voices in the crypto market that I trust more than others.”
Fox said it will look for projects and cryptocurrencies mentioned on Twitter, Reddit or other social media sites, and will pass if it doesn’t see a lot of buzz or excitement from a large number of investors. “I like to see more interest in a project from a larger group of people before deciding to invest in a project,” Fox said.
Do not try to determine the market time
“I don’t try to time the market at all,” Fox said. “When I started, I tried to time the market. I did some more experimenting with buying and selling the dips, holding the cash and buying it again when it went down.” However, Fox said he regretted trying to do so and that it wasn’t as profitable as getting rid of the fluctuations in his hands.
“I realized that it’s not as profitable as it is with stocks, just sit back and watch,” Fox said. “When I first started individual investing, I tried to time the market a bit with stocks. I’ve found that this isn’t always the most reliable – especially when it comes to crypto.”
Transferring money between websites was the smartest thing he did
Fox said that the smartest thing he has done with cryptocurrencies is to deposit them on different websites to earn more interest. He initially kept his Bitcoin investments on Coinbase, but later distributed them to some different platforms “to invest in other currencies. One of them was BlockFi.
Fox added that the interest yield is why he keeps a large portion of his portfolio in the dollar-backed Gemini stablecoin (GUSD). Currently, his GUSDs are consistently earning interest between 7% and 9%. However, there were some mistakes here. BlockFi, which is dependent on FTX for a $400 million line of credit, filed for Chapter 11 bankruptcy protection shortly after FTX did the same in November.
Another choice that Fox regrets making with his crypto portfolio is to sell certain currencies early as their prices skyrocket no matter how high they go up later. However, he added that it is really difficult to time the market in general and he does not recommend it. Sometimes it was a problem to just watch the rises as he sold early.
Cryptocurrencies have also wasted their huge profits
Another of Fox’s regrets was that he hadn’t learned about the “gas fees” sooner. In cryptocurrency transactions, the gas fee is the cost an investor incurs when transacting on Ethereum or converting cryptocurrencies. Transactions on Ethereum require a lot of computational energy and the gas fee at any given time can vary depending on many factors.
“When investing in a project, I had to convert Ethereum to this other coin and I had to pay a fee to convert it. You can time the gas fee to be lower, but I didn’t know. “I spent so much money on gas fees that I didn’t have to spend it because I traded so much, and I did it at a very busy time in the market,” he says.
