Are you itching to invest in Crypto and blockchain? Hear all the publicity but don’t have a single clue?
Here’s one way you can do it without learning all that complicated technology. Index Funds. (Interested to learn? go here…)
Did you know that you can build your own Crypto index fund of tokens without paying hefty fees to Crypto Hedge Fund Managers?
(Note: CoinZodiaC is unaffiliated with any of the following hedge fund projects. This is not financial advice.)
Cryptocurrency hedge funds are popping up everywhere.
Metastable Capital is just one of the dozens receiving millions in funding. It is one of the many secretly backed by Sequoia and Andreessen Horowitz, prominent venture capitalists. Bitwise launched last year in the summer, is also backed by Naval Ravikant. Polychain Capital alone has raised $210M+ from Sequoia Capital, Andreessen Horowitz, and more.
Coinbase Prime is a powerful cryptocurrency trading platform for institutions. Established for more experienced traders, it’s drastically similar to GDAX.
Metastable Capital is just one of the dozens receiving millions in funding. It is one of the many secretly backed by Sequoia and Andreessen Horowitz, prominent venture capitalists.
Bitwise launched last year in the summer, is also backed by Naval Ravikant.
Polychain Capital alone has raised $210M+ from Sequoia Capital, Andreessen Horowitz, and more.
The problem with some of these Crypto hedge funds is that its costly for the average investor, some of the premiums are at least US $100,000. Investors must also be US accredited. That means you must have a net-worth of at least US$1,000,000 excluding your properties.
Enter Index Funds, mutual funds that track the returns of a particular market index. An index is a group of securities, something like a guarantee for the repayment of the loan. In Crypto sense, securities are the coin offerings or the tokens you receive to serve this purpose.
Of course for big-time investors and professional traders, Crypto index funds are risky and unattractive. There’s no safety net in case of an all-out collapse of the entire Cryptocurrency market.
…But the returns are so attractive, they cannot stay away from it any longer while everyone else is rushing in.
Invest in coins or tokens you believe in and only what you can afford to lose.
So how do you build your very own Crypto Index Fund without any professional help?
- Step 1. Earn some fiat currency.
- Step 2. Buy bitcoin from Anywhere you are in the world, or from your Localbitcoin. (Other options; CoinMama | Changelly)
- Step 3. Study, Research and then Pick your preferred tokens from CoinMarketCap.
- Step 5. Balance your portfolio by allocating based on percentage.
- Step 6. Store each cryptocurrencies securely with a software or hardware wallet (like a Trezor or a Ledger). Don’t Trust exchanges or any “banks”
- Step 9. HODL
We Invest in Coins, not Companies. Look for the underlying digital currency that appreciates long term.
The whole idea of a Crypto Index Fund is to follow Warren Buffett’s style of buying and holding onto stocks. In this case, Hodling onto coins. (Buffett: “Stock Market is a device that transfers monetary value from the impatient to the patient.”)
If you rush to try to get the most gains out of your investment in the short term. That means you have a high time preference. It is more likely that you will follow unrealistic expectations and hype, and the whole thing could come crashing down. So you should always choose to be a low time preference investor. Forego short term speculations and aim for the long term. Bitcoin holders seem to carry the lowest of time preference of all other Altcoins investors.
Why are multi-million dollar firms, wall-street investors, entrepreneurs and venture capitalists rushing in?
There are numerous reasons why. If you want the long explanation, my newsletter here explains in complete detail told by inside circles.
Cryptocurrency is what these investors call exposure to both the White and Black Swans.
Black swans: if a major economy collapses, if countries clamp down on currency leaving their borders, we will see a huge amount of capital flow to decentralized cryptographic assets that are free from government control.
Anonymity & Sound Money
There’s a huge interest for anonymity. That’s why the extremely wealthy has always had money stashed offshore. Its difficult in an ever increasing digital age where clamp downs, tax men, borders, cost/fees has always been an issue.
Fiat money isn’t good at being a store of value. The rich and extremely wealthy has always invested in hard money/assets. Bitcoin, Artifacts, Art and gold etc…
As Warren Buffett puts it: “The Stock Market is a device for transferring monetary value from the impatient to the patient.”
Becareful out there. We are in the Wild West of Crypto. This world is filled with unvetted altcoins that could just as well be ponzi schemes.
Because for the majority of people, its extremely difficult to verify the authenticity of something so new, technical and kludgy. Many people will tend to overlook the advancement of the technology for the next pump and dump scheme perpetrated by a con-artist or a charming salesman.
Meanwhile, there are over 1500 cryptocurrencies to choose from. Many of which are appearing out of thin air. Some believe we are in an Altcoin market that is overvalued and highly inflated. Others believe that it is still too early to tell.
Regardless, they all see Bitcoin as the anchor of value. When Bitcoin is down, most of these cryptocurrencies go down. When Bitcoin surges in value, they do the same as well.
Willy Woo, a crypto researcher and CoinDesk author did a study and simulated the index of the Altcoin market on whether it outperforms Bitcoin over time.
He came to a conclusion that most coins under-performs bitcoin by a significant amount.
In the case of bitcoin, he said: “Bitcoin is really hard to beat with index funds, may be unbeatable with the present state of altcoins we have. Not only do they underperform bitcoin by a significant amount, but as a combined basket their day-to-day volatility is higher..”
Despite what some experts or economists might tell you, predicting the price of cryptocurrencies is very challenging even for expert traders in traditional markets with many years of data to review. So far, Cryptos are extremely volatile and exhibits an unconventional investor market-cycle of hope, optimism, belief, thrill, euphoria, complacency, anxiety, denial, panic, anger, depression and disbelief.
Whether or not you choose to invest in a myriad of these coins depends on your optimism or pessimism after you’ve done your own research. After that, the only thing you can do is Hodle hard. Its common to have your assets lose 20-50% of its value even in a single day. I’ve experienced this as well. That’s because the market is still nascent.